Audit Quality and Social Consequences of Audit Failure: A Case Study of Carillion Plc

Running Head: Auditing
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Project Report: Auditing

Auditing
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Contents
Introduction.......................................................................................................................3
Company overview...........................................................................................................3
Audit quality and potential factors comprised audit quality.............................................3
Social and economic consequences of audit failure.........................................................5
Going concern and indicators...........................................................................................6
References.........................................................................................................................8

Auditing
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Introduction:
The report has been prepared on Carillion Plc. The company has faced some auditing
issues in 2014-2016. The company had to face various issues due to investment into
numerous risky contracts and the projects. The company has been warned in 2017 for some
issues regarding the profits and financial circumstances. These warnings were just the initial
stage of difficult pitch on which the company had to go through. The report takes the
concern of audit quality of the company, potential factors of the company due to which audit
quality has been comprised, social and economical consequences of the company and the
accounting indicators and concepts of the company.
Company overview:
Carillion plc is a multinational company which has been established in England to
manage and construct facilities and services. Headquarter of the company is in
Wolverhampton. The annual report of the company briefs about the 900 million pounds
pension amount and a pension deficit of 600 million pounds. Internal parties of the company
were supposed to analyze and evaluate the scam of the company but no internal stakeholder
of the company was aware about the scandal (Reuters, 2018). However, the external parties
of the company i.e. investors, creditors and the government were also not in a possession of
evaluating the financial performance of the company as the annual report of the company has
been comprised in such a way that no stakeholder could analyze the issue.
In order for the financial statements to be used as an appropriate means of economic
decision-making, there must be assurance that the financial statements contain the correct
data and not misleading in decision making. It would make the annual report and financial
statement of the company more reliable.
Audit quality and potential factors comprised audit quality:
According to the The guardian (2018) there are various factors which have
impacted on the audit quality of the company. Some of them has been discussed and
evaluated here which explains that how the audit quality of the company has been comprised.
Intimidation during audit is high. This is because in cases of fraud and incompetence, audit
process and quality will unearth this. Potential factors that will influence the audit quality
include the time given to conduct an all inclusive audit report, resources and personnel to