Auditing and Assurance Services

This document provides information on auditing and assurance services, including the purpose and nature of external financial audits, relevant legislator/body in Australia, significant auditing standards, code of conduct for auditors, and the concept of common good and stewardship. The document also includes a case study on PwC as an audit firm.

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

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Table of Contents
Answer to Question 1:................................................................................................................2
Answer to Question 2:................................................................................................................2
Answer to Question 3:................................................................................................................3
Answer to Question 4:................................................................................................................4
Answer to Question 5:................................................................................................................5
Answer to Question 6:................................................................................................................5
References:.................................................................................................................................7

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Answer to Question 1:
Purpose of external financial audits:
The external financial audits are conducted with the intent to verify that the yearly
accounts provide a reasonable and genuine image of the accounts of an organisation and that
the utilisation of assets is made according to the items and points illustrated in the
constitution.
Nature of external financial audits:
External financial audits are developed with the intent to form a finite opportunity list
for benefitting an organisation and threats to be avoided (Carson, Fargher and Zhang 2016).
Thus, external audits are not intended to form an exhaustive list of all probable factors that
could affect the business; instead it aims to identify significant variables offering actionable
responses.
Answer to Question 2:
In Australia, the relevant legislator/body that looks after the operations of the audit
firms is “Australian Securities and Investments Commission (ASIC)”. There have been
significant audit regulation activities in Australia since the initiation of improved regulatory
requirements for auditors in July 2004. This body is accountable to administer the needs of
the Corporations Act 2001, since it is associated with auditor independence (Asic.gov.au
2019). With the help of audit oversight activities, ASIC assists in maintaining and increasing
the standard of conduct in the profession of audit. Although these activities seem to be
compliance focus and educational, enforcement action could be undertaken, in which
considerable non-compliance is detected. Along with ASIC, the “Auditor General Act 1997”

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needs the auditor-general in setting auditing standards that need to be complied in accordance
with the functions of the auditor-general.
Answer to Question 3:
One of the most significant auditing standards in Australia is ASA 200, which
emphasises on the objectives of the independent auditors and the audit conduct in compliance
with Australian Auditing Standards. According to this standard, the auditor has to comply
with two overall objectives. Firstly, for obtaining reasonable assurance regarding whether the
financial statements are free from material errors or frauds. This assists the auditors in
providing an opinion on whether the financial statements are developed in all material
aspects, as per the applicable financial reporting framework (Auasb.gov.au 2019). Secondly,
this standard has to report on the financial statements along with communicating as needed
by ASAs in compliance with the findings of the auditors.
Moreover, ASA 200 contains an objective associated with situations, in which
reasonable assurance could not be obtained. Based on such situations, the auditor might
qualify the audit opinion or withdraw from the assignment or disclaim am opinion. According
to AUASB, these objectives clearly reflect the responsibilities of the auditors. The other
clarified ASAs support the accomplishment of these objectives. Moreover, this standard lays
stress on five different requirements, which include the following:
 Ethical requirements related to independence, audit engagements and quality control
measures (Kilgore, Harrison and Radich 2014)
 Professional scepticism, in which the auditors have to recognise the probability of
certain circumstances that might lead to material misstatements
 Professional judgement, in which the auditors have to exercise the same to plan and
conduct financial statement audits

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 Adequate relevant audit evidence and audit risk
 Conduction of audit in compliance with ASA
Answer to Question 4:
It is necessary for the auditors to follow appropriate code of conduct for carrying out
their audit operations. In Australia, all auditors have to conform to the guidelines mentioned
in “APES 110 Code of Ethics for Professional Accountants”. This code is developed with
the purpose to comply with certain fundamental principles and they are discussed briefly as
follows:
Integrity:
According to this principle, the auditors have to be honest and straightforward in all
business and professional relationships (Apesb.org.au 2019).
Objectivity:
This principle requires the auditors to remain neutral, avoid conflict of interest or
undue influence of others for overriding business or professional judgements.
Professional competence and due care:
The auditors have to maintain skills and professional knowledge at the needed level
for ensuring that an employer or client obtains competent professional services depending on
current developments in practice, techniques and legislation.
Confidentiality:
The auditors need not disclose any business information obtained for providing
assurance services to the third parties without relevant consent from their clients (Carson,
Fargher and Zhang 2016).

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Professional behaviour:
The auditors have to adhere to the particular laws and regulations along with avoiding
any action having the chance of discrediting the profession (Kilgore, \Harrison and Radich
2014).
Answer to Question 5:
Common good is the overall social conditions allowing people either as groups or
individuals in reaching their fulfilment more easily and fully. The organisations exist only to
provide the greatest possible returns to their shareholders (Knechel and Salterio 2016). Since
the organisations concentrate more on corporate sustainability efforts and social
responsibility in realisation of a de facto social contract with public, there is chance of
expansion of business models to incorporate additional work for promoting social good in
their daily operations and strategies.
Stewardship could be explained as an ethics embodying the responsible planning and
resource management. The stewardship concept is applicable to various aspects. In the
current era, it is recognised in the form of acceptance or allocation of responsibility for
safeguarding the valuables of others from the social perspective (Sarwoko and Agoes 2014).
Answer to Question 6:
For this section, PwC is selected as the audit firm, which believes that greater quality
corporate responsibility standards are a crucial component of business strategy. The
organisation follows code of business conduct, provides high quality services, promote
environmental protection along with involving in the communities (PwC 2019). In Australia,
PwC has contributed to invest in 15 million people of backward classes in Australia along
with social and micro-enterprises for maximising their potential by 2022. In addition, the

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organisation has driven its efficacy in minimising absolute carbon impact by offsetting air
travel emissions from 2019 along with sourcing 100% renewable for electricity consumption.

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References:
Apesb.org.au., 2019. [online] Available at:
https://www.apesb.org.au/uploads/standards/apesb_standards/standard1.pdf [Accessed 26
Mar. 2019].
Asic.gov.au., 2019. Auditors | ASIC - Australian Securities and Investments Commission .
[online] Available at: https://asic.gov.au/regulatory-resources/financial-reporting-and-audit/
auditors/ [Accessed 26 Mar. 2019].
Auasb.gov.au., 2019. [online] Available at:
https://www.auasb.gov.au/admin/file/content102/c3/ED_ASA_200_15-08.pdf [Accessed 26
Mar. 2019].
Carson, E., Fargher, N. and Zhang, Y., 2016. Trends in auditor reporting in Australia: a
synthesis and opportunities for research. Australian Accounting Review, 26(3), pp.226-242.
Kilgore, A., Harrison, G. and Radich, R., 2014. Audit quality: what’s important to users of
audit services. Managerial Auditing Journal, 29(9), pp.776-799.
Knechel, W.R. and Salterio, S.E., 2016. Auditing: Assurance and risk. Routledge.
PwC., 2019. Corporate social responsibility. [online] Available at:
https://www.pwc.ru/en/about/corporate-responsibility.html [Accessed 27 Mar. 2019].
Sarwoko, I. and Agoes, S., 2014. An empirical analysis of auditor's industry specialization,
auditor's independence and audit procedures on audit quality: evidence from
indonesia. Procedia-Social and Behavioral Sciences, 164, pp.271-281.