Auditing. PARMALAT COMPANY. The series of scandals caused a general Essay

Auditing. PARMALAT COMPANY. The series of scandals caused a general crisis of confidence in the integrity of the entire system o - Essay Example This was one of the prime reasons which had brought the scandal under limelight. In the year 2003, Parmalat was severely penalized for trying to raise 300 million in the form of bonds (Word Socialist, 2004). The author of the study will highlight the impact of the integrity in the system of corporate accountability process, role of the auditors with respect to Parmalat scandal. The study will also highlight the importance of corporate governance mechanism related to Parmalat. The credibility of the audit reporting, functions and regulations will also be discussed with respect to the auditing procedure carried out by Deloitte & Touche in Parmalat. Finally, the study will conclude highlighting the changes in the critical evaluation of changes in auditing, corporate governance regulations in prevention of scandals. Integrity in the System of Corporate Accountability The corporate accounting system encompasses the traditional accounting and also the social reporting method. The social re porting concepts are supposed to revolve around environmental and also the social aspects of the assets and liabilities reporting methods. It is concerned with the benefits and cost associated with the issues and the verification, assurance provided by the auditors (Rao, Tilt and Lester, 2012). It encompasses various issues which revolve around the interactions and the inclusion of elements like ethics, corporate governance, social and environmental accounting, philanthropy activities (Pollock, 2011). The development of social corporate accounting encompasses the formulation of accounting systems as per the guidelines provided by the Global Reporting Initiative (GRI) to provide accuracy in the global and environmental accounting. Role of Auditors The role of internal auditors of the company identifies the errors and checks whether the measures undertaken by the management are in compliance with the norms and regulations. The duty of internal auditor is to check of the transparency o f accounting system and also provide advice based on the conducted auditing function (National Fraud Authority, n.d). One of the prime objectives of the auditor is to provide the stakeholders and shareholders the key assurance that risk management activities are carried out effectively. The auditor’s incompetence will be observed when he/she would be able to uncover the misappropriations in the accounting systems and also the preparation of the timely accounting reports, risk management system and various other activities. They evaluate the accounting activities and provide certain reasonable assurance that enables the accomplishment of goals and objectives of the organization (Ferrarini and Giudici, 2005). Accurate and transparent auditing function can also necessitate the entire financial system and help in the removal of accounting discrepancies within the systems (Caraballo, Cheerla and Jafari, 2010). The management of the company is unaware that inaccurate auditing proce dure leads to the complexities within the accounting system of the organization (George, 2011). In the context of Parmalat, the internal auditors were not only able to perform accurate auditing, detection of error on the methods of the system but also had involved itself in the creation of the forgery of accounts (Action Fraud, 2013).This was one of the prime reasons which had