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Auditing & Assurance Assignment

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Added on  2021-06-15

Auditing & Assurance Assignment

   Added on 2021-06-15

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qwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmrtyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzAuditing & Assurance
Auditing & Assurance Assignment_1
Major deficiencies in Audit that led to downfallThere were many ethical issues observed in the profession of an audit that generated from theHIH collapse. Moreover, the ethical issues gave rise to the incident of a downfall. Ethics pertains to the moral values and principles. Ethical dilemmas produce many situations that tend to confuse the auditors. It is important that the auditor should practice in the best interest of the company and the shareholders. In the case of HIH Insurance, five major ethicalprinciples were observed by the Framework for Assurance that is integrity, objectivity, confidentiality, professional behavior and competence (Matthew, 2015). The payment of a huge sum amounting to $5.1 million in terms of audit fees and $2.8 million in terms of non-audit fees from HIH was observed. Further, Andersen earned a sum of $5.097 million conducting the audit of the financial statement and $2.824 million was earned by providing nonaudit service to the HIH Insurance in the three financial years. It needs to be noted that providing such non-audit services unethical in nature because it was against the interest of the shareholders. As the management of HIH declined to increase the audit fee, Arthur Andersen reduced the work performance and this is a clear indication that there was a cozy relationship between the management and the auditor (Westfield, 2003). Further, the close association between Arthur Andersen and HIH lead to the use of a strong accounting policy. Hence, it needs to be noted that the opinion of the auditor Arthur Andersen was false in nature that the statements projected a true and fair view. In short, the financial statements were highly fabricated and influenced (Westfield, 2003). The overall situation denotes that the integrity of the auditor was under immense pressure.The major reason for the collapse was observed from the point of view of audit independence, audit committee and consideration of audit. The independent view of the auditor was missing in the case of HIH as the auditor developed a relationship with the management (Roach, 2009). The provision of non-audit services by Arthur Andersen to HIH can be tagged as the major reason for the collapse. In addition, the auditors failed to ensure that the accounts of HIH that was certified in a manner, provided a true and fair view of the financial position of the company. The auditors were well versed with the aggressive accounting approach undertaken by the management. Further, there were risks when it came to the conduct of audit which the auditors failed to respond with diligence and assessment (Roach, 2010). The collapse of HIH can be attributed to different reasons however, the noteworthy factor was the flawed methods that was taken 2
Auditing & Assurance Assignment_2

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