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The Role of Auditing in Corporate Governance in Australia and New Zealand: A Research Synthesis

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Added on  2023/03/17

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This literature review explores the role of auditing in corporate governance in Australia and New Zealand. It focuses on the performance of auditing committees and large corporations in conducting audits and reviews to enhance monitoring and regulation standards. The review discusses the concept of corporate governance, corporate governance in Australia and New Zealand, common themes and findings, different themes and findings, managerial implications, and study limitations and future research directions.

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Running head: MANAGEMENT
The Role of Auditing in Corporate Governance in Australia and New Zealand: A Research
Synthesis: Auditing and Governance in Australia and New Zealand
Name of the student:
Name of the university:
Author note:

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Table of contents
Introduction................................................................................................................................2
Research questions.....................................................................................................................2
Concept of corporate governance...............................................................................................3
Corporate governance in Australia.........................................................................................3
Corporate governance in New Zealand..................................................................................3
Summary of the theory and progression....................................................................................4
Common themes/findings..........................................................................................................5
Different themes/findings...........................................................................................................5
Managerial implication..............................................................................................................6
Study limitations and future research direction proposed..........................................................7
References..................................................................................................................................9
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Introduction
Corporate governance relates to the monitoring of the business activities through
mechanisms, relations and processes. This involves directly the interest of the stakeholders.
Corporate governance has attained new heights in operation in the threshold of Australia and
New Zealand (Hay, Stewart and Botica 2017). This literature review attempts to enhance the
awareness of the readers regarding the role of auditing in the corporate governance. The main
focus is on the performance of the auditing committees and large corporations towards
conducting audits and reviews of the operations for enhancing the standards and quality of
monitoring and regulation.
Research questions
How can audit help to prevent or minimise fraud or error?
Internal audits helps in identifying the mitigating the risks, which can stall the
activities of corporate governance in the threshold of Australia and New Zealand. The aspects
of accurate processing, policies, safeguarding against fraud risks, operational risks and
information system controls suffices the need of minimising the frauds and errors (Chang, A.,
2018).
How or what can be improved to have better auditing?
Planning for the financial statement audits can be constructed well in advance.
Systematic approach in this direction would help the auditors in mitigating the risks within
the stipulated time. Along with this, Du Plessis, Hargovan and Harris (2018), the planning is
also beneficial in terms of organizing and managing the engagements.
How important is auditing in the foundation of a good corporate governance?
Corporate governance plays an important role in financial reporting, which plays an
important role in detecting the misappropriations in the large corporations of Australia and
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New Zealand. Technological support in the internal audit function has largely seemed to be
beneficial for enhancing the organizational effectiveness. Within this, Ganesan et al. (2017)
states that the main focus is on the independent judgment of the auditors and objective
reporting of the drafts.
Is there any significant relationship between corporate governance and auditing?
Internal auditing serves as an integral component of the corporate governance, acting
as watchdog for the operations. Unless and until the internal house auditing is completed, the
personnel of the large corporations in Australia and New Zealand cannot gain an insight into
the effectiveness of the strategies and plans (Hay, Stewart and Botica 2017).
Concept of corporate governance
Corporate governance in Australia
The efforts of the regulators need to be praised for organizing reform programs for
enhancing the standards and quality of corporate governance in Australia. Mention can be
made of the Discussion paper, which was released after the Ramsay report. This was a part of
the Corporate Law Economic Reform program. This was followed by the submission of
report by HIH Royal Commission, leading to the collapse of the HIH Insurance Group Ltd
(Du Plessis, Hargovan and Harris 2018). All of these steps adversely affected the CLERP 9
bill, which was enforced by the Parliament on July 2004.
The first edition of ASX released the Principles of Good Corporate Governance,
enhancing the awareness of the businesspersons regarding the guidelines for executing the
business operations. In case, the companies decide not to follow a particular rule, they had to
provide justification. Upon the revision, ten principles were reduced to eight, which mainly
pertained to simplification of the requirements and flexibility of the disclosure in accordance
to the requirements (Ganesan et al. 2017).

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Corporate governance in New Zealand
New Zealand is an exception in terms of the alterations in the auditing requirements.
The etymological origin of corporate governance can be traced back in 1980’s, but it was not
universal. Mention can be made of 1995, when only 45% of the companies possessed
auditing committees, who were entrusted with the task of in-house functions like detecting
fraud cases. Audits helped in detecting the issues, which needs modification. This
accompanied the monitoring techniques, which acted as an agent in terms of governing the
operations in an efficient and effective manner (Chang 2018).
Summary of the theory and progression
Auditing in the corporate governance is assistance for the companies in terms of
mapping the harms and the benefits, which would be extracted. According to the arguments
of Hay, Stewart and Botica (2017), hypothetical parameter is attached to the true essence of
corporate governance in the workplace. Synthesis of the performance of the auditing
commitees and large corporations have resulted in the formation of mixed results related to
the role of auditing in shaping the corporate governance. Mention can be made of the agency
theory framework, which measures the incentives for the voluntary audit committee
formation. In this, there is no association between the agency cost variables and auditor
incentive variables. As per the arguments of Du Plessis, Hargovan and Harris 2018),
shareholder primacy theory is generated for mapping the social and environmental
consequences of reporting the cases on corporate governance.
On the other hand, Ganesan et al. (2017) is of the view that scientific management
theory is apt in terms of generating sustainable reporting practices towards internal audit
functions. Compared to this, Chang (2018) opines that complying with the standards of New
Zealand legislative requirements is beneficial in terms of enhancing the standards of
corporate governance. Qualitative study on the disclosure of the contents and its analysis,
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through the interviews, helps in synthesizing the ideas and arguments for deducing relevant
conclusions and recommendations. These aspects establish the relation between internal
auditing and the corporate governance, addressing the research question simultaneously.
Common themes/findings
Corporate governance attains commonality in all of the selected articles. In this, an
essential component is that of the auditing, which is done according to the principles.
Synthesizing the collected evidences and the responses results in the formation of essential
facts, which helps in developing sustainable reports for governing the operations. The
interviews, that is, qualitative research is apt in terms of mapping the role of auditing in
conducting the governance activities (Ganesan et al. 2017). The managers execute internal
audit functions for attaining infrastructure development. Viewing it from the other
perspective, these audits are evaluations, which helps in assessing the effectiveness of the
strategies for enhancing the organizational effectiveness in the threshold of Australia and
New Zealand.
Involving the government agencies in the audits is assistance for aligning the business
performance with the standards. In this, analysis of the reports and contents is assistance in
terms of detecting whether the exposed performance is in alignment with the standards and
protocols of the legislative requirements. Systematic review in this direction helps the
personnel of companies and organizations of Australia and New Zealand to evaluate whether
the performance is in accordance to the principles laid down by the Working Ombudsman
(Du Plessis, Hargovan and Harris, 2018). These aspects addresses the research question
pertaining to the ways and means of enhancing the standards and quality of auditing for
exercising corporate governance.
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Different themes/findings
One of the themes presented by the articles is that of the principles of contemporary
corporate governance. Internal audit functions is one of the other themes presented by the
articles. Compliance standards is a related theme with that of the corporate governance.
Mention can also be made of the qualitative study, that is, interviews, which enhances the
awareness about the collective response towards the theme of auditing in the corporate
governance. Reference can be cited of the disclosure of the responses, where incorporation of
the Data Protection Act (1998) and Equality Act (2010) reflects the struggle of the
management towards enhancement of the corporate social responsibilities. Synthesis of the
reports on corporate governance in Australia and New Zealand results in the formation of
ideas regarding the policies, which govern the marketing operations (Hay, Stewart and Botica
2017). Sustainability reporting practices is one of other themes, which represents another
aspect of the corporate governance. In spite of the different themes, the aspects correlate
auditing and corporate governance.
Managerial implication
The managers in charge of the internal audit functions can refer to the articles for
gaining an insight into the latest updates on the accounting principles. Along with this, the
articles act as a secondary source of information for the businessperson in terms of aligning
the businesses according to the standards and protocols of the legislative requirements in the
areas of operations. Referring to these articles would be assistance in terms of developing
positive sustainable reporting practices, adding authenticity into the operations. In this
process, understanding is provided towards aligning the business practices to the standards of
the legislative requirements of the business in the threshold of Australia and New Zealand.
Disclosures on the content analysis through the interviews is assistance in terms of
gaining an insight into the approaches towards corporate governance. Within this, an

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important aspect is Data Protection Act (1998), which helps in preserving the individual
sentiments of the employees. Along with this, referring to the articles is assistance in terms of
the exposing regulation towards controlling the financial transactions in accordance to the
legislative requirements.
Not referring to these articles can act as an obstacle towards governing the operations.
Moreover, it would act assistance in terms of executing the internal audit functions, within
which sustainability reporting practices is an important part. Considering the articles would
be beneficial for the managers in terms of applying the accounts and audits principles for
averting the cases of misinterpretations and errors. These articles act as the secondary source
of information for the managers in terms of developing financial reporting and risk mitigation
strategies.
Study limitations and future research direction
proposed
Theories and frameworks have been applied in the studies, however, there is a lack of
evaluation whether it fits in the current ambience of the workplace. The differentiation in the
theme expands the scope and arena of the thinking skills and judgmental capabilities of the
managers in terms of corporate governance. However, it is a deviant behaviour in this case, as
it relates to the threshold of Australia and New Zealand. This is a limitation, as it does not
include the other countries, where corporate governance is needed for regulating the activities
according to the priorities. Along with this, the articles are apt in terms of enhancing the
awareness about the auditing activities.
If the managers indulge in meeting with the board, it would be beneficial in terms of
deciding on the effectiveness of the strategies in response to the current scenario. Interactive
sessions would be fruitful for clarifying the doubts regarding the practical application of the
skills into actions. Consideration of the technologies would be apt for executing the internal
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audit functions in an efficient and effective manner. However, it needs to be ensured that the
systems are used judiciously. Herein, lays the importance of the role of managers in using
balanced scorecards for measuring and controlling the performance. This tool would be
effective in mapping the arenas, which need modification for upgrading the standards and
quality of the performance to the standards of the benchmark.
Evaluation of the strategies and policies would be effective in terms of altering the
nature of the corporate governance. In this, consideration of the responses of the interviews is
crucial in terms of developing good practices in the operations. Maintaining consistency in
the execution of evaluation would be effective for upgrading the standards and quality of
operations in the corporate governance in accordance to the legislative requirements.
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References
Chang, A., 2018. Analysis on corporate governance compliance standards in New Zealand–a
qualitative study on disclosures using content analysis and interviews. Journal of Financial
Regulation and Compliance, 26(4), pp.505-525.
Du Plessis, J.J., Hargovan, A. and Harris, J., 2018. Principles of contemporary corporate
governance. Cambridge University Press.
Ganesan, Y., Hwa, Y.W., Jaaffar, A.H. and Hashim, F., 2017. Corporate Governance and
Sustainability Reporting Practices: The Moderating Role of Internal Audit Function. Global
Business and Management Research, 9(4s), pp.159-179.
Hay, D., Stewart, J. and Botica Redmayne, N., 2017. The role of auditing in corporate
governance in Australia and New Zealand: a research synthesis. Australian Accounting
Review, 27(4), pp.457-479.
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