Auditing & Assurance Services And Risk Essay


1. Find your inner sceptic: It’s not enough to be sceptical, you have to demonstrate it in practice?
2. Explain the nature, size and scope of the big four accounting firms?
3. Are they really accounting firms or are they morphing into something else?


1. Audit is vital when it comes to the point of public, as well as investors because helps in elevating the level of confidence. It takes a lot of judgement and skills to provide the desired result. Hence, the auditor is needed a level of scepticism as it helps in conducting the audit at an enhanced level. This issue generated aftermath the banking crisis where the regulators challenged the audit firms whether the desired level of scepticism was showcased. Further, the need to exercise an enhanced level of scepticism is primarily needed. The application of an enhanced level of professional scepticism is a major skill when it comes to the profession of an auditor (Blay et. al, 2011). Until the time, the auditors are ready to challenge the assertions put forth by the auditor they will not perform as a way to fraud nor will be in a position to ascertain the fact that the financial statement of the company is projecting a true and fair view. Furthermore, scepticism can be taken to an enhanced level, challenging everything in an established company will tend to slow the publication of the financial statements and will increase the costs that are unnecessary (Heeler, 2009).

Being sceptical is the not the desired result because it must be demonstrated in practice. When it comes to an auditor, being sceptical of information, explanation and other relevant documents it is a chief source (Holland & Lane, 2012). However, knowing it and being sceptical will not produce a positive impact rather it should be demonstrated on every assignment. The application must be done that will help the clients and ensure proper documentation. Professional scepticism can be defined as an attitude that contains a reasoning bent of mind, ready to combat any situation that might project possible misleading either due to error or fraud and an evaluation of the audit evidence that is critical in nature (ACCA, 2015). The explanation provides a clear view that the work is influenced when the scepticism is implemented in practice. It helps and supports the auditor to assess the findings and conclude whether reasonable audit evidence has been received to ensure a true and fair view of the state of affairs of the company (ICAEW, 2016). Hence, it is essential that a sceptical bent of mind is essential because it leads to efficiency and effectiveness of the level of audit.

(ACCA, 2015)

Therefore, being sceptical is not a major consideration rather needs to be applied because the client will get justification. Scepticism enhances the audit practice and projects the reaction of the auditor during the process of an audit (Kalpan & Williams, 2013). A sceptical auditor lay trust in facts, as well as data, ensures proper verification and ensures strong interpretations that are evident from the report that is prepared (Carcello, 2012). Therefore, having a sound knowledge is not enough because it needs to be reflected in the work. An auditor may have paramount knowledge, however; there might be a fault in the report that reflects the level of deficiency. However, an auditor who is sceptical ensures a strong financial presentation and provides a strong practical exposure that is error free. A sceptical auditor believes in fact, as well as data, ensure proper verification (Coram et. al, 2011). Hence, being sceptical is not enough because there are various situations like closed, doubts and disconnection that might affect the audit. Hence, the auditor must be strong enough in the practical field so that the so that any deflections in the information can be traced (ICAEW, 2016). It is the practical work, as well as the client’s service that boasts of the strong service.

2. Initially, the Big Four was a vast firm that comprised of eight. In 1989 there was a merger that reduced the Big eight into Big Six and further in 1998 it was reduced to five when Price Waterhouse underwent a merger with Lybrand to become PricewaterhouseCoopers. The Big Four accounting firms are operated by a board that has its presence globally or council that contains total responsibility for the governance, as well as oversight of the member firms that are networked. The structure of the governance bodies contains a variation, however, contains leaders of senior rank from the various line and geographical areas. The CEO/Chair of the Big four is linked to the audit practice, the other two from the area of tax practice. However, there is no scenario of profit pooling at the international level. The amount remitted to the global network form by an individual member firm to fund the running cost of the network is linked to the revenue that the member firm generates. In reality, the U.S member firms

When it comes to the practice of assurance, the firm moves on to enhance the level of audit efficiency. This contains offshoring, development of centers of lower cost, outsourcing of aspect and using of technicians related to data. The Big four firms are operated by international networks. Member forms have a common name; brand and the member firm are legal entities. Big four firms operate as an umbrella entity and termed as a global network firm. The link is established by the legal agreement between the two. When it comes to governance it is done by way of various committees that come from within the firm and the members are selected by the partners. In some other case, the guidelines of the governance need large audit firms to bring non-executives who are independent when it comes to the matter of governance (Mock et. al, 2013). The Big Four are similar to other firms in the matter of management of equity actively in the prevailing situation. Moreover, the Big four are showing strong standards for partner promotion and transferring more parts from equity and getting it shift to the status of salary in the practice of audit. Moreover, there is a trend practiced by the Big four in promoting individuals. Hence, it is a clear-cut indication that the there will be more income partners as compared to equity partners in the forthcoming days.

As a matter of fact, the Big Four audit firms employ more than 710,000 people in 2016. This number contains partners, audit, professionals, tax, staffs, etc. In the past five years, there has been a paramount increment in the employment by the Big Four indicating an increment of over 16%. Apart from the year 2010, the employment by the Big Four has increased every year since 2009. The Big Four firms are into assurance, consulting, tax and even in the role of administration. The number of people in the Big Four has increased with the due passage of time while the staff composition in the assurance area has decreased. Due to the enhancement in advisory and variation in the financial statement audit work, the need for individuals who are experienced in nature has increased tremendously. This has led to a strong market for the technical expertise and other professionals in the field of finance. The Big strives to hire students from the accounting field and various others such as a computer, technology, organizational change, etc. Further, there has been a strong surge in the requirement from the field of statistics (Hoffelder, 2012).

The Big four has clearly shown that they are pouring in enough investment so that they can evaluate the manner to reframe their procedure of audit and take benefit of the chances that is given by the current technologies (Pristine, 2016). However, at the current point of time, there is little evidence that will provide a result on the quality of audit, protection of the investor, audit efficiency, etc.

3. Yes, the Big four are accounting firms however, they are venturing into various other services such as external audit, services pertaining to taxation, consultancy related to management and business, evaluation of risk and control. Further, they are even venturing into various other services like massive employment and opportunities in tune to career development to auditor and accountants all over. Apart from the normal accounting services the big four are constantly eyeing upon:

  • Management consulting

The other activities of the big four revolve around advisory services. This is one of the other activities that the firm is undertaking as they have a strong grasp of the external environment. The immense knowledge of the firm is utilized to provide various services like setting up of the business plan, financial standing, etc (Pristine, 2016). Moreover, the accountants from the firm have helped to trace new opportunities, manage the change in the external environment, take care of the insurance needs, etc.

  • Speciality services

With the due passage of time, the offerings by the firm have undergone a variation. Specialized services are provided by the firm. One of the noteworthy ventures is the business valuation that helps in determining the worth of the business and provides an adequate response to the fact that whether the business should head for merger or acquisition. Further, information system services are even provided that helps in knowing the integrity, as well as the security of the computer system. Fraud and forensic services are even provided that helps in uncovering the fraud practices.


ACCA. (2015). Professional Scepticism. Retrieved January 24, 2017 from

Blay, A. D., Geiger, M. A. & North, D. S. ( 2011). The Auditor's Going-Concern Opinion as a Communication of Risk. Auditing: A Journal of Practice & Theory, 30 (2): 77- 102.

Carcello, J. (2012). What do investors want from the standard audit report? CPA Journal 82

Coram, P., Mock, T. J., Turner, J. & Gray, G. (2011). The communicative value of the auditor’s report. Australian Accounting Review 21(3): 235-252.

Heeler, D. (2009). Audit Principles, Risk Assessment & Effective Reporting. Pearson Press

Hoffelder, K. (2012). New Audit Standard Encourages More Talking. Harvard Press.

Holland, K. & Lane, J. (2012). Perceived auditor independence and audit firm fees’, Accounting and Business Research. 42(2), 115-141.

ICAEW. (2016). Professional scepticism – what it means for auditors in practice. Retrieved

Kaplan, S. & Williams, D. (2013). Do going concern audit reports protect auditors from litigation? A simultaneous equations approach. The Accounting Review, 88 (1), 199-232.

Mock, T. J., B?dard, J., Coram, P., Davis, S., Espahbodi, R. and Warne, R. (2013). The audit reporting model: Current research synthesis and implications. Auditing: A Journal of Practice and Theory, 32, 323-351.

Pristine, E. (2016). Why are the Big 4 accounting firms important?. Retrieved 24 January 2017 from

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