Auditor’s Public Interest Responsibilities and Audit Quality Name of the University Author's Note

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

1AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Executive Summary
According to tis report’s findings, there is a risk of incorrect investment decision by the key
stakeholders of Orica Limited in the presence of the material misstatements in the financial
statements. In addition, it is required for the auditors to follow the principles of APES 110 to
adhere to the public interest requirements of the profession. The auditors are needed to
take the lessons from the collapse of Enron for avoiding the reoccurrence of these types of
collapse further in Australia.

2AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Table of Contents
1. Introduction......................................................................................................................... 3
2. Impact of Material Misstatements on the Key Stakeholders of Orica Limited.....................3
3. Auditor’s Public Interest Requirements................................................................................5
3.1 Auditor Independence....................................................................................................5
3.2 Audit Whistleblowing.....................................................................................................5
3.3 APES 110 Auditor’s Public Interest Requirements..........................................................6
4. Audit Lessons from Enron Scandal and the Behaviour of Arthur Andersen.........................6
4.1 Lessons from Enron Collapse..........................................................................................6
4.2 Lessons from the Behaviour of Arthur Andersen...........................................................8
5. Quality of Audit and Measures requires to take to address the Warning Note...................9
6. Conclusion.......................................................................................................................... 12
7. References..........................................................................................................................14
8. Appendices......................................................................................................................... 17

3AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
1. Introduction
Auditing is considered as an interesting profession where the auditors are
accountable to identify the material misstatements in the financial statements of their
clients through the application substantive and analytical audit procedures where they
undertake the examination of the financial statements of the companies (Bentley, Omer and
Sharp 2013). Audited financial statements are considered as a major tool to the firms’ key
stakeholders for the purpose of decision making about the resources of the firms (Lennox,
Wu and Zhang 2014). For this reason, the auditors must be responsible as well as
accountable while conducting the audit procedures due to the presence of the obligation to
serve in the best interest of the public (Abernathy et al. 2013). Hence, they need to adhere
to the public responsibility requirements of the profession. There are four parts in this
report. The first part assesses the impact of inefficient identification, disclosure and
adjustments of material misstatements in the financial statements on the key stakeholders.
The next part assesses the public responsibility requirements of the auditors. The next parts
discusses about the main auditing lessons from the collapse of Enron and their auditors. The
last part discusses about the required steps the auditors need to take to avoid the collapses
like Enron.
2. Impact of Material Misstatements on the Key Stakeholders of Orica Limited
There are many instances where the auditors failed in identifying, disclosing and
adjusting the material misstatements in the financial statements and it created certain risks
for the key stakeholders of those companies. The following discussion aims at identifying
the risks that material misstatements can pose to the key stakeholders of Orica Limited: