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Assignment on the Auditing and Assurance Service

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Added on  2020-05-28

Assignment on the Auditing and Assurance Service

   Added on 2020-05-28

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Running head: AUDITING AND ASSURANCE SERVICEAuditing and Assurance ServiceName of the Student:Name of the University:Author Note
Assignment on the Auditing and Assurance Service_1
1AUDITING AND ASSURANCE SERVICETable of ContentsIntroduction..................................................................................................................................3KPMG Audit Plc’s audit of Rolls-Royce Group.............................................................................3Issues that potentially led to the scandal.....................................................................................5Initiatives taken by the regulating bodies.....................................................................................6The particular solution in case of the Rolls-Royce accounting scandal........................................7Conclusion...................................................................................................................................8Appendix 1...................................................................................................................................9References and Bibliography...................................................................................................9Appendix 2.................................................................................................................................10
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2AUDITING AND ASSURANCE SERVICEExecutive SummaryThe frequency of accounting scandals has increased over the years. In spite of theseveral initiatives taken by the accounting bodies the instances of the financial frauds havebeen overwhelming. This particular study aims to focus on a particular example of the financial scandalexecuted by the British giant automaker company, Rolls-Royce and the auditing firm that hasbeen evaluating the organizational financial and non-financial auctions. KPMG has beenresponsible for the evaluation of the financial statements of the company for the past twentyyears. However, looking at the fraudulent operations carried out by the company, FRC haslaunched an investigation in the audit work of the company.This study aims at providing an overview into the relevant causes of major financialscandals and the initiatives or the solutions that have been developed by the regulating bodiesfor mitigating such fraudulent occurrences.
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3AUDITING AND ASSURANCE SERVICEIntroductionThe globally known and publicized series of the financial scandals that had occurred inthe last few years have effectively eroded the public trust in regards to the audit process of thecorporate bodies. The gradually increasing mistrust has led to the public, doubting the role ofthe auditors carrying out such evaluating procedures. This is because the primary duty of apublic auditor lies in acting, in the interest of the public, thus safeguarding the public welfare.The series of auditing scandals that have taken place has led to the public, question the ethicsof the auditor. In fact the trust placed in the accuracy of services provided by the auditors hasalso been hampered. The importance of the ethical considerations in the profession of auditinghas increased over the years mainly due to these frequent financial scandals. The InternationalFederation of Accountants (IFAC) has also developed a professional code of ethics for theauditors. This has been done in order to regulate the ethical considerations involved in theprofession of auditing. In spite of such initiatives taken, the occurrence of the auditing scandalshas not decreased in number (Pearce 2016). This study particularly aims to focus on this particular topic of accounting scandals andthe initiatives taken by the accounting professional bodies like ICAEW, ACCA, ICAS and CIMAand the big four auditing firms like PWC, KPMG, Deloitte and EY for improving the reputation ofthe audit. In order to achieve such an outcome the particular investigation by the FinancialReporting Council (FRC) of the audit proceedings by KPMG of British giant, Rolls Royce hasbeen analyzed. The issues that led to the occurrence of such a particular auditing scandal andthe recommendations for mitigating such financial scandals have also been discussed in thisstudy.KPMG Audit Plc’s audit of Rolls-Royce GroupThe conglomerate Rolls-Royce had already been alleged in the year of 2010, for payinga huge amount of fine (£671 million) to the Serious Fraud Office. The luxury car company didadmit to a number of corruption charges that involved falsifying accounts, interference with theongoing investigations and payments in tens of millions of pounds to win the ownership of thecontracts in Indonesia, Thailand, Russia and China (Arruda de Almeida and Zagaris 2015). KPMG has been the sole firm responsible for carrying out the audits of Rolls-Royce. Theinvestigation by the Financial Reporting Council has been executed in relation to the financial
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