Audit and Assurance in Australia: A Case Study of Satyam Computers

Running head: AUDIT AND ASSURANCE IN AUSTRALIA
Audit and Assurance in Australia
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1AUDIT AND ASSURANCE IN AUSTRALIA
Table of Contents
Introduction:................................................................................................................ 2
Statement by G Medcraft:...........................................................................................2
Purpose and audit report of Satyam India:..................................................................3
Extent of meeting auditing purposes:..........................................................................4
Evaluation of Satyam Company Management and Auditors ethical behaviour...........4
Background:................................................................................................................4
Commencement of Problems:.....................................................................................5
Flaws in governance and unethical conduct:..............................................................5
A case of Insider Trading:...........................................................................................6
Falsified books of accounts and Fake Accounting:.....................................................7
Negligent board:..........................................................................................................7
Questionable role of Audit committee:........................................................................8
False Audit:................................................................................................................. 8
Conclusion:................................................................................................................. 9
Reference List:..........................................................................................................10

2AUDIT AND ASSURANCE IN AUSTRALIA
Introduction:
Around two eras before corporate governance was comparatively unidentified
topic. The matter originated during the late 80’s and in the initial 90 when the
corporate governance sector in most the nations was bounded by difficulties of
dubious unethical practices. The failure of One Tel, Adelaide Seamanship, and
Satyam exposed the auditing gaps that led to the collapse of these companies.
Several failures gave rise to the reformation procedure and introduction of
public accounting reformation. The objective of this report is to assess the ethical
behaviour of auditors and management. The report will be analysing the collapse of
Satyam and highlight the management and audit failures.
Statement by G Medcraft:
Mr. G. Medcraft is regarded as the former chairman of the Australian
Securities and Exchange Comission and is concerned regarding the roles and
responsibilities of the auditors while performing the work of audit (Hayes, Wallage
and Gortemaker 2014). As evident from the statement of G. Medcraft it warns the
Australian accounting authority regarding the roles and accountabilities of auditors.
The statement made by G. Medcraft highlights his concern associated to auditor’s
dependency and trust on financial information. G. Medcraft stressed on specific
auditors roles and responsibilities.
The primary responsibility of auditor is to carry out the audit plan and
functions to get adequate evidence of financial statement whether those statements
are free from any materiality misstatement (De Paula 2016). On observing any
materiality misstatement, the auditors are required to comply with the ethical
principles surrounding audit to derive unbiased audit opinion. In the article of G.

3AUDIT AND ASSURANCE IN AUSTRALIA
Medcraft, a serious lack of professional conduct and professional scepticism is noted
in the roles and responsibilities of auditors. The statement made by G. Medcraft
expressed his opinion that Australian auditing companies are required to avoid any
major unfolding of auditing scandals such as Enron that tarnishes the audit
profession.
As evident from the above conversation, of late there has been widespread
circumstances where the professional conduct and professional scepticism of
auditors have faced questions (William, Glover and Prawitt 2016). Instances noted
suggest that auditors have failed discharge their responsibilities. With the unfolding
of major audit fraudulent scandals, there is a lack of trust among the community
relating the financial information published by them.
Purpose and audit report of Satyam India:
Audit forms the important element in business firms and Saytam is no
exception to such reports. The audit report forms the opinion of the auditor
associated to financial statements of the organization (Kumar and Sharma 2015).
This requires an organization to follow a certain set of auditing standards and
procedures in the preparation of audit report. In context of Satyam, the primary
purpose of audit report was to provide the users of financial information with the
necessary information regarding the organization financial performance.
There were numerous users of financial report for Satyam that included
investors, auditors, customers, lenders, creditors etc. the users made use of the
financial report for making different forms of decision (Zeff 2016). The audit report
issued by the auditors failed to observe any form of fraud and error and stated that
the Satyam financial statements were free from any materiality misstatements. The