Question

(1) Is there a greater chance of market failure (no transaction due to gap between asking & bid price) in the contemporary relationship between potential investors (shareholders in public) and professional managers (separation of ownership and management)?

(2) Will auditor's role change under the contemporary shareholder/professional management relationship? Why & why not?

(3) what do you think was the biggest benefit of auditing function in the early British financial market?

(4) One of the very interesting practices in Britain at that time was that auditors were required to have equity position in the firm they were supposed to audit. This is contradictory to the current U.S. system (per ethical standards & PCAOB ) that bans the investment by auditors in audit client (independence rule). Any opinions why there is discrepancy in investment rules of auditors between two periods?

(5) Given that there are various types of seasoned auditors such as generalists and specialists (article generally covers concept of novices & experts, though), do you think it easier or more difficult for specialists to perform audit outside their specialty (domain) than generalists?

(6) Are there, do you think, differences in knowledge (& its subset, amount of knowledge, structure, problem representation, reasoning, and information search) and performance between generalists & specialists (within their domains & outside domain)?

Answer 1

Ans-1 Yes, because of potential investor and professional manager are not work in isolation , they link with each others and investment are made in market. because of professional manager are analyse the market conditions and provide the estimation of future market condition and chances of gain or loss and potential Investor are having capacity to invest sufficient money in market. hence there is contemporary relation between Potential Investor and Professional management.

Ans-2 Yes, at the timing of audit auditor will do in unbiased manner. they can not consider auditing view as related to company. because of his decision are show the actual condition of company which are not take with biased manner.

Ans-3 As per my view audit opinion is intended to provide reasonable assurance, but not absolute assurance, that the financial statements are presented fairly, in all material respects and also help to achieve internal control which is a most important point for growth of any organisation, and also give true and fair view.for that  financial statement investor also ensure that their security and its  reduce investor risk also So, its very much beneficial for British Financial market to Grow up.

Ans-4 as per the above details U.S system is far better than britain practice of auditing, because of if any interest of auditor link with company than they will not able to take decision in unbiased manner. as per International auditing standard auditor should be always unbiased .

Ans-5 Yes, because of out of course it is very difficult and challenging for auditor and also they need to go for deep auditing and its time consuming also. auditor is also study more about auditing for specialty like forensic auditing.

Ans-6 yes, there is major difference for knowledge and performance of knowledge at a specific time, for use of knowledge its require specific skill to analyse the things and use appropriate knowledge .