Roles and Responsibilities of Auditors and Management: A Case Study of Satyam Computer

Running head: AUDITING
Auditing
Name of the Student
Name of the University
Author’s Note

1AUDITING
Table of Contents
Introduction...................................................................................................................... 2
Answer to Question 1.......................................................................................................2
Reason for the Statement.............................................................................................2
Purpose and Audit Report of Satyam Computer..........................................................4
Extent of Compliance with the Audit Purposes.............................................................4
Answer to Question 2.......................................................................................................5
Management’s Role......................................................................................................5
Auditors Role................................................................................................................7
Conclusion....................................................................................................................... 9
References.....................................................................................................................10

2AUDITING
Introduction
The process of Auditing can be described as the process to conduct an
inspection on the financial statements of the business organizations in order to make
sure that they are free from material misstatements. Thus, the main aim of the audit
profession is to know the users of the financial information about the correct financial
position of the business entities through their audit opinion (William Jr, Glover and
Prawitt 2016). Before putting trust on the financial information of the companies, the
users of financial information like investors, lenders, creditors are others consider the
audit report of those companies. Hence, in order to provide an unbiased audit opinion,
the auditors of the companies are required to comply with the required auditing ethical
standards (Leung et al. 2014). This report takes an honest attempt to conduct an
analysis and evaluation on the ethical roles of the auditors as well as the management
of the companies. There are many corporate collapses all over the world caused by the
unethical professional practices of the management and auditors. The collapse of
Satyam Computer in India in the year 2008 can be presented as one of those major
corporate collapsed caused by both the management and auditor’s fault. Thus, for the
report, the case of Satyam Computer is taken into consideration.
Answer to Question 1
Reason for the Statement
The provided article shows the deep concern of Mr. G. Medcraft on the roles and
responsibilities of the auditors while conducting the audit operations (abc.net.au 2018).

3AUDITING
Mr. G. Medcraft is the former chairman of Australian Securities and Exchange
Commission (ASIC). The provided article shows a hint of warning for the accounting
governing committees of Australia from the side of Mr. G. Medcraft on the degrading
roles of the auditors (abc.net.au 2018). He has been found to say that the users of
financial statements can no longer put the trust and faith on the audited financial
information due to the fact that the auditors are performing their roles and
responsibilities as required (abc.net.au 2018). In this context, it needs to be mentioned
that the auditors have the obligation to perform certain roles and responsibilities. The
primary role or function of the auditors is to plan and perform the audit operations in
order to get obtain sufficient evidence on the fact that the financial statements of the
companies are free from material misstatements.
The next responsibility lies in determining the fact that whether there is any fraud
or error responsible for the material misstatements, if any. Most importantly, while
performing the audit operations, the obligation on the auditors is to fully comply with the
ethical standards and principles of audit profession as provided in Accounting
Professional & Ethical Standards Board Limited, APES 110 (apesb.org.au 2018).
However, in the provided article, Mr. G. Medcraft has been spotted by mentioning that
there is a lack of professionalism and professional scepticism from the auditors
(abc.net.au 2018). Thus, his recommendation towards the big four audit firm is to uplift
the audit standard in case they want to avoid any Enron type of case in Australia
(abc.net.au 2018). Thus, based on the above discussion, one fact is clear that the users
of financial information will not be able to put their trust and faith in the financial
information if they auditors fail to perform their roles and responsibilities ethically.