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Assignment On Auditing, Assurance and Services - HI6026

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Holmes Institute Sydney

   

Audit, Assurance and Compliance (HI6026)

   

Added on  2020-03-04

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HI6026 - This report is regarding the introduction of new accounting standard ASA 701 “Communicating Key Audit matters in the Independent Auditors Report” and it clearly examines the case of ABC learning center. The report illustrates how the frauds in an organization has paved the way for introduction of new accounting standard and has led to various amendments in the existing standards. It also discussed about the successful implementation of the standard and the auditors are encouraged to meet the requirements.

Assignment On Auditing, Assurance and Services - HI6026

   

Holmes Institute Sydney

   

Audit, Assurance and Compliance (HI6026)

   Added on 2020-03-04

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Running Head: Auditing, assurance and servicesAuditing , assurance andservices
Assignment On Auditing, Assurance and Services - HI6026_1
Auditing, assurance and services1Table of ContentsIntroduction......................................................................................................................................1Auditing issues in ABC Learning Centre........................................................................................2Reasons for developing ASA 701....................................................................................................4Matters to be disclosed in auditor report of ABC Learning Centre.................................................6Conclusion.......................................................................................................................................7References........................................................................................................................................8
Assignment On Auditing, Assurance and Services - HI6026_2
Auditing, assurance and services2Introduction This report is regarding the introduction of new accounting standard ASA 701 “Communicating Key Audit matters in the Independent Auditors Report” and it clearly examinesthe case of ABC learning center and if amendment to the ASA 701 has been put forward then thefinancial fraud would have not been occurred and the stated company would not have collapsed. It also states about the new reporting requirements introduced in the ASA 701 and its implications in the industry due to which the way of financial and accounting misappropriation has resolved up to an extent. It also contains the linking of the ABC learning center case with theASA 701, in which it contains about the matters occurred. The report clearly illustrates how the frauds in an organization has paved the way for introduction of new accounting standard and has led to various amendments in the existing standards. There are various loopholes in the law drafted and the reporting of the auditors was not accurate so to discontinue this practice and enhance globalization various efforts were taken to improve the reporting requirements. There were various issues raised in ABC learning Centre such as the accounting issues and debt and these issues occurred due to no proper disclosures by the auditor and the auditor gave an unqualified opinion for the same. A linkage study has been established between the stated company and the introduction and amendments in the auditing standard explaining the reasons ofamendments and if the same was present the stated company would not have been collapsed. It also discussed about the successful implementation of the standard and the auditors are encouraged to meet the requirements and the investors and audit committee being engaged and supporting for the process illustrated above.
Assignment On Auditing, Assurance and Services - HI6026_3
Auditing, assurance and services3Auditing issues in ABC Learning Centre The stated company is an Australian listed company which runs a business of childcare centers. The company expanded its business rapidly in other countries as well. It rapidly started acquiring small and medium sized centers across the country (Blythe, 2017). In a short span of time it made significant growth which led to increase in its stock prices to $8.60(Teen, 2012). Since it acquired bulk centers but was unable to sustain the growth for the long time. It paid excess value for centers than actual value affecting the growth. It took debts for acquiring the company and was unable to pay the same as it does not pick the pace of growth which was expected. The acquisitions made were criticized by economists all over the country. In no time the profits and share prices of the company fell down and thus lead to the liquidation. There were various issues of the failure of this company in which the significant one was fraudulent financial reporting (Sumsion, 2006). Major ethical issues identified were Unethical accounting practices followed. Auditors of the company’s financial statement breached the code of ethics. For survival of the organization corporate governance principles should be followed, the same was breached by the company.ABC learning Centre has a remarkable financial fraud in its organization. Financial fraud is defined as cheating in financial transactions for its personal benefit. Since there was manipulation of financial statements it can be said as an accounting fraud in which it overstated the assets and revenues of the company superficially and underreporting its liabilities. It is also discovered that ABC has made considerable profits from subsidies it received from government in the form of tax rebates. It also earned profits from paying low wages to staff and cost cutting which was not a sustainable business model (Weaven and Grace, 2010). Controversies were made due to its acquisitions of child care centers which created monopoly in the market. It was
Assignment On Auditing, Assurance and Services - HI6026_4

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