Auditing Essay Example | Topics and Well Written Essays - 1750 words

Auditing - Essay Example However, globalisation is also associated with different business and financial risks. Globalisation can have varied effects on different economies in the world. Various forces like investors, borrowers, financial institutions, etc. are having an impounding effect on increased levels of financial globalisation (Schmukler, Zoido & Halac, n.d., p.1). With globalisation and associated risks, accounting and auditing procedures are also encountering significant changes worldwide. In this report the effects of globalisation on auditing mechanisms and various developments of auditing procedures have been studied. Globalisation Globalisation can be defined as the process of increasing association of the markets worldwide and the interdependence between the business processes followed by different organisations all over the world. Recent years have encountered a rapid increase in such phenomenon. Globalisation describes the spread and interconnectivities of new advanced technologies, communic ation systems and production all over the world (Smith & Doyle, 2002). The two important driving factors towards globalisation are: a) Advancements in infrastructure of telecommunications and b) the increasing use and advancement of internet. The economies of the world are getting connected and resulting in increased opportunities for business concerns as well as rising competitions amongst themselves. There is a development of sharing of international cultures as well. The expansion of trade worldwide and globalisation have brought about significant benefits for different economies all over the world. However the recent Global Financial Crisis has somewhat put a hold on the globalisation process (International Monetary Fund, n.d.). Various benefits to citizens of a country as a result of globalisation includes admittance to increased varieties of products and services at lower costs, increased number of job opportunities, higher standard of living, etc (International Monetary Fund, February 2008). Effects of Globalisation on Accounting and Auditing The number of business organisations operating globally is vast and it is increasing at an increasing rate. This puts emphasis on the development of accounting language which is common to all the countries in the world. Globalisation has brought about significant changes in the accounting and auditing procedures all over the world. There had been profound changes in reporting standards of financial statements of organisations as a result of globalisation. This is quite evident from instances like the convergence agreement that has been signed between International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) in the year 2002 and the adoption of International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS) by the European Union (EU) in the year 2005 (Ding, Jeanjean & Stolowy, 2008, p.145). Globalisation is having a significant effect on the accoun ting profession itself. With the advancement of information technology and internet web based financial reporting systems are becoming more common and also mandatory for most of the business concerns. The accounting models used by different business organisations have changed. Globalisation has also brought about changes regarding the systems of communicating financial