AUDIT, ASSURANCE AND COMPLIANCE Audit, Assurance and Compliance Name of the University Author's Note

Running head: AUDIT, ASSURANCE AND COMPLIANCE
Audit, Assurance and Compliance
Name of the Student
Name of the University
Author’s Note

1AUDIT, ASSURANCE AND COMPLIANCE
Executive Summary
The report shows that the key stakeholders get affected with the presence of material
misstatements in the financial statements. After that, there is a relation between auditor
independence and whistleblowing as both helps in maintaining the ethical aspects of the
profession. This report also shows the lessons from the collapse of Enron and the behaviour
of Arthur Anderson. As per the findings of the report, the auditors are needed to enhance
the audit quality to prevent the occurrence of the collapse like Enron.

2AUDIT, ASSURANCE AND COMPLIANCE
Table of Contents
1. Introduction......................................................................................................................... 3
2. Influence of Material Misstatements on the Key Stakeholders of Rio Tinto........................3
3. Auditor Independence and Whistleblowing Related to Public Interest Requirements........5
4. Lessons from Enron Scandal and Arthur Andersons’s Behaviours........................................6
5. Audit Quality and Needed Steps by the Auditors.................................................................9
6. Conclusion.......................................................................................................................... 12
7. References..........................................................................................................................13
8. Appendices......................................................................................................................... 16

3AUDIT, ASSURANCE AND COMPLIANCE
1. Introduction
Auditing is considered as the process to inspect and examine the financial records of
the companies for the determination of the fact whether they are accurate and in
accordance with the applicable rules and standards (Knechel and Salterio 2016). The
responsibility of the external auditors is to provide their opinion on the fact that whether
the financial statements are free from material misstatements after performing various
analytical procedures (Louwers et al. 2015). The first objective of this report is to measure
the impact of material misstatements in the financial statements on the key stakeholders of
the firms. For this purpose, Rio Tinto is considered as the company is listed in Australian
Securities Exchange (ASX). The next objective of this report is to consider the public interest
requirements as per APES while considering the concepts of auditor independence and
whistleblowing. The objective of the next part is to discuss about the lessons from the
collapse of Enron. The last part focuses on the responsibility of the auditors to increase
audit quality.
2. Influence of Material Misstatements on the Key Stakeholders of Rio Tinto
In case the auditors fail in proper identification, disclosure and adjustment of
material misstatements, the key stakeholders of the clients are affected significantly. The
following discussion shows the same in relation to Rio Tinto:
As per the appendix, Shareholders are one of the key stakeholder groups of Rio
Tinto. It needs to be mentioned that the main aim of the company is to ensure superior
returns to the company’s shareholders and the company maintains this by balancing
discipline investment with prudent management of the company’s balance sheet along with
the return on the shareholders (riotinto.com 2019). This statements implies that the