What Is Audit & Assurance In Accounting? A Guide - Desklib

The purpose of the report is to analyze the key stakeholder analysis as well as the auditing system in relation to the Australian and New Zealand bank.  The report has also analyzed the importance of whistle blowing in relation to the case of Enron which was diagnosed with a corrupt practice. The report has analyzed in details the need for good auditing system as well as making assurance which can make the organization better for the investors. So, it can be said that the need for auditing and assurance to the stakeholders is of utmost importance to eradicate the malpractices that are there within the organization.

0
Running head: AUDIT AND ASSURANCE
AUDIT AND ASSURANCE
Name of the Student
Name of the University
Author’s Note

1AUDIT & ASSURANCE
Executive Summary
The purpose of the report is to analyze the key stakeholder analysis as well as the auditing
system in relation to the Australian and New Zealand bank. The report has also analyzed the
importance of whistle blowing in relation to the case of Enron which was diagnosed with a
corrupt practice. The report has analyzed in details the need for good auditing system as well as
making assurance which can make the organization better for the investors. The following
paragraphs of the report aims at providing a detailed analysis on the various factors related to
auditing and the ethics which are involved in the whistle blowing case.

2AUDIT & ASSURANCE
Table of Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................3
Key Stakeholder Analysis................................................................................................................3
Independence & Whistleblowing....................................................................................................7
Enron Scandal..................................................................................................................................8
Audit Quality.................................................................................................................................10
Conclusion.....................................................................................................................................12
References..................................................................................................................................14

3AUDIT & ASSURANCE
Introduction
The effective working of an organization requires strong corporate objectives. These
objectives need to be pursued in a diligent manner to make sure that the business process is
conducted in an efficient manner (Ashcraft et al. 2017). The whole task of processing a business
requires simultaneous control of various internal processes along with the monitoring of all the
accounting systems. The prevention of the fraudulent financial transaction is also a part of the
measurement of the business performance for which the system of auditing is needed (Chambers
and Odar 2015). Auditing is defined as the act of maintenance of financial records by an
organization with the engagement of operational aspects for the authentic maintenance of the
financial stability related to the organization (Averhals, VanCaneghem and Willekens 2018). The
need for auditing is to ensure that there are no discrepancies in the financial records and to track
and solve if any. This is done to ensure that the organization has better credibility in terms of
business and financial aspects (Barr-Pulliam, Brown-Liburd and Sanderson 2017). The following
assessment is an analysis of the different aspects of the auditing system and the amount of
assurance that has been fed by the circumstances hampering the performance of the organization
in the future.
Key Stakeholder Analysis
Australia and New Zealand banking group is amongst the five largest and well-
established companies in the province of Australia. It has a potential place on the global basis
which ranks amongst the top 50 banks in the world (ANZ.com 2018). There are major
stakeholders in the bank who get affected by the problems as well as profit of the bank. The
major stakeholders who are involved in the ASX Company are the government, customers of the
bank, suppliers, employees of the bank and the other people involved in the public organizations

4AUDIT & ASSURANCE
(Averhals, VanCaneghem and Willekens 2018). The bank which is said to be the third-largest
bank in Australia after Westpac bank and the Commonwealth Bank has to deal with the
stakeholders for which the stakeholder map has been given as follows.
Figure 1: Stakeholder Map of Australia and New Zealand Bank
(Source: Ashcraft et al. 2017)
According to the analysis of the figure, it can be commented that the company has a
strong stakeholder management technique. The maintenance of the stakeholder relationship is

5AUDIT & ASSURANCE
done through the abstract ideas of trust, relationship building as well as mutual respect in the
longer phase of time (Chambers and Odar 2015). The company strives in the building up of a
Sustainability Framework which ensures the company to have prioritized the elements of
commercial and retail banking element (Ashcraft et al. 2017). The main aim is to provide better
banking service to all the stakeholders so that their needs and rights are not hampered. The
stakeholders should demand the authentic financial documents for building up their trust on the
organization (Barr-Pulliam, Brown-Liburd and Sanderson 2017). The organization on the other
hand should also supply them with the required materials as well as credible financial resources
for building up their confidence in the policies of the bank (Averhals, VanCaneghem and
Willekens 2018). The reliability of the stakeholders is of utmost importance which can only be
done by the application of suitable financial papers which are legal and authentic.
This engages the stakeholders with the firms which gives profit to the firm in the longer
run. The trustworthiness of the stakeholders is needed as it helps them to engage more with the
bank. The engagement is done on the basis of structural approach of the firm as well as the need
to have financial information which is relevant to the case (Barr-Pulliam, Brown-Liburd and
Sanderson 2017). Moreover, the old and existing stakeholders need to know about the new
shareholders who are entering the organization as well as involving with the working (Chambers
and Odar 2015), This is done to clarify the ownership and the management of the regulatory
protocols in a work organization for a better environment and clarity within the shareholders
(Ashcraft et al. 2017). Moreover, it has also been investigated that with good auditing system
which is credible to the organization, the issues that could have affected the long term working
of the organization can be mended. The issues which are assessed in relation to the strategies of
the organization as well as coordination of different perspectives can be also eliminated by the

6AUDIT & ASSURANCE
use of proper auditing measures (Kend and Basioudis 2018). The investors then find the
organization suitable for their investment which rises their credibility score in the market.
The importance of the Annual reports as well as other financial papers are immense as it
includes all the prevalent issues that are there in the organization and how much work is to be
done by the shareholders for mending the issues (Averhals, VanCaneghem and Willekens 2018).
The shareholders get an idea about the place of the company in the market through the analysis
of the financial papers and auditing system (Chambers and Odar 2015). The analysis of the
renders and effective system of management is also to be done by the process of auditing and
assurance (Ashcraft et al. 2017). The importance of the shareholders in an organization can be
shown using the Power matrix in which ranking of the different stakeholders are being done
namely the CEO, financial officer, the project manager, the developers, the change manager as
well as the customers and suppliers (Barr-Pulliam, Brown-Liburd and Sanderson 2017). The
shareholders each having their own level of power matrix is shown as follows –

7AUDIT & ASSURANCE
Figure 2: Analysis of the power matrix of shareholders
(Source: Soh and Martinov‐Bennie 2018)
In the above figure, it can be seen the different stakeholders in the bank in relation to the
power and interest. The different stakeholders have their own level of importance in the
organization. There is ample need for the strong stakeholder relationship for creating worth and
value of the organization in the market (Barr-Pulliam, Brown-Liburd and Sanderson 2017).
Australia and New Zealand Bank also focuses on the building up of strong relationships for the
creation of better relation between the bank and the shareholders who are also the stakeholders of
the bank (Ashcraft et al. 2017). The need for a transparent exchange of finances is needed for the
better working of the organization.
Independence & Whistleblowing
Whistle blowing has been one of the most important terms in the business as this is the
person that exposes all the wrong doings of an organization to the outside world (Barr-Pulliam,
Brown-Liburd and Sanderson 2017). The person gives the unethical information for making sure
that nobody is being cheated by the organization. There has been a number of laws in regards to
whistle blowing like The Whistle Blowing Act (1998) to protect the whistle blowers in the
accounting information system (Averhals, VanCaneghem and Willekens 2018). The act made
sure that the whistle blowers get all the protection as well as do not be forced to disclose their
information in public which can harm them in any manner. The work of the whistle blower is to
reveal the misconduct which is being done by a company in relation to fraud and other practices
for earning better profit (Gu, Simunic and Stein 2017). The whistle blowers are generally current
or previous employees who have all the information. This sometimes arises problems in the
organization (Ashcraft et al. 2017). The principle of any organization should be related to ethics

8AUDIT & ASSURANCE
and proper wok environment. However, this has been hampered by the people many times. The
whistle blowers tries to restore the information with transparency (Martínez-Ferrero andGarcía-
Sánchez 2018). There are types of whistle blowing activity among which two are important –
reporting the misconduct of the organization as well as reporting people outside the organization
for the preachment of laws. The act of whistleblower is mentioned in the APES 110 of the code
of business ethics. They take into consideration the various analysis of the documentation of the
organization as well as employees and government 9 Barr-Pulliam, Brown-Liburd and Sanderson
2017). They have their own risk in which they involve to drive the actual information by raising
voice against the politics and legal aspects of business. They mend the needs of the shareholders
for which protection is must for the whistle blowers under the Federal protection.
Enron Scandal
One of the major scandals which can be mentioned in details in this regard in the Enron
Scandal and its increasing profit margin due to unethical means. Enron is an electric company
which recorded sky-high growth from the time of 1995-2000 (Pratt and Peters 2017). The
shareholders became more interested in the organization for the rapid growth of the firm and
their expectancy to earn more profit. However, during the time of 2000 to 2002 it was seen that
the stock prices of Enron went down (Averhals, VanCaneghem and Willekens 2018). However,
it was a terrible loss to the stakeholders as all the investors re-invested in the company and the
stock prices went down marking their loss. However, the company showed in their financial
papers that the amount of profit was very high to attract more investors in the company. After
analyzing the case, it was found that the company was trying to just maintain the brand image
and there was no prominent practice of fraudulency (Soh and Martinov‐Bennie 2018). The brand
image which lasted for 20 years had to be maintained for which the company showed the

9AUDIT & ASSURANCE
revenue figures and not the profit margins for maintaining the investor interest in the company.
This made a ripple in the government as it came to the realization that the firm was cheating the
shareholders by revealing wrong data and just to maintain their position in the market (Louwers
et al. 2015). This led to the support of the unethical business practices for which Enron collapsed
along with Arthur Anderson. Enron had a perception that their financial data being hypothetical
did not arise any issues in the minds of the people and the perceptive data could have been taken
into consideration (Simnett, Carson and Vanstraelen 2016). They therefore tried to maintain their
financial perspectives and give accounting figures as per the needs of the company.
The work of the whistle blowers in this case was of immense importance. The whistle
blower in this case is Sheron Watkins who was a student of Enron. He revealed to the world the
financial malpractices of the firm in relation to the financial numbers and not revealing the actual
information which is there in the company (Simnett, Carson and Vanstraelen 2016). He made it
into focus that the company did not bother to give the correct information to the people but made
sure to gain enough profit by keeping the figures as per the requirement of the firm (Averhals,
VanCaneghem and Willekens 2018). They cheated on the people as this did not benefit the
stakeholders in any manner but only made profit for the company in the longer phase of time.
The investors will invest in the company based on the figures and would not get the
desired amount of profit in the longer span (Simetinger 2018). The aqua advanced technology
and production services will be deployed by the workers with more efficiency and have higher
productivity in the near future. The financial figures which will be represented in the data will
only benefit the organization not the people involved (Schmidt, Wood and Grabski 2016). The
stakeholders will invest based on the non-restricted in the financial statements and will expect
profit which will not be in practical. The company in their reports accessed the targets that were

10AUDIT & ASSURANCE
not achievable and even manipulated the figures in order to keep the interest of the investors
alive. This type of practice is not worthy of the act and therefore needs serious attention to it
(Simetinger 2018). The whistle blower opened the fact in front of the whole world which led to
the collapse of the organization (Barr-Pulliam, Brown-Liburd and Sanderson 2017). They gave
feasible information about the unethical acts of the company which led to the elimination of the
unethical acts of the organization which hindered the trust present.
In order to complete the act, the whistle blower should first find out more about the
problems and then find valuable information in relation to it. They should have ample
information to expose the organization (Eaton et al. 2017). Then they should find out a journalist
who can help them in their work and also reveal the truth to the world. They are taking the risk
for doing something good which should be recognized by the federal claims and should be kept
anonymous by the government to keep them safe and sound (Averhals, VanCaneghem and
Willekens 2018). There are laws like Paying payment rights act 1996 which gives the whistle
blowers the right to receive protection for the act if they expose something bad. They should be
protected so that they do not feel any danger in the work and can carry out their work for the
betterment of the people in a great fashion (Schmidt, Wood and Grabski 2016). They should be
protected and appreciated so that many people can come up for being a dedicated whistle blower
in the future for the greater people.
Audit Quality
The role of the auditor and the quality is audit in this fraud case is also noteworthy. The
auditors made sure to incorporate more information which made the expectations of the investors
high and not include relevant information about the true figures of the company (Eaton et al.
2017). They did not undergo true exchange of financial information which could have benefited

11AUDIT & ASSURANCE
the people. People like were Ken Lay and Jeff Skilling who was the CEO of the company were
involved in the case with the fraudulent auditing system (Ashcraft et al. 2017). The senior people
of the firm including Arthur Anderson got benefited by the whole process while the common
investors suffered as the prices of the shares dropped to a major level (Gist et al. 2015). The
sudden suffering made certain people go bankrupt which is obviously not something which can
be encouraged in a workplace. The only aim of the organization was to create a goodwill in the
mind of the investors without caring for the people. The hypothetical situation was created just to
trick the investors into something that is not actual but just to seal the original practices and get
away with the fraud ones (Knechel 2016). There were certain people who knew about the frauds
and therefore got away with it. However, there were people who never knew and got bankrupt
for the selfishness of the company.
It is always to be remembered that the external auditors should not be influenced under
any circumstances for making sure that correct accounting has been done. Their privacy should
be maintained as well as they should not be given authority to any kind of benefits rather than
their deserved (Gist et al. 2015). The Independence Policy statement made sure that the external
and internal auditing system aligned with the services that are being audited in a fashion (Eaton
et al. 2017). The committees are responsible for the section of the auditing parties and also to
ensure that they work in a legal manner (Griffiths 2016). In relation to the Independence Policy,
it should be mentioned that there are assurance and approvals from the members before applying
the same in the auditing system. Approval from the Audit and Risk committee is also required in
the proceedings.
According to the business practice code of ethics, it can be said that APES Code 110
measures the personal accounts for the audit management program (Griffiths 2016). The half-

12AUDIT & ASSURANCE
yearly review as well as the full year audit is to be done by the party for ensuring quality and
transparency in the system. The auditor and the firm should have a firm relation however the
relation should be organize as well as professional (Gist et al. 2015). No personal relations or
family terms should be encouraged in the whole act (Eaton et al. 2017). There should be mutual
financial interest only with no added terms for the family bonds. This will ensure that all the
bonds which are there in the auditing system are only related to the professional terms (Barr-
Pulliam, Brown-Liburd and Sanderson 2017). There are no personal relations hampering the
authenticity of the audit systems and benefit the mutual financial interest in the firm. Both the
auditor as well as the organization will gain benefit to the auditing policy.
Conclusion
At the end of the analysis, it can be concluded that the need for auditing and giving
assurance to the stakeholders is of utmost importance to eradicate the malpractices that are there
within the organization. The amount of necessity is high to include a transparent as well as
authentic financial paper to the people for ensuring social welfare and increased public interest in
the bank. This also ensures that the amount of corruption is less which eliminates the unethical as
well as illegal accounting and practices. The implementation of the business ethics as well as
unbiased decision making is essential for better profit in the longer span of time. The principals
which are involved in the external auditing system should not be affected by the different forms
of conflicts as well as the policies of the organization. The services of the stakeholders and
management are to be applied to make sure that the role of the organization is professional for
the stakeholders who are investing their money. All the financial papers should be clear and there
should be zero discrepancy between the original and the shown papers. Zero corruption and
malpractice should be there in the different systems related to the contingency fees as well as the

13AUDIT & ASSURANCE
success rate of the commission. The need for the rotational change in the partners in terms of the
auditing system is to be done for which the career and the auditing system is to be incorporated
in a well-fashioned manner. The chance for the conduction of unethical business ideas as well as
practices should be eliminated giving high priority to the task to make sure that the public
interest is being generated an fulfilled. The development of all these aspects and for the
maintenance of a transparent service in terms of audit should be the first priority through the
development of the quality auditing system in the organization.

14AUDIT & ASSURANCE
References
ANZ.com. 2018. ANZ About Us. [online] Available at: http://www.anz.com/about-us/ [Accessed
on 20 January 2019]
Ashcraft, M., Arous, E.J., Judelson, D.R., Simons, J.P., Kush, D., Arous, E.J., Fan, E. and
Schanzer, A., 2017. IP245 Implementation of a Standardized Audit-Feedback-Education Quality
Assurance Cycle Improves Venous Duplex Ultrasound Protocol Compliance in a Vascular
Laboratory. Journal of Vascular Surgery, 65(6), pp.120S-121S.
Averhals, L., VanCaneghem, T., and Willekens, M. 2018. Clustering in Audit Fees as a (Quality)
Signalling Device: An Empirical Analysis. In 28th Audit and Assurance Conference, Date:
Barr-Pulliam, D., Brown-Liburd, H.L. and Sanderson, K.A., 2017. The Effects of the Internal
Control Opinion and Use of Audit Data Analytics on Perceptions of Audit Quality, Assurance,
and Auditor Negligence.
Chambers, A. D., and Odar, M. 2015. A new vision for internal audit. Managerial Auditing
Journal, 30(1), 34-55.
Eaton, D.J., Tyler, J., Backshall, A., Bernstein, D., Carver, A., Gasnier, A., Henderson, J., Lee,
J., Patel, R., Tsang, Y. and Yang, H., 2017. An external dosimetry audit programme to credential
static and rotational IMRT delivery for clinical trials quality assurance. PhysicaMedica, 35,
pp.25-30.
Gist, W. E., Anderson, U. L., Janvrin, D. J., and Pitman, M. K. 2015. Comments by the Auditing
Standards Committee of the Auditing Section of the American Accounting Association on the
IESBA ED Release (August 14, 2014), Proposed Changes to Certain Provisions of the Code
Addressing the Long Association of Personnel with an Audit or Assurance Client: Participating
Committee Members. Current Issues in Auditing, 9(1), C18-C22.

15AUDIT & ASSURANCE
Griffiths, P. 2016. Risk-based auditing. London: Routledge.
Gu, T., Simunic, D. A., and Stein, M. T. 2017. Fixed Costs, Audit Production, and Audit
Markets: Theory and Evidence.
Kend, M., and Basioudis, I. 2018. Reforms to the Market for Audit and Assurance Services in
the Period after the Global Financial Crisis: Evidence from the UK. Australian Accounting
Review, 28(4), 589-597.
Knechel, W. R. 2016. Audit quality and regulation. International Journal of Auditing, 20(3),
215-223.
Knechel, W. R., and Salterio, S. E. 2016. Auditing: Assurance and risk. Routledge.
Louwers, T. J., Ramsay, R. J., Sinason, D. H., Strawser, J. R., and Thibodeau, J. C.
2015. Auditing and assurance services. McGraw-Hill Education.
Martínez-Ferrero, J., andGarcía-Sánchez, I. M. 2018. The level of sustainability assurance: The
effects of brand reputation and industry specialisation of assurance providers. Journal of
Business Ethics, 150(4), 971-990.
Pratt, S., and Peters, E. 2017. Internal audit: Raising the bar in auditing financial crime
risk. Journal of Financial Compliance, 1(3), 237-244.
Schmidt, P. J., Wood, J. T., and Grabski, S. V. 2016. Business in the Cloud: Research Questions
on Governance, Audit, and Assurance. Journal of Information Systems, 30(3), 173-189.
Simetinger, F. 2018. Audit and Assurance Specifics in Cloud-Based Industry 4.0
Environment. Journal of Systems Integration, 9(3), 7-17.
Simnett, R., Carson, E., and Vanstraelen, A. 2016. International archival auditing and assurance
research: Trends, methodological issues, and opportunities. Auditing: A Journal of Practice and
Theory, 35(3), 1-32.

16AUDIT & ASSURANCE
Soh, D. S., andMartinov‐Bennie, N. 2018. Factors associated with internal audit's involvement in
environmental and social assurance and consulting. International Journal of Auditing, 22(3),
404-421.