Corporate Collapse: AWA and HIH Analysis

Corporate Collapse 1
AMA and HIH Corporate Collapse
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Executive Summary
Actually, the major objective of this paper is analysing the corporate failure of AWA and
HIH organizations which has resulted to significant effect to the Australian corporate and its
financial history. The AWA case was thus decided by the NSW supreme considering the
proceeding enacted by AWA in contrast to its auditors, Deloitte Haskins, alongside the sells
(DHS) so that they could cater for damages considering a breach of contract and due
negligence (Fakhfakh, 2015). In the long run DHS were found guilty thus they paid for the
damages and their negligence. Thus the final decisions were reinstated and the final decision
upheld. On the other hand, HIH corporate failure was due to royal commission carried out in
2002 by the justice Neville Owen. There were reports based on the matters that contributed to
failure of the HIH, incorporating a vast overview of the auditor’s responsibilities, Arthur
Andersen (Wilensky, 2015). The major objective of this paper will specifically focusing on
two corporate collapse cases brought about by audit failure, the auditors involved, how the
audit procedures contributed to the firms collapse, auditor’s independence, professionalism,
and ethical values, improvements that have taken place in the audit standard since then, and
recommendations for inclusion of forensics within the entire audit process.

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Table of Contents
Executive Summary...................................................................................................................2
Introduction................................................................................................................................4
The AWA Case:.....................................................................................................................5
The HIH Royal Commission:.................................................................................................6
Auditors of the company the collapsed......................................................................................7
How Audit procedures contributed to the collapse....................................................................7
Auditor Independence, professional and ethical values in the case...........................................8
Improvements that’s have taken place to the audit standards since then...................................9
Recommendations......................................................................................................................9
Conclusion................................................................................................................................10
Reference..................................................................................................................................11

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Introduction
The analysis of the AWA and the HIH cases is specifically grounded based on the transcripts
of the AWA case hearings and a report presented by the HIH royal commission. Based on the
AWA case, keen review of the peered review from professional witnesses considering the
behaviours and action of auditors has been conducted and utilized as benchmarks and bases
adhered by the standards of the auditor’s progress and their conduct. Therefore core outline
of this paper is as follows:
Section 1: introduction to the AWA and HIH cases
Section 2: the auditor of the firms that failed
Section 3: audit procedures that led to the collapse
Section 4: Auditor Independence, professional and ethical values in the case
Section 5: recommendations
Thus considering the AWA case, it is the leading Australian authority that has problems in
auditor’s negligence. The 1995 appeal and the case are based on the role of the auditors in
assessing fraudulent events of the AWA audit office, Koval, considering the foreign trading
and dealings carried out on behalf of AWA between 1985 and 1987. The DHS negligence of
its conduct for the interim audit and the groundwork of profit assessment statement in 1986
report is said to be deceptive. The primary issue for auditing lingers to be the responsibility
and the role of auditors in sensing and detecting fraud. Moreover, history exhibits that the
formation and improvement of auditing operations, and auditing professionalism, is centred
basically on the need to identify, regulate, and report based on the asset of policy maker and
the individual owner of the assets. Additionally, (Alali and Romero, 2013) opposes that the
assessment of fraud wasn’t the objective of the objective of the audit previously although the