3102AFE Auditing Course: A Report on Auditor Independence Issues

This report addresses auditor independence within the context of a specific case, likely for the 3102AFE Auditing course. It discusses safeguards, both professional and work environment-related, to mitigate threats to auditor independence. The report also analyzes a scenario where an audit firm, MRA LTD, potentially failed to maintain public interest by not fully disclosing financial information and possibly destroying working papers. The ethical dilemma of management misconduct is also identified. The report references APES 110 and other sources to support its analysis of auditor independence, ethical considerations, and the importance of representing a true and fair view of a company's financial statements to protect stakeholders' interests. Desklib provides access to this and similar documents to aid students in their studies.

Running head: AUDITING
Auditing
Name of the Student
Name of the University
Author’s Note

1AUDITING
Table of Contents
Requirement [b].........................................................................................................................2
Requirement [c]..........................................................................................................................3

2AUDITING
Requirement [b]
The safeguard refers to the provision that are taken to prevent the threat or an action
that can eliminate the threat at an acceptable level. The MRA LTD has a possibility of
acquiring safeguard into their work through two broad ways. These are: professional
safeguard that are associated with the legislations, another one is safeguard that are taken into
the work place. This has been referred as the work environmental safeguard (Orth et al.,
2015).
Professional safeguard: This includes the professional knowledge while entering into the
audit profession, professional development, working through following proper corporate
governance supported by the accounting standard, marinating professional standard of
working in to the practical work field through maintaining disciplinary procedure into the
profession, the external review of the company financial report by the legal empowered third
party authority.
The company has a possibility of achieving work environmental safeguard through following
two broad ways. Such as: firm wider safeguard and engagement specific safeguard (APES
110, 2019).
Firm wider safeguard: The Company could achieve firm wider safeguard through following
the company’s policies and principles strictly into their management. This emphasis on the
audit leadership to maintain public interest.
Engagement specific safeguard: The engagement specific safeguard refers to the safeguard
that is associated with the third party review of company report. This could help the company
to achieve the representation of independent audit report and fair value representation of
financial statement. Further, the engagement could be created through appointing
Whistleblower.

3AUDITING
Requirement [c]
Maintaining public interest while representing an audit report has been a primary
objective of an auditor. This has been identified that the MRA LTD has failed in many ways
in maintain the public interest while representing an audit report of their client. As per the
Audit principles the audit report should reflect the true value of the company’s financial
statement, size of the employees and nature and objective of the business. Therefore, this has
been identified that the audit firm did not fully disclosed the financial information of the
PRAN LTD (Anderson& Anderson, 2014). This has in return limited the opportunity for the
stakeholders to identify the true position of the business and of the company, size of the
employees and the objective of the business of their client. Destroying the working paper has
enhanced the possibility of destroying the public interest into the audit work. Limiting the
financial information through not providing a full discloser and generating misstatement has
enhanced the possibility of the misinterpretation of company’s performance and risk for the
stakeholders. The ethical dilemma has been identified as the management misconduct has
been recognized into the audit process by MRA LTD (Anderson& Anderson, 2014).

4AUDITING
Reference
Anderson, M., & Anderson, S. L. (2014, June). GenEth: a general ethical dilemma analyzer.
In Twenty-Eighth AAAI Conference on Artificial Intelligence.
APES 110. (2019). APES 110. Retrieved from https://www.cpaaustralia.com.au/professional-
resources/accounting-professional-and-ethical-standards/apes-110-code-of-ethics-for-
professional-accountants
Orth, R., Scheumann, R., Galeitzke, M., Wolf, K., Kohl, H., & Finkbeiner, M. (2015).
Sustainable corporate development measured by intangible and tangible resources as
well as targeted by safeguard subjects. Procedia Cirp, 26, 630-634.