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Auditing Assignment- Dick Smith Electronics

   

Added on  2020-06-06

9 Pages2545 Words47 Views
AUDITING
Auditing Assignment- Dick Smith Electronics_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK...............................................................................................................................................11. Factors related to the corporate collapse............................................................................12. Factors identified by Auditors............................................................................................4Recommendations..................................................................................................................5CONCLUSION................................................................................................................................6REFERENCES................................................................................................................................7
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INTRODUCTIONAuditing is the main concept which is used in the business to have better transparency inoperations of company. In given scenario, this has been seen that the management of Dick SmithElectronics is using various techniques which led to collapse of business. Auditors of thiscompany did not implement ethical practises which in turn made the business collapsed. Poorpractising of corporate governance practices like lack in transparency in financial reporting andinternal control tools are the main causes because of which collapse of business occurred. TASK 1. Factors related to the corporate collapseCorporate collapse refers to the financial bankruptcy or insolvency of an organisationfollowed by legal statement of termination of existence of company. However, such phenomenonis not an instant one. This is a regular procedure where the signs and symptoms emerge overyears. In many cases, the causes are financial and one can assess the financial variables underfirm’s financial reporting to estimate a corporate collapse. Because, these kind of collapsechange in different manner, various definitions of corporate collapse accrues. However, this isnot an easy task to identify about whether a corporate collapse is imminent or a recovery is easyor possible. There are various tools or factors that are required to be used by the auditors in orderto create transparency (Sikka and Willmott, 2010). It is the responsibility of an auditor who isbound by a code of ethics to have better transparency. Dick smith company's insolvency arisedue to lack of effective governance practices and lower transparency in corporate governanceand internal control system that make the firm to get into collapse. These factors are discussed indetail: Corporate governance: This is the rules and regulations which company is adoptingwhile running their operations effectively. This is the system through which firms are directedand managed. BODs of a company are accountable for governance of their organisations.Shareholders' also play the role of appointing directors and auditors and also assures thatappropriate corporate governance layout is implemented. There are some of the responsibilitieswhich are required to be includes in board. These are:Fixing the firm's strategic aim,1
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