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
It can be seen from the findings of the report that Wesfarmers Limited has certain key
stakeholders like shareholders, suppliers and others who will be affected in the presence of
material misstatements in the financial statements. After that, it is important for the
auditors to consider the aspects like independence and whistleblowing in auditing. At the
same time, the auditors are needed to consider the lessons of Enron collapse for avoiding
this kind of collapse in Australia.

2AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Table of Contents
1. Introduction......................................................................................................................... 3
2. Key Stakeholders Analysis of Wesfarmers............................................................................3
3. Indepdence, Whistleblowing and Public Interest Requirement as per APES 110.................5
3.1 Independence.................................................................................................................5
3.2 Whistleblowing...............................................................................................................5
3.3 Public Interest Requirements of APES 110.....................................................................6
4. Lessons from Enron Collapse and Arthur Anderson.............................................................6
4.1 Lessons from Enron........................................................................................................6
4.2 Lessons from the Behaviour of Arthur Andersen...........................................................9
5. Audit Quality and Steps Auditors Need to Take to Address the Warning.............................9
6. Conclusion.......................................................................................................................... 12
7. References..........................................................................................................................14
8. Appendices......................................................................................................................... 17

3AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
1. Introduction
Auditing is considered as such a profession where the main job responsibility of the
auditors is to perform various substantive and analytical procedures on the financial
statements of the companies with the aim to find any kind of material misstatements in
them (Chen et al. 2013). There are certain responsibilities on the auditors while performing
the audit procedures and one of them is to comply with the public interest requirements
(Knechel and Salterio 2016). The public interest requirement states that the auditors are the
representatives of the public. In Australia, the presence of APES 110 can be seen that
provides the necessary guidelines to the auditors to consider the public interest
requirements (Martinov-Bennie and Mladenovic 2015). The first part of the report discusses
about the impact of material misstatements in the financial statements on the key
stakeholders of Wesfarmers. The next parts discusses about the public interest
requirements of auditor considering the aspects like audit independence and
whistleblowing. The next parts sheds light on the major audit lessons from the Enron
Scandal and the auditor’s behaviour. The last part discusses about the audit strategies need
to be taken to address the warning of Greg Medcraft.
2. Key Stakeholders Analysis of Wesfarmers
The below discussion shows the impact of material misstatements on these key
stakeholders of Wesfarmers:
Shareholders: As per Appendix 1, Wesfarmers considers their shareholders as a key
stakeholder group and the shareholders need up-to-date financial information about the
company to make effective investment decision about the company
(sustainability.wesfarmers.com.au 2019). In this position, the improper identification,