Answer to Question #160582 in Economics for a

Question

The United States Supreme Court decision in US v. Arthur Young (1984) reaffirmed the auditor’s watchdog function when it said that auditor’s ultimate allegiance is to “a corporation’s creditors and stockholders, as well as to the investing public”. It added that the watchdog function “demands that the accountant maintain total independence from the audit client at all times and requires complete fidelity to the public trust”. Do you think Deloitte as the auditor of 1MDB had fulfilled its watchdog function effectively? Why do you say so?

Answer 1

Control is an important management function. This is an objective phenomenon in the economic life of society, and in the field of financial management, it is an integral part of the system of regulation of financial relations.

Depending on the subject and the nature of the activity, financial control is divided into state, departmental and non-departmental; depending on the object - to internal and external; depending on the organization of implementation - for revision and audit. When exercising control activities, special techniques of documentary and actual control, expert assessments, methods of analysis, and other tools are used.

When performing an audit, the independence of the auditor is one of the fundamental conditions, since the main purpose of the audit is to obtain objective information.