Scams in Ireland and India: Auditing and Assurance

This article discusses the scams that have occurred in Ireland and India, focusing on the role of auditing and assurance in preventing such frauds. It explores the impact of these scams on the economy and emphasizes the need for stronger internal controls.

Running head: Auditing and Assurance
Auditing and Assurance
Name of the Student
Name of the University
Author Note

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Auditing and Assurance
Table of Contents
Scam in Ireland..........................................................................................................................2
Anglo Irish Bank Scam..........................................................................................................2
International fraud cartel controlled more than 300 accounts and stole €15mn....................4
Scam in India..............................................................................................................................5
PNB Scam by Nirav Modi.....................................................................................................5
Satyam Computer Scam.........................................................................................................7
Answer No 1............................................................................................................................10
Answer No 2............................................................................................................................11
Reference..................................................................................................................................13

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As per the recent collapse of a different company it can be said that there has been an
increase in the scam rate which is due to the loopholes which are there in the accounting
standard and also in the process of the auditor. The report has been based upon the scams
which have to happen in Ireland and India and also it answer the question that how the
shareholder can able to trust the external auditor in spite of the scam which has to occur in the
economy and also answer how can be modification and the development in the standard can
take place so that it can able to stop the scam which has in the past and also help the auditor
to carry their audit process in the company.
Scam in Ireland
There are many scams which happen in Ireland, and it has directly affected the country as the
scam directly affects the interest of the public. The fraud which occurred in Ireland and the
fault which was there of the auditor shown below:
Anglo Irish Bank Scam
Anglo Irish bank was situated in Dublin and got itself nationalized in 2009. The bank
has done one of the biggest scams in the country, and it directly affected the interest of the
public so it can be said that due to the auditor not able to perform their duty correctly this
scam took place and it took away money of many individuals (Adler et al., 2018).
The scam has been held by the Individual name David Drumm, and he was the one who was
there at the back of the scam. It has been found out that David and the CEO of the bank both
jointly carried the scam in the business (Balachandran 2016). As the CEO of the company
had all the authority in regards to the financial statement of the bank and is able to do the
changes as per their requirement so due to this power the bank CEO has overstated the
financial report as it has shown the customer deposit increased by € 7 billion as due to this the
investors think that the bank has so much amount of money so as a result, it will able to

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deposit the amount of the investment in the bank and the bank is able to do the fraud with
investors. David and the CEO of the bank carry this operation as to increase the customers
deposit so that is able to show the excellent position of the bank in the investors eyes as so
that it if the bank has so much of deposits than it shows that it has got a right amount of
revenue and it will also be able to get the confidence of the investors in the bank, and also it
will able to make them invest their money in their bank as the financial statement of the bank
shown there is increase in the deposit so as a result it will influence the investors for taking
the decision in the company (Baporikar 2016).
So from the above discussion it can be seen that the scam which the bank has done and it has
been performed by the CEO and David as that it has been done so that the bank can able to do
fraud with the investors and depositor of the company so that it will lead them to do analysis
of the bank financial position in a proper manner so that it will let them invest in the bank. So
this was one of the biggest scams in Ireland, and it leads to economic failure in the country
(Bhasin 2016).
The case happens, and it was even in the bank financial statements are showing true
and value as per the auditor. Auditor has carried all the process which are required by them in
order to do so that it can able to judge the financial statement of the company accurately and
effectively (Bhasin 2016). Later on it was found out that the auditor were not able to get the
sufficient amount of audit evidence in regards in the deposit of the company as the fraud is
been done by the top management so they do not let the auditor gather sufficient information
about the deposit, so that is the reason that the auditor is not able to judge the overstatement
of the deposit in the bank (Bhasin 2016). The idea can also be considered as due to the
loophole in the accounting standard the auditor was not able to get the proper evidence as the
bank is able to follow the rule properly so due to that the auditor is not able to understand that
there is fraud going on in the business.

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International fraud cartel controlled more than 300 accounts and stole €15mn
The second biggest fraud which happens in Ireland is the International fraud cartel as it took
over 300 reports and by doing cyber fraud is able to steal more than €15mn, so it becomes
one of the biggest scams in Ireland (Brown, Daugherty and Persellin 2014).
It was found out that some of the group staying in Ireland is attached with the cyber expert is
carrying the business of taking out of the money from a different individual from their bank
account. So this as a whole result in a very big materiality and as a result the entire fraud
amount came to 15mn and it directly affects the economics of the country as the fraud take
place in the bank and the bank is the primary source of the revenue in the economy so if any
fraud is there in the bank than it will directly affect the economy (DeFond and Zhang 2014).
The fraud takes place due to the weakness in the internal control of the bank as the bank is
not able to save guard the money of the individual as it has been given by the depositors in
the bank. As if the bank is able to have proper internal control so they should have adequate
cybersecurity as it will help the bank to save the individual money as if the bank would have
sufficient security in their system related to the cybercrime so this would help them in regards
of the safety of the cash which has been deposited by the individual in the bank (Dora and
Umesh 2018).
As after the finding of the case, it was found out that more than 350 accounts are affected by
the cybercrime, and it was found out that the money which has been stolen by the bank is a
trade-off to a different international country which even includes country like China and
West Africa (Dowling and Lucey 2014). So it can be said that due to the weakness in the
internal control, the scam could take place and as the money is trade-off from so many
accounts, so it is tough for the investigation team to make out the actual amount of the fraud
which has taken place in the bank account.

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So the above has been shown the scam which happens in Ireland and how it has affected the
overall economy of the country as the fraud was related to massive amounts and both scam
were related to the bank so as the fraud have taken place in the bank, so it directly affects the
economy of the country and as it was included the money of the public, so it also helps the
situation of the economic crisis (Furnham and Gunter 2015).
Scam in India
` India is a developing country and also the fastest growing nation, so it even able to get
much amount of the resources and as the country has so much resource, so the rate of the
scam in the same has also been increased, so the part of the report shows that the scam which
is happening in India and how the auditor was not able to make the risk which was there in
the business (Griffiths 2016). So the two biggest scams which happen in India are shown
below:
PNB Scam by Nirav Modi
This was one of the biggest scams which have to occur in the country, and as per the date it
is the latest one the scam was carried by an individual businessman Nirav Modi, and the
fraud is done to Punjab national bank (Hall 2015). The fraud took place in 2018, and the
fraud scam amount is 11,356.84 crore₹ (US$ 1.4 billion).
The case was that the company which is own by Nirav Modi. Nirav went to the bank and
asked for the undertaking of the letter of understanding so that the company can able to make
the payment to the overseas suppliers. It told the bank that the company need the money so
that it can able to pay the suppliers who are situated in the foreign (He, Zeadally and Wu
2015). The bank asked for the 100% margin in against of the letter of understanding so that it
can able to sure about the loan amount as if the company is able to give the margin than if the
loan is not paid by the company then it could recover the sale of the asset which the company

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have kept as mortgage in the bank. As the Nirav Modi statement it was found out that it told
the bank that has issued them the letter of understanding without taking any sort of the
margin so the company want to take the letter again and this time also it is not able to provide
any kind of the margin to the bank (Ingam 2015). So the company is not able to give any
amount of the security to the bank, and he was not able to found any sort of the document in
regards of the previous issue of the letter to the bank. So it was found out later on in the
investigation that they were two employees of the bank is also there in the scam and so the
employee who is there in the bank helps the company to able to get the amount without
getting the document of the security (Iwanicz-Drozdowska, Smaga and Witkowski 2016).
So after proper verification it was found out that the details of the suppliers which was given
by the company in overseas were not real, and the company was making false
misrepresentation so that it can able to take more amount from the bank and able to defraud
and as it was found out that the company is not doing any such kind of the activities. It was
also found out that the as the bank was not able to ready to pay the amount of the loan in
regards of the mortgage so to get the loan without giving any sort of the lease the company
took help from the employee of the bank as with the help of them the company is able to
create false paper and ready to raise the loan from the bank (Khosa 2017).
As the bank was unaware of the fraud so when it able to get to know it as the financial
position of the bank was following and also the share of the company so to know the detailed
of the scam bank asked the CBI, so that is able to invest the case. So after the investigation
only it was found out that the company was doing false misrepresentation in regards to the
payment which they have to do to the overseas client, and also shows how the company have
manipulated the system of the bank by the help of the employee and able to take the loan
from the bank and ready to make such significant amount without doing the required amount
of formalities (Knechel and Salterio 2016).

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As per the auditor is a concern it can be said as the matter has been carried in the auditor
found out that due to weakness in the internal management, the company is not able to get
that there is such a significant amount of fraud in the company (Mehta 2018). As without
proper amount of the security how such a significant amount of the loan is been given by the
bank to the company and also how it able to not find the amount which got credited to the
company amount so it can be said if the bank had a better amount of internal control than it
will able to control the risk and could have able to stop the fraud in the company.
Satyam Computer Scam
This was one of the biggest scams which happen in India as in this whole economy have got
suffer, and also it was the most impact upon the money of the public as the scam was related
to the money. The scam was carried by B. Ramalinga Raju who the promoter and founder of
the Satyam Computers. It can also be said it used the financial statement of the company and
also it was the fault for the auditor in the case (Mercille 2014).
The case which happen in the scam is that the founder of the Satyam computer B.
Ramalinga Raju, the CEO Raju show that the money which is been there in the company is
to be invested in some Malaysian company and the company which it was there was
controlled by Raju family so it was the CEO who pushed all the money of the company two
different company which was not controlled by his family and also it was found out that the
company financial statement was been overvalued by the company so that it can able to take
more amount money from the investors as if the company financial statement is able to show
more amount of the fund in the financial statement that it will able to show that the financial
position of the company is good and it will lead the investors to invest the money in the
financial statement of the company (Murphy 2014). As the investors have spent all their
wealth which result in an amount of 14,162 crores and the sum was shifted to the different
company so that it can able to have control over the money and able to do fraud with the

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public money as it has shown the money in the financial statement, but in reality it is carried
to different company.
The scam as the company was showing an increase in the financial statement so due to these
the price of the share of the company was increasing as how the company is performing in
the market so the price was increasing as the share has been purchased so due to these the
share price of the company is been increasing so as the price was growing so the customer
was able to get more amount of the return so as the increase in demand the share was trading
more in the share market and it leads to getting more amount of the money in the company
and as a result the scam could able to take place (Narayanaswamy, Raghunandan and Rama
2015).
The auditor of the company was PWC India, who carries it audit process in the company. It
is the duty of the auditor to check the whether the company financial statement is showing
real and fair value or not so it has to carry the audit process in order to judge all the business
risk and other matter so that it can all the business risk which is there in the company. So as
they were the auditor of Satyam computer, so it was their duty to check the company
financial statement, so it was found out that the company have shown false figures in the
financial statement and due to these reason the company financial statement was showing
overvalued so the auditor should have found that while carrying the audit process in the
financial statement of the company so it was found out that the auditor was also involved in
the scam as they have not taken proper procedure in the company as it was the overvalued in
the financial statement, but it is not able to show the same in the auditor report and also gave
them Unqualified Report (Pai and Tolleson 2015). So as the company was given an
Unqualified Report, so it shows that the financial statement was showing fair value, so it
leads the financial user in to a misrepresent and as a result it lead them to invest in the
company so the scam have take place as the auditor is not able to have performed it auditing

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services in regards of the auditing accounting standard and also it is not able to complete the
audit with the principle of the independent as they were with the management in the fraud as
they help them to raise the money from the investors (Pandya 2018).
The scam came in to the see when the CEO gave its letter that they were involved in
fraud as they have done the fraud of 14,162 crore with the help of the manipulation of the
money in the financial statement so due to these only the company share price of the
company and as after the fraud came in to the picture and the real financial statement of the
company is shown so as a result of it the share price goes down to the minimum amount, so it
leads to a big downfall of the share price in the share market, and as a result it directly
affected the interest of the public as the share was only taken by the individuals, so it got
changed, and it was also found out the company has influenced the auditor also so that it can
able to get the decision of the auditor report as per their and also it can able to get a right
amount of the cash in respect of the report (Power and Gendron 2015).
So the conclusion which have come in the case was that it the CEO has been charged for the
instance and the SEBI also found out that it was also the fault of the auditor which was PWC
as it does not carry the audit process in regards of the accounting standard and even as it is
not able to judge the financial statement accurately as the report was overvalued but the
auditor was not able to found out that in the financial statement by the auditor, so the Auditor
company was banned for carrying the audit process in India for 2 years and also they have
been charged for the penalty for the non-compliance of the accounting standard.
Answer No 1
Auditor should carry the audit process in the company so that it can able to judge the
financial statement whether it show true and fair value or not as the auditor carry audit
process so that it can able to provide the necessary amount of the information to the financial

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users as the auditor carry the audit process so that it can able to ensure that the money of the
public is not wasted or been fraud by the company so to ensure that the company is not able
to do any sort of misrepresentation (Roy 2015). It can be seen from the above report that
there are many scandals which have occurred in Ireland and India. So it can be said the fraud
happen happened due to that the auditor is not able to perform their duty correctly, but it is
the auditor only who able to solve all the problems in the company financial statement (Xia et
al., 2015).
The auditors carry much process so it should be taken seriously by the stakeholder as
it is the one who only check all the details of the company account and other necessary
documents so if the accounting standard and auditor are not there in the system than the fraud
and scam rate will also increase in the economy as due to the auditor and other regulation as
due to these rules and norms the company is able to maintain the proper amount of the
financial statement in the company so the auditor allow them to make an appropriate sort of
the accounts so that it will check all the transaction accurately and efficiently so that the
individual it can able to judge each properly and also able to check each account so that it can
able to ensure the same in the financial statement (Sandvig et al., 2014).
It is not possible for the individual to check the internal management of the company as it
has to carry many process and procedure so that it can able to know the details and able to
judge the risk which is associated with the same so the individual is not able to do the same
by their own and the level of the expertise and other requirement is not able to fulfil by them
so it is the auditor who carry its knowledge so that it can able to judge the company internal
control accurately an d able to know the error which are been done by the company as the
more amount of failure are there in the internal control than this directly increase the risk of
material misstatement in the financial statement so the shareholder should have trust upon the
auditor in regards to the financial report as they are the one who holds all the essential

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procedure in the business and able to analysis the same of the internal control so that it can
able to see all the risk which are associated so the stakeholder should able to trust the auditor
as it helps them to know all the weakness in the internal control and improve the user to take
proper amount of the decision in regards of the financial statements (SHARMA, GUPTA and
SETIYA 2019).
Auditor should maintain the audit quality properly so that it will help them to know
more about the financial statement of the company as to maintain the same amount of the
audit quality it should be able to as the auditor should be able to follow all the auditing
standard which are there to be followed by the auditor in carrying the audit process so it
should comply the ISA(UK) 220 so that it will be able to form a proper opinion upon the
financial statement so it the authority should be able to do the some changes which are not
there as it should able to do increase the procedure of the audit so that it will be able to have
proper amount of process which can be followed by the auditor so that it will be able to have
proper amount of information and the auditor will be able to give proper amount of decision
in the financial statement of the company.
Answer No 2
Accounting standard helps the company to prepare the financial statement of the company as
it provides all the rules and regulation which company should do while making the financial
statement of the company (Shen et al., 2017). It shows the method and the accounting
process, which should be followed in regards to the preparation of the financial statement. As
there is some fraud which took place and the auditor was unable to check the financial
statement properly so it can be said that there is to be some change in the accounting standard
so it can be said that there should be some changes in the accounting standard so that it helps
the auditor to do the audit process more quickly in the financial statement of the company.
The changes which should be done in the accounting standard are:

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 It should be more simple so that it can be able to be appropriately interpreted and help
the user to all the details correctly as these will help the user to know each amount of
the entry and also able to understand them properly (Singh and Gupta 2018).
 It should increase the amount of the disclosure which the company have to do in
regards of the financial statement of the company as there is more amount of the
exposure so it will able to make the company do less amount of the misstatement in
the financial report as it has done some much of disclosure, so it has to make sure that
there is no lack of exposure and as to do the revelation it has to maintain proper
accounts, and this will stop the risk which is associated with the financial statement
(Sookhak et al.,2015).
 Proper definition should be given so that the company can able distinguish
appropriately about the different transaction in the accounting standard so that it can
help them show appropriate details of each item as if the company is able to give
details of each item than there will be no amount of misrepresenting as if the company
is up to some sort of misstatement than it will hard for them to give proper amount of
the disclosure so as all the details will be there so it will be hard for the company to
manipulate the financial statement.
The standard should be meant as per the requirement of business so it can able to help the
company to overcome the problem which they face while doing the accounting of the
business as if the accounting standard is able to provide all the required information then it
will help the company to make more amount of the disclosure in the financial statement of
the company. So the standard should be amending properly so that it can able to fulfil the
entire requirement properly of the accounting process of the company.
Auditor should also able to increase the audit session so that it will be able to carry
more audit process in the company as the auditor has to check all the information which are

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related to the company so to carry all the process properly in the financial statement, the
changes which should be there in the auditor session as it should be focus upon the scope of
the audit as it will be helpful for the company and also it will be able to proper quality of
audit.
It should also give more emphasis upon the audit evidence which is to be obtained by the
auditor so that it able to give proper opinion in the financial statement. The auditor should be
able perform it well as if the auditor is able to give proper amount of evidence than the clarity
in the audit will be more and the auditor will able to give opinion in regards of the financial
statement.

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