Auditing and Assurance

Running head: AUDITING AND ASSURANCE
Auditing and Assurance
Name of the Student
Name of the University
Author’s Note

1AUDITING AND ASSURANCE
Executive Summary
This report aims at analysing different issues in FFA in different aspects of business such as
corporate governance, auditing and others. The first part considers the principles and
recommendations related to ASX. The second part considers the application of AAA model
to solve the ethical issue in the company. The last part addresses the issues like due care,
contributory negligence and duty of care.

2AUDITING AND ASSURANCE
Table of Contents
Introduction................................................................................................................................3
Answer to Question 1.................................................................................................................3
Answer to Question 2.................................................................................................................4
Answer to Question 3.................................................................................................................6
Conclusion..................................................................................................................................8
References..................................................................................................................................9

3AUDITING AND ASSURANCE
Introduction
Auditing is considered as the process of examining as well as inspecting the financial
statements of the companies in order to make sure they are free from material misstatements
and they are prepared as per the needed financial standards and guidelines. It is the obligation
on the auditors to comply with the necessary ethical principles and standards while providing
the professional services (William Jr, Glover & Prawitt, 2016). The obligation is also on the
Board of Directors of the audit clients to establish effective corporate governance mechanism
and it can be done while maintaining the adherence with the ASX Corporate Governance
Principles and Recommendations. In addition, the auditors are needed to consider certain
crucial aspects like due care, contributory negligence and duty of care. The main aim of this
report is the analysis of the provided case of Samway Baker Fitzgerald (SBF) and Faraway
Pastoral Limited (FFA) with the aim to answer the provided questions.
Answer to Question 1
It needs to be mentioned that the presence of eight principles and recommendations
can be seen in ASX Corporate Governance Principles and Recommendation. However,
among all of these eight principles and standards, the second principle has relevance with the
provided situation. As per this principle 2, a listed business organization should have a board
that has appropriate size, structure, skills and commitments for enabling the board members
in discharging their duty in the proper manner (asx.com.au, 2019).
It provides the recommendation that a board must have at least three independent
directors; and for this reason, the companies are needed to provide information on the fact
that which of their directors are independent directors (Xu, How & Verhoeven, 2017). It can
be seen from the provided case that FFA has only disclosed that their board includes three
non-executive directors, but they have not disclosed who the independent directors among
them are. This aspect raised question on the fact that whether there are three independent
directors in the board of FFA or not. In response of this, the management of FFFA needs to
ensure disclosing the name of the independent directors in their board (Kang et al., 2013).
After this, the recommendation of the second principle puts the obligation on the
companies that the chairman of the board should be an independent director. In this aspect, it
needs to be mentioned that independent directors ate those directors that do not have any
monetary or other interest in the company as it can affect the independence of the directors.
However, it can be seen from the provided information of FFA that Kevin Oliver, one of the