Auditing Procedure Of Dick Smith Electronics

Running head: AUDITING PROCEDURE OF DICK SMITH ELECTRONICS
Auditing Procedure Of Dick Smith Electronics
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AUDITING PROCEDURE OF DICK SMITH ELECTRONICS1
Executive Summary
The aim of the report is to interpret the reasons of the corporate collapse of dick smith
and the lessons that can be learned from the failure of the company. The report gives brief
details of the company and the type of business that the company in which the company is
engaged. The strategic errors of dick smith that become the reason of the failure of the
company has been explained. The accounting policies that has been adopted by the company
to manipulate the financial records of the company are analysed. The report also find out the
governance issues that led to the fall of dick smith. The last part of the report contains the
lessons that other companies can learn from the case dick smith so that these events of
corporate failure does not happened again.

AUDITING PROCEDURE OF DICK SMITH ELECTRONICS2
Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Question 1..................................................................................................................................3
Overview of dick smith electronics ltd......................................................................................3
Question 2..................................................................................................................................3
Question 3..................................................................................................................................9
Question 4................................................................................................................................11
Question 5................................................................................................................................11
Question 6................................................................................................................................11
Conclusion................................................................................................................................12
Reference..................................................................................................................................13

AUDITING PROCEDURE OF DICK SMITH ELECTRONICS3
Introduction
The reason behind the failure of any organisation is due to the absence of a strong
corporate governance policy and the inability of the company to form a transparent
accounting system. Every failed companies has specific reason of failure but the main reason
that is associated with all the companies is their negligence in maintaining a good governance
policy. Dick smith, which is known as one of the largest retail chain in Australia, has
collapsed due to their strategic mistakes and the poor execution of the governance policies.
There are several reasons for the failure of the company among which some major points are
the absence of the accounting policies framed by the AASB code of conduct and the APES
110. The company’s board and management makes several mistakes that lead to the sudden
fall of business. In addition to the non compliance of the accounting standards the company
also failed to sustain as a going concern. The auditors give an unmodified report against the
company which indicates that the company is adopting unfair practices and that lead to the
collapse of the company.
Discussion
Question 1
Overview of dick smith electronics ltd
Dick smith holdings was an Australian retail store that deals in the business of selling
consumer electronic components and electronic project kits. The company was formed in
Sydney in the year 1968 by Dick smith who later sold 60% of the shares to Woolworths in
1980 and hold 40% of the shares and later on 2016 they ceased the operation of the business.
The company was suspended for trading in the Australian stock market by the Australian
securities exchange on sixth of January 2016.