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
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1AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Executive Summary:
The report has focused on the analysis of stakeholders of an ASX listed firm, due to which
Metcash Limited has been taken into account. It becomes prominent that Metcash Limited has
various stakeholders and they have different interests in the organisation. If the financial
information of the company is not free from material misstatements, there would not be any
favourable impact on their decision making procedure; instead, they would be misguided to
undertake wrong decisions. In addition to this, the concepts of whistleblowing and
independence are the two concepts acting as barriers to the illicit practices adopted by some
organisations for manipulating their books of accounts. The collapse of Enron is a similar
incident, as it has manipulated its books of accounts by collaborating with the auditor to show
inflated profit margins to the stakeholders. From this collapse, the auditors have to learn a
number of lessons owing to which they should ensure professional competence and due care at
the time of performing their audit obligations.

2AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Table of Contents
Introduction:.................................................................................................................................. 3
1. Stakeholder analysis of Metcash Limited and effect of material misstatements on their
decision making process:...............................................................................................................3
2. Independence and whistleblowing for auditors and their relation with APES 110:...................5
3. Lessons for the auditors from the scandal of Enron:.................................................................6
4. Audit quality and steps to address the warning statement of Greg Medcraft:........................10
Conclusion:.................................................................................................................................. 13
References:.................................................................................................................................. 15

3AUDITOR’S PUBLIC INTEREST RESPONSIBILITIES AND AUDIT QUALITY
Introduction:
During the conduction of substandard audits and absence of adequate ascertainment of
assurance, the important stakeholders are prone to a number of risks and they are evident for
the auditors as well. The paper would focus on the analysis of stakeholders of an ASX listed
firm, due to which Metcash Limited has been taken into account. It is one of the leading
wholesale marketing and distributions organisations in Australia with revenue generation of
$14 billion in 2018 (Metcash.com 2019). The main reason that the stakeholder analysis is
conducted is to find out the effect of material misstatements on each category of stakeholders,
if no proper disclosures are made. The next section would deal with independence and
whistleblowing for the auditors and the association could be identified between these two
aspects and public interest requirements laid down in APES 110. After this, the auditors have to
take certain lessons from the Enron scandal with special emphasis on the work of Arthur
Andersen. Finally, the paper would shed light on audit quality and steps for addressing the
warning statement of Greg Medcraft.
1. Stakeholder analysis of Metcash Limited and effect of material misstatements on their
decision making process:
Metcash Limited has a number of stakeholders and in case, the financial information of
the firm has material misstatements, the impact would be unfavourable on the stakeholders.
The detailed discussion below would help in evaluating the same:
Shareholders and investors: