Auditor’s Public Interest Responsibilities and Audit Quality

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
The report shows that the fault of the auditors in properly identifying, disclosing and
adjusting the material misstatements an affect different decision-making process of the
Wesfarmers Limited’s key stakeholders. The audit profession demands the commitment of
the auditors to perform the audit procedures in accordance with the best interest of the
public as they are the representative of the key stakeholders of the companies. In the
presence of all of these compliances with the rules and regulations of auditing, it will be
possible for the Australian auditors to avoid the occurrence of the scandals like Enron in
Australia

2AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Table of Contents
Introduction............................................................................................................................. 3
Key stakeholder analysis and Explanation on How they would be affected with Material
Misstatements......................................................................................................................... 3
Concepts of Independence and “Whistleblowing” and Public Interest Requirements
Mentioned in the APES 110 Code of Ethics for Professional Accountants...............................5
Lessons that the auditors Can Learn from the Enron Scandal and from the Behaviour of
Arthur Andersen.......................................................................................................................6
Audit Quality and What Auditors need to do to address the “Warning” Noted in the
Statement Made by Greg Medcraft.........................................................................................9
Conclusion.............................................................................................................................. 12
References..............................................................................................................................13
Appendices.............................................................................................................................16

3AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Introduction
Over the years, there are many instances all over the world where the large business
organizations faced brutal collapse or unexpected liquidation due to several disputes,
mistakes and errors in accounting and auditing practices; and the collapse of Enron can be
considered as the greatest among all of them (Johnstone, Gramling & Rittenberg, 2013). In
most of the case, the involvement of the auditors can be found in providing the smoothness
to the accounting frauds or manipulations; and this aspect raises question about the public
interest responsibilities of the auditors because they auditors have been favouring the audit
clients’ interest due to the presence of this personal interests (Maroun & Atkins, 2014).
However, one major demand of this particular profession is to comply with the
requirements of audit independence, audit scepticism and audit ethics as these are
necessary tools for the auditors to maintain the dignity of the profession (Cohen & Leventis,
2013). The main aim of this report is to conduct a discussion on the needed aspects of
auditing related to the auditors’ public interest requirements. The topics of the discussion
are audit materiality, independence, whistle blowing, Enron scandal and the warning note of
Greg Medcraft.
Key stakeholder analysis and Explanation on How they would be affected with Material
Misstatements
The following discussion shows the analysis of the key stakeholders of Wesfarmers
Limited that is an ASX listed Australian Retail Company:
Suppliers: The appendix of the report indicates towards the long-term commitments of
Wesfarmers towards their suppliers as they are one major key stakeholder of the firm
(sustainability.wesfarmers.com.au, 2019). The company has adopted several strategies to