Audit, Assurance and Compliance

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
This report aims at the analysis of certain audit aspects like the effects of material
misstatements on the key stakeholders, auditor independence, whistleblowing, lessons
from Enron collapse and others. As per the report, the key stakeholders of BHP Billiton
would not be able in making correct decision in the presence of improper identification of
material misstatements. After that, both whistleblowing and auditor independence is
needed to diminish unethical behaviours within the organizations. This report also focuses
on the lessons from the scandal of Enron and what the auditors need to do in order to avoid
this type of corporate collapse and financial crisis.

2AUDIT, ASSURANCE AND COMPLIANCE
Table of Contents
Introduction............................................................................................................................. 3
BHP Billiton’s Stakeholder Analysis related to Material Misstatements..................................3
Auditors Independence and Whistleblowing...........................................................................5
Auditing Lessons from Enron Scandal and Arthur Anderson’s Behaviour................................6
Audit Quality and Needed Steps to be taken by the Auditors..................................................9
Conclusion.............................................................................................................................. 12
References..............................................................................................................................14

3AUDIT, ASSURANCE AND COMPLIANCE
Introduction
Key stakeholders of the companies use the reports of the auditors as a major
document or tool for verifying the truthfulness as well as fairness of the disclosed financial
reports (Ojala et al., 2014). In the process of auditing, the key responsibility of the auditors
is to conduct the inspection and analysis of the financial reports of the firms so that any
material misstatements can be spotted in them. It is needed for the auditors to make proper
identification of the material misstatements in the financial reports due to the fact that the
key stakeholders extract the required financial information from them (Farouk & Hassan,
2014). For this reason, this report considers the impact of material misstatements in the
financial statements on the key stakeholders of one ASX Listed company that is BHP Billiton.
After that, this report sheds light on the concepts of auditor independence and
whistleblowing related to the public interest requirements in APES 110. Lastly, this report
considers the important lessons learned from the scandal of Enron in the audit profession
along with the required doings of the auditors to maintain the quality of the total audit
operations.
BHP Billiton’s Stakeholder Analysis related to Material Misstatements
There are certain stakeholders within BHP Billiton who can be majorly affected with
the presence of material misstatements in the financial statements and the effects are
shown in the following discussion:
Investment Community: in BHP Billiton, the investment community includes financial
analysts, Socially Responsible Investment (SRI) analysts who provides advises the existing
and potential shareholders about the performance and corporate governance of the firms
and others (bhp.com, 2019). Thus, they follow the financial statements of BHP Billiton for