An Analysis of Auditor Responsibilities and Audit Quality in the Case of Wesfarmers Limited
VerifiedAdded on 2023/04/24
|18
|4455
|397
AI Summary
The text is a report on auditor’s public interest responsibilities and audit quality, with a focus on Wesfarmers Limited, an Australian retailer. The report analyzes the independence and whistleblowing concepts in accordance with APES 110, which requires auditors to maintain confidentiality of information and not disclose it to third parties without proper approval. The report also discusses lessons that can be learned by auditors from the Enron Scandal and the behavior of Arthur Anderson. The report examines audit quality and steps to be taken by auditors after evaluating G Med craft’s statement. A stakeholder analysis of Wesfarmers Limited is also conducted, with a focus on the impact of material misstatements on each group. The government is one of the stakeholders, and Wesfarmers has liaised with the federal and state government on issues impacting its business operations.
Contribute Materials
Your contribution can guide someone’s learning journey. Share your
documents today.
Running head: AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Auditor’s Public Interest Responsibilities and Audit Quality
Name of the Student:
Name of the University:
Author’s Note:
Course ID:
Auditor’s Public Interest Responsibilities and Audit Quality
Name of the Student:
Name of the University:
Author’s Note:
Course ID:
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
1AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Executive Summary:
Wesfarmers have liaised with the federal and the state government in consideration to several
issues impacting its business operations. Such time and resources required for contributing to
the state and federal government inquiries for participation is important and it is difficult for
the company to respond to all the concerns. The paper focussed on analysing the independence
along with whistleblowing concepts in accordance with APES 110. As per the “APES 110 Section
100.5(d)”, the auditors are needed to sustain the information confidentiality taking place from
business along with professional associations. Lastly, they are required not to disclose this
confidential information to the third parties devoid of attaining power approval and they are
required to abide by necessary guidelines and regulations in order to deal with actions having
the potential of discrediting such profession.
Executive Summary:
Wesfarmers have liaised with the federal and the state government in consideration to several
issues impacting its business operations. Such time and resources required for contributing to
the state and federal government inquiries for participation is important and it is difficult for
the company to respond to all the concerns. The paper focussed on analysing the independence
along with whistleblowing concepts in accordance with APES 110. As per the “APES 110 Section
100.5(d)”, the auditors are needed to sustain the information confidentiality taking place from
business along with professional associations. Lastly, they are required not to disclose this
confidential information to the third parties devoid of attaining power approval and they are
required to abide by necessary guidelines and regulations in order to deal with actions having
the potential of discrediting such profession.
2AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Table of Contents
Introduction:....................................................................................................................................3
Wesfarmers Limited Stakeholder Analysis:.....................................................................................3
Whistleblowing and Independence Based on Auditors..................................................................5
Lessons to be learnt by Auditors from Enron Scandal and from Arthur Anfderson Behaviour......7
Quality of Audit and Steps followed by Auditors in Dealing with Greg Med crafts warning........10
Conclusion:....................................................................................................................................13
References:....................................................................................................................................15
Table of Contents
Introduction:....................................................................................................................................3
Wesfarmers Limited Stakeholder Analysis:.....................................................................................3
Whistleblowing and Independence Based on Auditors..................................................................5
Lessons to be learnt by Auditors from Enron Scandal and from Arthur Anfderson Behaviour......7
Quality of Audit and Steps followed by Auditors in Dealing with Greg Med crafts warning........10
Conclusion:....................................................................................................................................13
References:....................................................................................................................................15
3AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Introduction:
In case there sub-standard’s audits performance along with adequate assurance might
not be reliably determined, the major stakeholders are prone to certain consequential
uncetainities and they also encompass auditors. The current report is focussed on carrying out
stakeholder evaluation of an ASX listed company. Considering same, Wesfarmers Limited is
taken into account that is positioned as a renowned Australian retailer with a workforce of
217,000 employees (Wesfarmers.com.au. 2018). Relied on stakeholder analysis, the effect on
each group might be analysed in case the material misstatements re not disclosed or identified
in a better manner. The second part of the paper will focus on analysing the independence
along with whistleblowing concepts in accordance with APES 110. The third part will focus on
the lessons that can be learned by the auditors from analysing the case of Enron Scandal along
with evaluating behaviour of Arthur Anderson. Finally, the report will also focus on researching
audit quality along with steps to be considered by the auditor after evaluating G Med craft
statement.
Wesfarmers Limited Stakeholder Analysis:
The following group of stakeholders are attained by Wesfarmers Limited along with
carrying out detailed evaluation associate with the material misstatement:
Government- In the year 2018, Wesfarmers have liaised with the federal and the state
government in consideration to several issues impacting its business operations. Such
time and resources required for contributing to the state and federal government
Introduction:
In case there sub-standard’s audits performance along with adequate assurance might
not be reliably determined, the major stakeholders are prone to certain consequential
uncetainities and they also encompass auditors. The current report is focussed on carrying out
stakeholder evaluation of an ASX listed company. Considering same, Wesfarmers Limited is
taken into account that is positioned as a renowned Australian retailer with a workforce of
217,000 employees (Wesfarmers.com.au. 2018). Relied on stakeholder analysis, the effect on
each group might be analysed in case the material misstatements re not disclosed or identified
in a better manner. The second part of the paper will focus on analysing the independence
along with whistleblowing concepts in accordance with APES 110. The third part will focus on
the lessons that can be learned by the auditors from analysing the case of Enron Scandal along
with evaluating behaviour of Arthur Anderson. Finally, the report will also focus on researching
audit quality along with steps to be considered by the auditor after evaluating G Med craft
statement.
Wesfarmers Limited Stakeholder Analysis:
The following group of stakeholders are attained by Wesfarmers Limited along with
carrying out detailed evaluation associate with the material misstatement:
Government- In the year 2018, Wesfarmers have liaised with the federal and the state
government in consideration to several issues impacting its business operations. Such
time and resources required for contributing to the state and federal government
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
4AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
inquiries for participation is important and it is difficult for the company to respond to
all the concerns (ABC News. 2017). In case there is existence of material misstatements
within the Wesfarmer Limited’s financial reports, the calculation of the tax expense
might be suitable and thus can lead to a considerable concern for the government.
Suppliers- the Company is focussed on long term results that offers benefits to the
shareholders along with suppliers along with realising their brand negotiations those are
aspects of acceptable along with normal business practices as well as resulting in
innovation, competiveness, efficiency along with sustainability of all the parties. The
Wesfarmers division maintaining close relationship with the working of the suppliers
and it also maintains ethical sourcing review along with audit systems for high risk
suppliers. In case the companies deal with any financial loss or unsuitable conditions
impacting the Australian retail sector, it might impact the capability of dealing with due
obligation (Alleyne, Haniffa and Hudaib 2016). For this reason, the effect might be on
the material misstatement risk such as categorization of the long-term liabilities or
valuation related with the non-current assets that might be an increased concern for the
suppliers.
Shareholders- Wesfarmers Limited is involved with the retail stakeholders in its yearly
general meeting and it also responds to the correspondence that is ad-hoc. The share
register of the company is maintained by the investors of the computer share Private
limited (Merkel 2017). The company maintains several investor briefings in each year
associated with full-year along with half-year outcomes. The major interests related
with the company’s shareholders encompass competitiveness of the industry within
inquiries for participation is important and it is difficult for the company to respond to
all the concerns (ABC News. 2017). In case there is existence of material misstatements
within the Wesfarmer Limited’s financial reports, the calculation of the tax expense
might be suitable and thus can lead to a considerable concern for the government.
Suppliers- the Company is focussed on long term results that offers benefits to the
shareholders along with suppliers along with realising their brand negotiations those are
aspects of acceptable along with normal business practices as well as resulting in
innovation, competiveness, efficiency along with sustainability of all the parties. The
Wesfarmers division maintaining close relationship with the working of the suppliers
and it also maintains ethical sourcing review along with audit systems for high risk
suppliers. In case the companies deal with any financial loss or unsuitable conditions
impacting the Australian retail sector, it might impact the capability of dealing with due
obligation (Alleyne, Haniffa and Hudaib 2016). For this reason, the effect might be on
the material misstatement risk such as categorization of the long-term liabilities or
valuation related with the non-current assets that might be an increased concern for the
suppliers.
Shareholders- Wesfarmers Limited is involved with the retail stakeholders in its yearly
general meeting and it also responds to the correspondence that is ad-hoc. The share
register of the company is maintained by the investors of the computer share Private
limited (Merkel 2017). The company maintains several investor briefings in each year
associated with full-year along with half-year outcomes. The major interests related
with the company’s shareholders encompass competitiveness of the industry within
5AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
which it has its business operation, Coles demerger, portfolio opportunities such as
acquisitions and investments, approach of capital allocation along with its outlook. In
case the material misstatements are not recognised within the financial reports, the
shareholders can take improper investment decisions those can decrease their overall
investment returns (Ball, Tyler and Wells 2015).
Employees and Consumers- Wesfarmers communicate with its consumers through
personalised mails, websites, in person, through letters and phone calls. Their feedback
is considered on all the working days and based on the same responses are offered. In
addition, the company has more than 217,000 employees and they participate within
the business decisions through carrying out employee surveys, emails, and personal
contact along with the process of whistleblowing. In case overstatement of financial
report is observed, it can impact the process of decision making of the employees and
the consumers of Wesfarmers (Chaplin 2017).
Whistleblowing and Independence Based on Auditors
Auditor independence indicates the external auditors’ independence and it is
characterised by the integrity within audit procedure along with objective approach. Such
concept requires the auditors to carry their work in an effective manner and in objective way.
The whistleblowing along with auditor independence concepts are considerable attributes of
the profession along with inevitable aspects of accounting ethics that governs the accounting
profession (Apesb.org.au. 2018).
which it has its business operation, Coles demerger, portfolio opportunities such as
acquisitions and investments, approach of capital allocation along with its outlook. In
case the material misstatements are not recognised within the financial reports, the
shareholders can take improper investment decisions those can decrease their overall
investment returns (Ball, Tyler and Wells 2015).
Employees and Consumers- Wesfarmers communicate with its consumers through
personalised mails, websites, in person, through letters and phone calls. Their feedback
is considered on all the working days and based on the same responses are offered. In
addition, the company has more than 217,000 employees and they participate within
the business decisions through carrying out employee surveys, emails, and personal
contact along with the process of whistleblowing. In case overstatement of financial
report is observed, it can impact the process of decision making of the employees and
the consumers of Wesfarmers (Chaplin 2017).
Whistleblowing and Independence Based on Auditors
Auditor independence indicates the external auditors’ independence and it is
characterised by the integrity within audit procedure along with objective approach. Such
concept requires the auditors to carry their work in an effective manner and in objective way.
The whistleblowing along with auditor independence concepts are considerable attributes of
the profession along with inevitable aspects of accounting ethics that governs the accounting
profession (Apesb.org.au. 2018).
6AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Considering the concept of auditor independence it can be recognised that an auditor
might indicate misstatements along with breaches within the financial statements at the
discovery time. For this reason, this important feature of professional along with ethical audit
commitment is indicated as independence commitment. There might be direct along with
positive effect of the independence commitment on the whistleblowing intentions along with
external auditors. Considering same, Hosseini and Mahesh (2016) explained that
whistleblowing can be considered as policies that facilitate the staff in reporting certain
unethical violations in case they reveal the same within companies. A whistle-blower is
considered to be an individual explaining any activity or information that is deemed to be
incorrect, unethical or illegal within a public and private company. This facilitates in increasing
loyalty along with developing a commitment sense within the company along with the job
description.
The “Accounting Professional and Ethical Standards Board (APESB)” has offered the
“APES 110 Code of Ethics for Professional Accountants” document. Based on the “APES 110
Section 210.111”, the accounting auditor that is nominated is required to attain necessary
permission from the consumer for communicating with previous auditor. In case the permission
is denied by the consumers, the nomination must be generally declined (Ma’Ayan and Carmeli
2016). In a situation, the consumer attains attain permission, the auditor which is nominated
can ask the last auditors in writing for all the needed information so that the decision based on
nomination can be taken. It has been introduced in order to safeguard the whistle-blowers
working under the government along with reporting misconduct associated with the agency.
This has facilitated in making sure of the freedom of speech of the contractors and the workers
Considering the concept of auditor independence it can be recognised that an auditor
might indicate misstatements along with breaches within the financial statements at the
discovery time. For this reason, this important feature of professional along with ethical audit
commitment is indicated as independence commitment. There might be direct along with
positive effect of the independence commitment on the whistleblowing intentions along with
external auditors. Considering same, Hosseini and Mahesh (2016) explained that
whistleblowing can be considered as policies that facilitate the staff in reporting certain
unethical violations in case they reveal the same within companies. A whistle-blower is
considered to be an individual explaining any activity or information that is deemed to be
incorrect, unethical or illegal within a public and private company. This facilitates in increasing
loyalty along with developing a commitment sense within the company along with the job
description.
The “Accounting Professional and Ethical Standards Board (APESB)” has offered the
“APES 110 Code of Ethics for Professional Accountants” document. Based on the “APES 110
Section 210.111”, the accounting auditor that is nominated is required to attain necessary
permission from the consumer for communicating with previous auditor. In case the permission
is denied by the consumers, the nomination must be generally declined (Ma’Ayan and Carmeli
2016). In a situation, the consumer attains attain permission, the auditor which is nominated
can ask the last auditors in writing for all the needed information so that the decision based on
nomination can be taken. It has been introduced in order to safeguard the whistle-blowers
working under the government along with reporting misconduct associated with the agency.
This has facilitated in making sure of the freedom of speech of the contractors and the workers
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
7AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
in certain situations (Gala et al. 2018). The whistle-blowers have the right to fill the complaints
those they perceive to be the considerable breaches evidences of the following in compliance
with “APES 110 Section 100.1”:
Gross fund waste
Law, rule or regulations
Gross mismanagement
Substantial or specific danger to the public health and safety
Authority abuse
Lessons to be learnt by Auditors from Enron Scandal and from Arthur Anfderson Behaviour
The Enron collapse is considered to be one of the major corporate international
collapses. There are numerous causes for the auditors to attain learning from such collapse and
these are explained under briefly:
Enron Scandal Case
It is observed that Enron Company accounts for significant for any efficient capital
market. The auditor within Enron, Anderson indicated its downfalls served as representative of
the overall profession. In addition, the auditor is considered to have unusually culpable over the
Enron that is shedding inclining documents other than the investigators (Bepari and Mollik
2016). Such audit failure took place because of a set of business associations those have been
increased by interest conflicts along with perverse investiture. In addition, the shareholders of a
company employ the auditors those are liable to report to the former. The accounting
in certain situations (Gala et al. 2018). The whistle-blowers have the right to fill the complaints
those they perceive to be the considerable breaches evidences of the following in compliance
with “APES 110 Section 100.1”:
Gross fund waste
Law, rule or regulations
Gross mismanagement
Substantial or specific danger to the public health and safety
Authority abuse
Lessons to be learnt by Auditors from Enron Scandal and from Arthur Anfderson Behaviour
The Enron collapse is considered to be one of the major corporate international
collapses. There are numerous causes for the auditors to attain learning from such collapse and
these are explained under briefly:
Enron Scandal Case
It is observed that Enron Company accounts for significant for any efficient capital
market. The auditor within Enron, Anderson indicated its downfalls served as representative of
the overall profession. In addition, the auditor is considered to have unusually culpable over the
Enron that is shedding inclining documents other than the investigators (Bepari and Mollik
2016). Such audit failure took place because of a set of business associations those have been
increased by interest conflicts along with perverse investiture. In addition, the shareholders of a
company employ the auditors those are liable to report to the former. The accounting
8AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
companies are associated within frequent consulting services selling to the audit clients and
along with that the external auditors are employed within the top management positions or the
internal auditors. For this reason, it turns out to be important for the companies to bring in the
fear of individual audit personnel of losing an audit assignment that is profitable. Other than
such background, the audit quality is deemed to suffer (Lee and Fargher 2017).
In such scenario, the most vital change might be to attain audit responsibilities away
from the private accounting companies and offer it to the government. Conversely, this change
can turn out to be important and in this scenario, the risk might be present with respect to
audit quality. Moreover, it is important for the government agency might manage in dealing ith
the mistakes along with conflicts those are dealt by most of the private companies. Considering
such scenario, it is important to make sure that selection of auditors does not exist in the
control of the organizational leaders. Rather than that, the government agency might employ
the auditors relied on the list offered by the company that can conduct incurring the audit fees.
Conversely, it is important to develop complex statutory regulation related with audit
profession including the disciplinary powers (Onodugo 2015). The auditors have also succeeded
in dealing with the self-regulation fiction by means of professional authority along with peer
review that needs to be dominated. Conversely, a ban requires being included within the
accounting companies offering consulting along with services to the audit consumers. On more
idea is a compulsory rotation over the four years of audit partners for avoiding the auditors to
turn out to be committed to their consumers. The more feasible peer review takes place at the
time companies is considered within the predecessor books. The “Australian Securities and
companies are associated within frequent consulting services selling to the audit clients and
along with that the external auditors are employed within the top management positions or the
internal auditors. For this reason, it turns out to be important for the companies to bring in the
fear of individual audit personnel of losing an audit assignment that is profitable. Other than
such background, the audit quality is deemed to suffer (Lee and Fargher 2017).
In such scenario, the most vital change might be to attain audit responsibilities away
from the private accounting companies and offer it to the government. Conversely, this change
can turn out to be important and in this scenario, the risk might be present with respect to
audit quality. Moreover, it is important for the government agency might manage in dealing ith
the mistakes along with conflicts those are dealt by most of the private companies. Considering
such scenario, it is important to make sure that selection of auditors does not exist in the
control of the organizational leaders. Rather than that, the government agency might employ
the auditors relied on the list offered by the company that can conduct incurring the audit fees.
Conversely, it is important to develop complex statutory regulation related with audit
profession including the disciplinary powers (Onodugo 2015). The auditors have also succeeded
in dealing with the self-regulation fiction by means of professional authority along with peer
review that needs to be dominated. Conversely, a ban requires being included within the
accounting companies offering consulting along with services to the audit consumers. On more
idea is a compulsory rotation over the four years of audit partners for avoiding the auditors to
turn out to be committed to their consumers. The more feasible peer review takes place at the
time companies is considered within the predecessor books. The “Australian Securities and
9AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Investments Commission” must be banned as the practice of these companies to appoint
internal auditors along with managers from the external audit companies.
Finding Effective Standards
One of the major issues that must be considered by the auditors from analysing the
Enron Scandal serves as the concern associated with the accounting standards. The behaviour
of the companies have made sure that in certain areas, particularly the treatment of dodges
within the balance sheet, the accounting standards of US those are increasingly negligent and
they are highly prescriptive leading to sight loss of the broader principles. The prior attempts
which the Financial Accounting Standards Board was used in enhancing the standards that has
resulted to vociferous lobbying. This increases the requirement for regulatory authority to use
certain meticulous standards through making sure of effective principles rather than highly
detailed rules and it might result in abiding by the internationally agreed standards.
It has been revealed by the Fiasco of Enron that there is lack of efficient governance
within large multinational companies. Over the years, all types of checks and balances is
developed in order to make sure that the leaders of the companies acting as shareholders
agents are actually conducting the same. Conversely, the Chief Executives attain the power to
set these checks along with holding highest stock options as possible. For this reason, there is
an increased requirement of realigning the system in order to function more within the
function more within the shareholders interests. The company require non-executive directors
makes sure that suitable payment though devoting vital attention within the job, independent
remuneration along with audit committees and associate internal auditors as well as job
segregation of the chairperson and chief executive (Caratti, Pinto, Scully and Perrin 2018). For
Investments Commission” must be banned as the practice of these companies to appoint
internal auditors along with managers from the external audit companies.
Finding Effective Standards
One of the major issues that must be considered by the auditors from analysing the
Enron Scandal serves as the concern associated with the accounting standards. The behaviour
of the companies have made sure that in certain areas, particularly the treatment of dodges
within the balance sheet, the accounting standards of US those are increasingly negligent and
they are highly prescriptive leading to sight loss of the broader principles. The prior attempts
which the Financial Accounting Standards Board was used in enhancing the standards that has
resulted to vociferous lobbying. This increases the requirement for regulatory authority to use
certain meticulous standards through making sure of effective principles rather than highly
detailed rules and it might result in abiding by the internationally agreed standards.
It has been revealed by the Fiasco of Enron that there is lack of efficient governance
within large multinational companies. Over the years, all types of checks and balances is
developed in order to make sure that the leaders of the companies acting as shareholders
agents are actually conducting the same. Conversely, the Chief Executives attain the power to
set these checks along with holding highest stock options as possible. For this reason, there is
an increased requirement of realigning the system in order to function more within the
function more within the shareholders interests. The company require non-executive directors
makes sure that suitable payment though devoting vital attention within the job, independent
remuneration along with audit committees and associate internal auditors as well as job
segregation of the chairperson and chief executive (Caratti, Pinto, Scully and Perrin 2018). For
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
10AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
this reason, the auditors along with the companies require offering better audit and governance
in carrying out effective business operations.
Arthur Andersen Behaviour:
Enron is the second largest accounting company in which Arthur Anderson and it carries
out audit operations within the company, the individual is responsible to make sure of the
company’s financial statements accuracy along with internal bookkeeping. The investors
employed such reports of Anderson for undertaking certain investment decisions as they
perceived that such reports were accurate and devoid of any interest conflicts. Conversely,
there exist an interest conflict, Andersen was an effective business partner of Enron and few of
its executives came under Enron’s employment. However, the individual asked Enron to ensure
their partnerships prior to verification of the financial statements later. Moreover, in March
2002, Andersen was held guilty of the gradually exploiting the company’s audit documents. This
indicates that the auditor did not professionally and ethically act as it has attained millions in
the form of consulting and audit fees.
Quality of Audit and Steps followed by Auditors in Dealing with Greg Med crafts warning
In a situation there is no internationally considered definition of audit quality, quality
external audit service might be taken into account a consideration to audit having a better
professional sceptism degree conducted in compliance with the important standards. Certain
other important elements might encompass insight of nature, sector knowledge along with
valuable insights degree along with observations taking place from audit ability or process in
order to coordinate services suitable from various international locations (Albeksh 2016). Greg
this reason, the auditors along with the companies require offering better audit and governance
in carrying out effective business operations.
Arthur Andersen Behaviour:
Enron is the second largest accounting company in which Arthur Anderson and it carries
out audit operations within the company, the individual is responsible to make sure of the
company’s financial statements accuracy along with internal bookkeeping. The investors
employed such reports of Anderson for undertaking certain investment decisions as they
perceived that such reports were accurate and devoid of any interest conflicts. Conversely,
there exist an interest conflict, Andersen was an effective business partner of Enron and few of
its executives came under Enron’s employment. However, the individual asked Enron to ensure
their partnerships prior to verification of the financial statements later. Moreover, in March
2002, Andersen was held guilty of the gradually exploiting the company’s audit documents. This
indicates that the auditor did not professionally and ethically act as it has attained millions in
the form of consulting and audit fees.
Quality of Audit and Steps followed by Auditors in Dealing with Greg Med crafts warning
In a situation there is no internationally considered definition of audit quality, quality
external audit service might be taken into account a consideration to audit having a better
professional sceptism degree conducted in compliance with the important standards. Certain
other important elements might encompass insight of nature, sector knowledge along with
valuable insights degree along with observations taking place from audit ability or process in
order to coordinate services suitable from various international locations (Albeksh 2016). Greg
11AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Med craft indicated that there are chances where Australia can face incidents such as of Enron
unless the four large accounting companies considerably improve their auditing standards. The
person has also explained that in case corporate accounts are not effectively audited there can
be increased danger warning regarding next financial crisis.
In a scenario, the explained concern is not addressed in an immediate manner there can
be certain incidents related with corporate collapses such as Enron in Australia. For making sure
the same, the auditors are required to conduct their jobs in an effective manner through
attaining assurance that the financial reports are devoid of material misstatements. As
explained within “APES 110 Section 2”, the auditors are required to ensure that the financial
statements offer true and fair analysis of the material aspects. Med craft has focussed on the
fact that the major reason behind such collapse of Enron was the audit failure that took place in
the financial crisis (Albeksh 2017). For this reason, in order to offer suitable financial
information to several stakeholders in the company the auditors are required to be accountable
for carrying out financial statements audit. Within the news article, it has been recognised that
ASIC has gathered major audit samples for 18 months till December 2016 conducted by PwC,
Delloite, Ernt and Young and KMPG. From them 23% did not offer suitable assurance on the
financial statement accuracy or that does not include any material misstatements. This signified
that the auditors are devoid of professional scepticism and they are not able to deal with
challenging conditions. For this reason, it is not a better sign and such situation might get worse
in future.
For example, the Enron collapse in the year 2002 was because of accounting fraud along
with that such decline resulted in downfall of its auditor Arthur Anderson and because of its
Med craft indicated that there are chances where Australia can face incidents such as of Enron
unless the four large accounting companies considerably improve their auditing standards. The
person has also explained that in case corporate accounts are not effectively audited there can
be increased danger warning regarding next financial crisis.
In a scenario, the explained concern is not addressed in an immediate manner there can
be certain incidents related with corporate collapses such as Enron in Australia. For making sure
the same, the auditors are required to conduct their jobs in an effective manner through
attaining assurance that the financial reports are devoid of material misstatements. As
explained within “APES 110 Section 2”, the auditors are required to ensure that the financial
statements offer true and fair analysis of the material aspects. Med craft has focussed on the
fact that the major reason behind such collapse of Enron was the audit failure that took place in
the financial crisis (Albeksh 2017). For this reason, in order to offer suitable financial
information to several stakeholders in the company the auditors are required to be accountable
for carrying out financial statements audit. Within the news article, it has been recognised that
ASIC has gathered major audit samples for 18 months till December 2016 conducted by PwC,
Delloite, Ernt and Young and KMPG. From them 23% did not offer suitable assurance on the
financial statement accuracy or that does not include any material misstatements. This signified
that the auditors are devoid of professional scepticism and they are not able to deal with
challenging conditions. For this reason, it is not a better sign and such situation might get worse
in future.
For example, the Enron collapse in the year 2002 was because of accounting fraud along
with that such decline resulted in downfall of its auditor Arthur Anderson and because of its
12AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
association ith the fraud (Ball and Wells 2015). In Australia, asset value was written by Nine
Entertainment Company and Seven West Media after concerns are increased by ASIC
considering valuations in the 2016 annual reports. As per Medcraft, ASIC has conducted 7000
surveillances along with several investigations above thousands banned in more than 600
companies, imprisoned more than 80 individuals and returned $ 1.3 billion to all investors
within past six years. On the other hand, the individual has handed more than a list of
unfinished busineses to the federal government. Conversely, criminal charges are required to
be indicated on them other than the civil charges (Purwanto, Hanjani and Kusumadewi 2018).
Such recommendations have been offered by both the financial system inquiry and
government. Conversely, criminal charges are required to be impacted on them other than the
civil charges and in order to attain audit quality is important to deal with independence threats
or lower the same by means of safeguards implementation. From Medcrafts statements, it is
clear that to the time the companies include only few individuals possessing the needed
knowledge and experience to carry out duties of audit partners, rotating them cannot make
sure suitable safeguard as explained within “APES 110 Section 290.155”. In situation where the
independent regulator has offered an exemption from the specific rotation within specific
jurisdictions it turns out to be likely for an individual to stay as a major audit partner for over
seven years. Conversely, there is existence of alternative safeguards such as independent
external review.
In addition, “APES 110 Section 100.1” indicates that an auditor is needed to work so that
the best interests of public might be assured. Therefore, member accountability is to fulfil the
needs of an employer, client along with alignment with the code of assurance of the best public
association ith the fraud (Ball and Wells 2015). In Australia, asset value was written by Nine
Entertainment Company and Seven West Media after concerns are increased by ASIC
considering valuations in the 2016 annual reports. As per Medcraft, ASIC has conducted 7000
surveillances along with several investigations above thousands banned in more than 600
companies, imprisoned more than 80 individuals and returned $ 1.3 billion to all investors
within past six years. On the other hand, the individual has handed more than a list of
unfinished busineses to the federal government. Conversely, criminal charges are required to
be indicated on them other than the civil charges (Purwanto, Hanjani and Kusumadewi 2018).
Such recommendations have been offered by both the financial system inquiry and
government. Conversely, criminal charges are required to be impacted on them other than the
civil charges and in order to attain audit quality is important to deal with independence threats
or lower the same by means of safeguards implementation. From Medcrafts statements, it is
clear that to the time the companies include only few individuals possessing the needed
knowledge and experience to carry out duties of audit partners, rotating them cannot make
sure suitable safeguard as explained within “APES 110 Section 290.155”. In situation where the
independent regulator has offered an exemption from the specific rotation within specific
jurisdictions it turns out to be likely for an individual to stay as a major audit partner for over
seven years. Conversely, there is existence of alternative safeguards such as independent
external review.
In addition, “APES 110 Section 100.1” indicates that an auditor is needed to work so that
the best interests of public might be assured. Therefore, member accountability is to fulfil the
needs of an employer, client along with alignment with the code of assurance of the best public
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
13AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
interests (Wilson, McNellis and Latham 2018). In accordance with “APES 110 Section 100.2 (c)”
safeguards are important to be implemented in a way that the threats can be decreased or they
can be decreased to an acceptable margin. More specifically, safeguards are implemented at
the time it is evaluated that the threats are more than desired level in case there is no
compliance conducted with vital auditing principles.
Relied on Medcraft statement, it might be stated that it is likely to deal with another
financial crisis in case the Australian auditors maintain professional competence along with the
due care. In this maintainice, the auditors are required to attain desired skills level and
knowledge which might assist in holding competent associations along with the consumers
along with the audit companies. As per the “APES 110 Section 100.5(d)”, the auditors are
needed to sustain the information confidentiality taking place from business along with
professional associations (Roy and Saha 2018). In addition, the auditors must not disclose such
confidential information to the third parties devoid of suitable approval from the important
party unless important. Lastly, they are required not to disclose this confidential information to
the third parties devoid of attaining power approval and they are required to abide by
necessary guidelines and regulations in order to deal with actions having the potential of
discrediting such profession.
Conclusion:
The paper focussed on analysing the independence along with whistleblowing concepts
in accordance with APES 110. In a situation there is no internationally considered definition of
audit quality, quality external audit service might be taken into account a consideration to audit
interests (Wilson, McNellis and Latham 2018). In accordance with “APES 110 Section 100.2 (c)”
safeguards are important to be implemented in a way that the threats can be decreased or they
can be decreased to an acceptable margin. More specifically, safeguards are implemented at
the time it is evaluated that the threats are more than desired level in case there is no
compliance conducted with vital auditing principles.
Relied on Medcraft statement, it might be stated that it is likely to deal with another
financial crisis in case the Australian auditors maintain professional competence along with the
due care. In this maintainice, the auditors are required to attain desired skills level and
knowledge which might assist in holding competent associations along with the consumers
along with the audit companies. As per the “APES 110 Section 100.5(d)”, the auditors are
needed to sustain the information confidentiality taking place from business along with
professional associations (Roy and Saha 2018). In addition, the auditors must not disclose such
confidential information to the third parties devoid of suitable approval from the important
party unless important. Lastly, they are required not to disclose this confidential information to
the third parties devoid of attaining power approval and they are required to abide by
necessary guidelines and regulations in order to deal with actions having the potential of
discrediting such profession.
Conclusion:
The paper focussed on analysing the independence along with whistleblowing concepts
in accordance with APES 110. In a situation there is no internationally considered definition of
audit quality, quality external audit service might be taken into account a consideration to audit
14AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
having a better professional sceptism degree conducted in compliance with the important
standards. As per the “APES 110 Section 100.5(d)”, the auditors are needed to sustain the
information confidentiality taking place from business along with professional associations.
having a better professional sceptism degree conducted in compliance with the important
standards. As per the “APES 110 Section 100.5(d)”, the auditors are needed to sustain the
information confidentiality taking place from business along with professional associations.
15AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
References:
ABC News., 2017. Poor auditing could be 'canary in the coal mine' for financial crisis: ASIC.
[online] Available at: https://www.abc.net.au/news/2017-11-03/asic-boss-concerned-over-poor-
auditing/9114490 [Accessed 29 Dec. 2018].
Albeksh, H.M.A., 2016. The Crisis of the Ethics of Audit Profession: Collapse of Enron
Company and the Lessons Learned. Open Access Library Journal, 3(11), p.1.
Albeksh,.A., 2017. The Crisis of the Ethics of Audit Profession: Collapse of Enron Company and
the Lessons Learned. Open Access Library Journal, 3(11), p.1.
Alleyne, P., Haniffa, R. and Hudaib, M., 2016. The Construction of a Whistle‐Blowing Protocol
for Audit Organisations: A Four‐Stage Participatory Approach. International Journal of
Auditing, 20(1), pp.72-86.
Apesb.org.au., 2018. [online] Available at:
https://www.apesb.org.au/uploads/standards/apesb_standards/standard1.pdf [Accessed 29 Dec.
2018].
Ball, F., Tyler, J. and Wells, P., 2015. Is audit quality impacted by auditor
relationships?. Journal of Contemporary Accounting & Economics, 11(2), pp.166-181.
Ball, F. and Wells, P., 2015. Is audit quality impacted by auditor relationships?. Journal of
Contemporary Accounting & Economics, 11(2), pp.166-181.
Bepari, M.K. and Mollik, A.T., 2016. Stakeholders’ interest in sustainability assurance process:
An examination of assurance statements reported by Australian companies. Managerial Auditing
Journal, 31(6/7), pp.655-687.
Caratti, S., Pinto, D., Scully, G. and Perrin, B., 2018. An analysis of the Tax Practitioners Board
outsourcing exposure draft. Tax Specialist, 21(3), p.106.
References:
ABC News., 2017. Poor auditing could be 'canary in the coal mine' for financial crisis: ASIC.
[online] Available at: https://www.abc.net.au/news/2017-11-03/asic-boss-concerned-over-poor-
auditing/9114490 [Accessed 29 Dec. 2018].
Albeksh, H.M.A., 2016. The Crisis of the Ethics of Audit Profession: Collapse of Enron
Company and the Lessons Learned. Open Access Library Journal, 3(11), p.1.
Albeksh,.A., 2017. The Crisis of the Ethics of Audit Profession: Collapse of Enron Company and
the Lessons Learned. Open Access Library Journal, 3(11), p.1.
Alleyne, P., Haniffa, R. and Hudaib, M., 2016. The Construction of a Whistle‐Blowing Protocol
for Audit Organisations: A Four‐Stage Participatory Approach. International Journal of
Auditing, 20(1), pp.72-86.
Apesb.org.au., 2018. [online] Available at:
https://www.apesb.org.au/uploads/standards/apesb_standards/standard1.pdf [Accessed 29 Dec.
2018].
Ball, F., Tyler, J. and Wells, P., 2015. Is audit quality impacted by auditor
relationships?. Journal of Contemporary Accounting & Economics, 11(2), pp.166-181.
Ball, F. and Wells, P., 2015. Is audit quality impacted by auditor relationships?. Journal of
Contemporary Accounting & Economics, 11(2), pp.166-181.
Bepari, M.K. and Mollik, A.T., 2016. Stakeholders’ interest in sustainability assurance process:
An examination of assurance statements reported by Australian companies. Managerial Auditing
Journal, 31(6/7), pp.655-687.
Caratti, S., Pinto, D., Scully, G. and Perrin, B., 2018. An analysis of the Tax Practitioners Board
outsourcing exposure draft. Tax Specialist, 21(3), p.106.
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
16AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Chaplin, S., 2017. Accounting Education and the Prerequisite Skills of Accounting Graduates:
Are Accounting Firms’ Moving the Boundaries?. Australian Accounting Review, 27(1), pp.61-
70.
Gala, P.T., Utami, I., Kristanto, A.B. and Hapsari, A.N.S., 2018. AN EXPERIMENTAL STUDY
OF WHISTLE-BLOWING: THE INFLUENCE OF OBEDIENCE PRESSURE AND ETHICAL
DILEMMAS. Asia Pacific Fraud Journal, 3(1), pp.163-173.
Hosseini, S.B. and Mahesh, R., 2016. THE LESSON FROM ENRON CASE. Journal of Current
Research, 8(08), pp.37451-37460.
Hosseini, S.B. and Mahesh, R., 2016. THE LESSON FROM ENRON CASE. Journal of Current
Research, 8(08), pp.37451-37460.
Lee, G. and Fargher, N.L., 2017. The role of the audit committee in their oversight of whistle-
blowing. Auditing: A Journal of Practice & Theory, 37(1), pp.167-189.
Ma’Ayan, Y. and Carmeli, A., 2016. Internal audits as a source of ethical behavior, efficiency,
and effectiveness in work units. Journal of business ethics, 137(2), pp.347-363.
Merkel, K., 2017. The importance of ethics in auditing: fraud and ethical breakdowns.
Onodugo, V.A., 2015. Whistle-Blowing: Inspiring Chartered Accountants. The Nigerian
Accountant, 48(4), pp.28-31.
Purwanto, A., Hanjani, A. and Kusumadewi, R.R., 2018. Factors Influencing the Auditor’s
Intentions to Take Whistleblowing Action. Advanced Science Letters, 24(12), pp.9481-9484.
Roy, M.N. and Saha, S.S., 2018. Statutory Auditors’ Independence in Select Corporate
Accounting Scandals Since 1990: A Comparative Study. In Statutory Auditors’ Independence in
Protecting Stakeholders’ Interest (pp. 121-171). Palgrave Macmillan, Cham.
Chaplin, S., 2017. Accounting Education and the Prerequisite Skills of Accounting Graduates:
Are Accounting Firms’ Moving the Boundaries?. Australian Accounting Review, 27(1), pp.61-
70.
Gala, P.T., Utami, I., Kristanto, A.B. and Hapsari, A.N.S., 2018. AN EXPERIMENTAL STUDY
OF WHISTLE-BLOWING: THE INFLUENCE OF OBEDIENCE PRESSURE AND ETHICAL
DILEMMAS. Asia Pacific Fraud Journal, 3(1), pp.163-173.
Hosseini, S.B. and Mahesh, R., 2016. THE LESSON FROM ENRON CASE. Journal of Current
Research, 8(08), pp.37451-37460.
Hosseini, S.B. and Mahesh, R., 2016. THE LESSON FROM ENRON CASE. Journal of Current
Research, 8(08), pp.37451-37460.
Lee, G. and Fargher, N.L., 2017. The role of the audit committee in their oversight of whistle-
blowing. Auditing: A Journal of Practice & Theory, 37(1), pp.167-189.
Ma’Ayan, Y. and Carmeli, A., 2016. Internal audits as a source of ethical behavior, efficiency,
and effectiveness in work units. Journal of business ethics, 137(2), pp.347-363.
Merkel, K., 2017. The importance of ethics in auditing: fraud and ethical breakdowns.
Onodugo, V.A., 2015. Whistle-Blowing: Inspiring Chartered Accountants. The Nigerian
Accountant, 48(4), pp.28-31.
Purwanto, A., Hanjani, A. and Kusumadewi, R.R., 2018. Factors Influencing the Auditor’s
Intentions to Take Whistleblowing Action. Advanced Science Letters, 24(12), pp.9481-9484.
Roy, M.N. and Saha, S.S., 2018. Statutory Auditors’ Independence in Select Corporate
Accounting Scandals Since 1990: A Comparative Study. In Statutory Auditors’ Independence in
Protecting Stakeholders’ Interest (pp. 121-171). Palgrave Macmillan, Cham.
17AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Wesfarmers.com.au., 2018. [online] Available at: https://www.wesfarmers.com.au/docs/default-
source/reports/wes18-044-2018-annual-report.pdf?sfvrsn=4 [Accessed 29 Dec. 2018].
Wesfarmers.com.au., 2018. Home . [online] Available at: https://www.wesfarmers.com.au/
[Accessed 29 Dec. 2018].
Wilson, A.B., McNellis, C. and Latham, C.K., 2018. Audit firm tenure, auditor familiarity, and
trust: Effect on auditee whistleblowing reporting intentions. International Journal of Auditing.
Wesfarmers.com.au., 2018. [online] Available at: https://www.wesfarmers.com.au/docs/default-
source/reports/wes18-044-2018-annual-report.pdf?sfvrsn=4 [Accessed 29 Dec. 2018].
Wesfarmers.com.au., 2018. Home . [online] Available at: https://www.wesfarmers.com.au/
[Accessed 29 Dec. 2018].
Wilson, A.B., McNellis, C. and Latham, C.K., 2018. Audit firm tenure, auditor familiarity, and
trust: Effect on auditee whistleblowing reporting intentions. International Journal of Auditing.
1 out of 18
Related Documents
Your All-in-One AI-Powered Toolkit for Academic Success.
+13062052269
info@desklib.com
Available 24*7 on WhatsApp / Email
Unlock your academic potential
© 2024 | Zucol Services PVT LTD | All rights reserved.