Discuss about the Auditing & Assurance.
The business risk in the context of HIH has been related to the global, local as well as the environmental attributes and issues. The following parameters have been identified to determine the amount of risk that HIH is facing.
The profitability and the structure – The business risk of HIH would have an adverse influence on the operational strategies as well as the business performance of the entity. The competitive risk in the business entity shall have an impact on the operational policies of the business entity. The risk assessment procedure in the business entity would influence on the operational strategies of the business entity. As such, this shall lead the business entity to reduce the chances of loss, and financial irregularities in the country. Arens et al. (2012) mentioned that the Australian prudential regulatory commission determines the insurance as well as the insurance commission in the country. As such, this shall help the business entity to prepare the financial statements in an authentic and transparent manner.
The auditing assessment procedures shall have an impact, to determine the auditing risks in the business enterprise. The general agreements in the company would influence to determine the operational policies of the business entity. The profitability structure as well as the insurance risks in the business entity shall determine the operational policies of the business entity. Chandler and Edwards (2014) mentioned that there are certain risks in the daily operational policies of the business entity. As such, the inherent financial condition of the business entity has to be effective enough to meet the daily operational policies of the business entity and achieve the long –term goals as well as the objectives of the business enterprise. Evetts (2014) mentioned that the insolvency risk should have to be determined to develop the operational strategies of the business entity. The conceptual risk shall be required to develop the necessary laws and the guidelines that shall help the business entity to achieve the organizational objectives.
The HIH is able to determine the risk relating to unqualified audit based on certain financial statements. Furnham and Gunter (2015) mentioned that the maintenance of the solvency margins is one of the pertinent issues that have a positive impact on the operational strategies of the business entity. About this, if the auditing procedures are not followed as per the required guidelines of the business entity it can lead to inaccurate budget forecasting for the organization. As such, the auditing procedures in the business entity shall be developed to prepare authentic financial statements for the business entity.
Inherent Risk – In this regard, it can be said the inherent risk shall help the business entity to develop the operational procedures of the business enterprise. The inherent risk relates to discrepancies in the financial statements of the business entity. According to Hayes et al. (2014), these risks shall lead the business entity to financial risks for the business entity.
Control risk – The control risks relates to material inaccuracies that has not been detected in the internal control system of the organization. In the case of HIH, the reconciliation of the general ledger as well the bank account has not been performed substantially to meet the needs of the organization. As such, the control risk is an essential market risk that shall have an impact on the financial condition of an entity and would lead to discrepancies. Thus, it is the primary objective of the auditing to physically verify each stock or inventory to prevent any discrepancies in the year-ended annual reports of the business enterprise.
Detection risk – The risk have to be deducted to identify the risks that can pose a threat to the business sustainability of the enterprise. In the audit, there are major risks that can affect the business sustainability of the enterprise. These include incorrect recording of the financial transactions as well as the financial irregularities in the business entity.
It can be said that the auditors must be provided with the necessary data that shall have an influence on the operational policies of the entity. However, the legal liability of the organization is a core part of the operational risk relating to the business entity. Kumar and Sharma (2015) mentioned that HIH must emphasize on the liquidity position of the company, to determine the operational and the financial position of the business entity.
The alterations made in the legislation of the organization shall hamper the impact of the HIH insurance in the organization. The factors that have an impact on the financial resource of the company are less than pricing ability of the legislations as well as improper investment policies. As such, this led to the depletion of the financial resources in the business entity.
The conflicts between the proprietors, managers as well as the debtors of the organization shall have an impact on the operational strategies of the business entity. These issues shall have an impact on the business performance of the entity. As such, the issues in the risk management have been a major contributor towards the ineffective business strategies adopted by the entity.
Non-Executive Director
The non-executive director does not have exclusive powers and rights regarding the implementation of the operational strategies of the enterprise. As such, this would hamper the process of leadership in the organization. HIH has offered a sum of $1.7million for offering auditing services. In addition to this, a sum of $1.631 million was offered for offering non-auditing services to the business entity. Lenz and Sarens (2012) mentioned that the corporate governance of HIH can be held for negligible action. In addition to this, there has been power and lack of authority to the individual concerns of the management. This has been one of the primary attributes, which has led to the inconsistency and irregularities in the preparation of the financial statements of the organization.
The audit report states the financial irregularities that have an impact on the different accounting statements that are prepared on the different financial statements of the organization. Messier Jr, (2016) mentioned that development of informal relationships between the management of the business entity with the external auditors of the company shall have an impact on the quality of the audit services as well as the fees charged for the audit services. It is the primary duty of the management of the business. Following were the issue due to which the management wanted to hire these members for its external audit team
The auditors shall be fair and transparent in discharging their duties without any interference from the management of the company.
It is the primary responsibility of the auditing companies to offer consultancy services regarding the payment of the tax. As such, the management of the company to provide auditing as well as non-auditing services to the clients. Another essential issue in offering auditing services is the conflict of services. The firm, which offers both auditing as well as consultancy services to the same firm, is the saving in operational costs for the business enterprise. Therefore, Chandler and Edwards (2014) mentioned that the regulatory measures in the business entity should enable business entities to prepare the year –ended financial statements as per the required guidelines.
The members in the organization did not offer full information to the external auditors of the organization. As such, the audit process was hampered with false as well as misleading information. The situation of Arthur Anderson detonated after the collapse of Enron. He also played a major part in obstructing justice for the organization. These factors violated the standard of the organization and had a considerable role in the financial irregularities of the organization.
The following recommendations shall address the issues relating to audit governance as well as the financial reports in the organization. The report contains the amendments under CLERP 9 and are stated as follows;
References
Arens, A.A., Elder, R.J. and Beasley, M.S., 2012. Auditing and assurance services: an integrated approach. Prentice Hall
Chandler, R.A. and Edwards, J.R., 2014. Recurring Issues in Auditing (RLE Accounting): Professional Debate 1875-1900. Routledge.
Evetts, J., 2014. The concept of professionalism: Professional work, professional practice and learning. In International Handbook of Research in Professional and Practice-based Learning (pp. 29-56). Springer Netherlands.
Furnham, A. and Gunter, B., 2015. Corporate Assessment (Routledge Revivals): Auditing a Company’s Personality. Routledge.
Hayes, R., Wallage, P. and Gortemaker, H., 2014. Principles of auditing: an introduction to international standards on auditing. Pearson Higher Ed.
Kumar, R. and Sharma, V., 2015. Auditing: Principles and Practice. PHI Learning Pvt. Ltd..
Lenz, R. and Sarens, G., 2012. Reflections on the internal auditing profession: what might have gone wrong?. Managerial Auditing Journal, 27(6), pp.532-549.
Messier Jr, W., 2016. Auditing & assurance services: A systematic approach. McGraw-Hill Higher Education.
Porter, B., Simon, J. and Hatherly, D., 2014. Principles of external auditing. John Wiley & Sons.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download