Question

2-18 (Objectives 2-6,27) You have been asked to make a presentation in your International Business class about how globalization is impacting the auditing profession. In preparation, you met with your auditing professor and discussed these questions:

Answer 1

Key Points regarding impact of Globalization on Auditing Profesison-

1-The survival of accounting firms and the careers of their partners were substantially affected by their ability to form and maintain affiliations with global firms.

2-The recent financial crisis and its impact in varying degrees throughout the rest of the world demonstrated the interconnectedness of the global economy, particularly in relation to the tightness of credit markets.

3-The audit industry is commonly described as having a tiered structure. The top tier (also referred to as ‘brand name auditors’) comprises the largest audit firms, which are structured as global firm networks

4-Firms in a global network have the dual advantage of being both global and local. Other strategic advantages arising from the use of network structures may include economies of scale, learning and access to knowledge, and better management of risk.

5-The benefits of purchasing audit services from global firm networks are most apparent for multinational companies that require delivery of audit services on a multi-country basis. Motivation for purchasing global audit services from a single networked provider, rather than multiple providers, arises from an efficiency perspective. It is costly to contract with multiple providers in different countries that are using different methodologies and different standards