BUACC5935 - Auditing and Assurance Services: Audit Quality Analysis

This report addresses the critical issues surrounding audit quality, emphasizing the challenges faced by auditors and the impact of ethical breaches on financial reporting. It highlights the significance of adhering to a strong ethical framework, referencing the Restructured Code of Ethics. The report explores the role of technology, including artificial intelligence (AI) and robotic process automation (RPA), in enhancing audit processes and improving accuracy. It examines real-world examples, such as the collapse of Lehman Brothers and the ethical breaches of firms like KPMG, to illustrate the consequences of inadequate audit quality. The analysis underscores the importance of data visualization for interpreting market trends and the need for auditors to be well-versed in the technologies used within organizations. The report concludes that audit quality can be significantly improved through technological innovations and a commitment to ethical practices, providing insights for stakeholders and the public.

Auditing and Assurance service

Auditors
The organization needs to maintain audit quality. Auditing is a very complex and challenging
concept which is analyzed by the management and the stakeholders of the organization. Auditors
are generally liable to perform a quality audit process that can provide the organization with the
best financial reports. the data collected with the help of auditing will not only help the
organization to fulfill the function of the financial reporting chain but also will engage the
management team to have adequate experience, knowledgeable and skilled labor who are
completing their work in accordance to the values, ethics, and attitude within the proper time
frame (KMPG, 2019). Auditors are required to work following the laws and regulations by
conducting the audit process and making timely reports using them.
It was observed in the last audit quality inspection that the financial reporting council of the big
force has been marked down in terms of improvement because of which industries are facing
downfalls. It has been observed in the latest results that the FRC facilities are facing multi-
million finance because of the audit failures made by the big 4 firms. The audit regulator tried to
reflect the quality of the audit so that proper accounts can be analyzed by the organization while
taking the decisions (KMPG, 2019).
The auditor is one of the most important entities of an organization because they contribute to
improvise the financial statements of the organization that are helpful in almost every operation
conducted by the company. The quality of the audit reports helps to maintain the financial
stability of the organization. Several guiding standards have been set up by the international
accounting association and the state board for preparing the best audit statements. A high-quality
audit will be very useful in terms of public interest responsibility. Proper code of ethics should
be followed while conducting the audit process so that the best set of data can be provided to the
organization and the stakeholders (Tadros & McIlory, 2019). For instance the collapse of
Lehman Brother was mainly due to the auditor Ernst & Young. The audit quality was inadequate
and thereby the discrepancies were not observed in the financial statements.
KMPG was put to criticism by the regulator as ethical standards were breached in the dealings
with the fashion retailer Ted Braker. A fine of £3m was imposed and penalty of £80,000 was
imposed for poor audit quality.
There is a different type of artificial intelligence systems that can be used with the organization
for analyzing the internal, unstructured sources and identify them to read pluck them and further
restrict them from violating the regulations and rules of international standards. These systems

Auditors
also have to carry out the transaction is the best possible way by recording them properly.
Artificial intelligence can also help to monitor the external sources of data like television, social
media and other video platforms that may help the organization to expand the prospect of the
audit process.
Visualization: the organizations can try to adapt data visualization technologies that are very
simple. These technologies help the organization to graphically represent the data which can be
easily interpreted. Proper analysis of the charts can help the organization to easily determine the
price trends of the market. It is not easy to determine the trends of the market by reading the
actual calculations and figures. The charts and graphs make it's much more interactive and easy
to understand the structure of the company because of the interactive visuals that it provides. The
impact of auditors over the insight of transaction, systems, and trends of the organization is very
interesting (Sikka et. al, 2009).
Advanced technologies of the organization are said to promise the audit quality of the form.
However, it is very important to remember that potential uses of artificial intelligence, data
visualization, and rap techniques are only good for the audit team if they are properly guided.
Analysis of the results is very important for conducting a proper audit process (Sikka, 2009). It
was noted in a speech of the annual meeting of a public company that these powerful tools mail
to the organization to work most efficiently if proper knowledge is being provided to the auditor
about the exercises that are being carried out within the organization.
Robotic process automation: These types of software are used to determine and interpret a
transaction, manipulate the data, set proper standardized regulations and automate other
communication processes. These processes have been implemented in various kinds of tax and
advisory services. This software’s not only helping the organization to record the transactions
properly but also to conduct the audit process in a much more efficient manner (Sikka, 2009).
The implementation of RPA in an organization will be best suited if the reconciliation of
revenue-based transactions and routine tasks are required.
Hence, it can be concluded that audit quality can be enhanced with the help of technology. The
concerns in the past year that has been raised can be easily pacified with the help of
technological innovations.

Auditors
References
KMPG (2019). How Advanced Technologies May Improve Audit Quality. Retrieved from
https://www.forbes.com/sites/insights-kpmg/2019/03/04/how-advanced-technologies-may-
improve-audit-quality/#27b0a2575632
Sikka, P. (2009). Financial crisis and the silence of the auditors. Accounting, Organizations and
Society, 34(6-7), pp. 868-873. DOI: 10.1016/j.aos.2009.01.004
Sikka, P., Filling, S.,Liew, P. (2009). The audit crunch: reforming auditing, Managerial
Auditing Journal, 24(2), pp.135-155. DOI: https://doi.org/10.1108/02686900910924554
Tadros, E and McIlory, T. (2019). ASIC to name and shame big four consulting firms over audit
quality. Retrieved from: https://www.afr.com/politics/federal/asic-to-name-and-shame-big-four-
consulting-firms-over-audit-quality-20190806-p52efr>