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ASA 701 - Report On Collapse Of ABC Learning

12 Pages3277 Words233 Views
   

The University of New Castle Australia

   

Auditing (ASA 701)

   

Added on  2020-02-24

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The study has been conducted on the collapse of ABC Learning Centre. The main aim of this report is to analyze how the Learning center gets collapsed within a shorter time and identify the reasons for the sudden downfall of the company. The report has then helped in understanding how new auditing standards Communicating the Key audit matters have come into place and developed and how the auditing standard would have helped in making the collapse unsuccessful.

ASA 701 - Report On Collapse Of ABC Learning

   

The University of New Castle Australia

   

Auditing (ASA 701)

   Added on 2020-02-24

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1COLLAPSE OF ABC LEARNING CENTRE AND THE INTRODUCTION OF NEW AUDITING STANDARD – ASA 701Student Name: Student ID:
ASA 701 - Report On Collapse Of ABC Learning_1
SYNOPSISEXECUTIVE SUMMARYThrough this study, each and every company will be informed as to how the company getscollapsed within the few years of expansion and the operations. The study has been conducted onthe collapse of ABC Learning Centre. The main aim of this report is to analyze as to how theABC Learning centre gets collapsed within the shorter time and identifying reasons for thesudden downfall of the company. Along with the analysis and the identification, second majoraim is to identify the role of the auditors and the management of the company in bringing thecollapse of the company. The report has then helped in understanding how new auditing standardon Communicating the Key audit matters have come into place and developed and the ways inwhich the auditing standard would have helped in making the collapse as unsuccessful. With thisconsideration, the report has been prepared. 2
ASA 701 - Report On Collapse Of ABC Learning_2
EXECUTIVE SUMMARY................................................................................................................................2INTRODUCTION.............................................................................................................................................4ABC LEARNING CENTRE..............................................................................................................................5BACKGROUND OF COMPANY.............................................................................................................................5REASONS FOR COLLAPSE.................................................................................................................................6Financial Accounting Mess....................................................................................................................................6Failure of the Corporate Governance....................................................................................................................7Auditing Flaw.........................................................................................................................................................8CLEAN REPORT ISSUED............................................................................................................................................8NEW AUDITING STANDARD – ASA 701.......................................................................................................9AUDITNING STANDARD REQUIREMENTS.................................................................................................................9KEY AUDIT MATTERS FOR ABC LEARNING.............................................................................................................10Accounting treatment of the Intangible Assets..........................................................................................10Rapid Expansion..........................................................................................................................................10CONCLUSION................................................................................................................................................10RECOMMENDATION...................................................................................................................................11REFERENCES................................................................................................................................................113
ASA 701 - Report On Collapse Of ABC Learning_3
INTRODUCTIONThe title of the report is the Collapse of ABC Learning Centre and the introduction of newauditing standard ASA 701. The title has itself described the aim of the study. In the years of21st century, many companies have went into liquidation due to the accounting frauds made withthe connivance of the auditor and the management frauds which shows the ineffective workingand functioning of the government. The major of these companies were – Lehman Brothers, HIHInsurance, One Tel Phone Company, Cash Converters and ABC Learning Centre. Thesecollapses have led the global financial crisis across the World. In the report, the discussion willbe limited only to the collapse of the ABC Learning Centre. These collapses has led thegovernment of the country of Australia to take such measures so as to avoid the accounting andmanagement frauds and accordingly in the year of 2015, the government has issued the newauditing standard number 701 on Communicating the Key Audit Matters in the IndependentAuditors Report. This standard has increased the role of the auditors of the company indisclosing all the relevant information about the company like accounting policies, methods andsimilar information. Simultaneously the role of the management of the company has also beenincreased in relation to presenting the actual position to the auditors of the company and thestakeholders. It has also been detailed as to how the collapse would not have happened in casethe new auditing standard has come into place earlier. With this consideration, the report hasbeen prepared with appropriate headings and sub headings. .4
ASA 701 - Report On Collapse Of ABC Learning_4

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