Essay: Auditing Profession In Australia - Opportunities & Challenges.

The report is intended to state on the different types of the opportunities which are related to state on the opportunities and challenges associated to present auditing profession. The main aspects of the discussion have been further seen to be associated to discuss the theories with the recent regulatory attempts to improve the audit quality in Australia. The various types of the discussions of the report have been supported with suitable examples and relevant cases. Some of the different types of the other aspects of the report have been further seen to investigate the pressures on the accountants faced in the working environment and examining the challenge of the accountant’s ability with the ethical standards. The other aspects of the opportunities and challenges have been able to decide on the factor which has identified the pressures which may affect the accountants and determine the potential remedies which can ensure the use of the ethical standards upheld. The report has given emphasis on the research survey drawn in the knowledge and the experience of the Australian based professionals and various types of the wider application of the same. The other aspect of the accountants has been further considered based on the various aspects of the controversies which are considered for depicting of the profile cases such as ABC Learning Centre and HIH. The latter part of the report has further able to suggest on the improvement measures to improve the present situation (CFO. 2015). 

Ethics is defined as an attitude or a particular decision which is determined as right or wrong. It has been further discerned that ethics is seen to be having number of practical applications to the field of the human activity. In the accountancy profession the concept of ethics has been seen to be having many assumptions such as claiming of a false expense. Some of the various types of the other ethical issue may be seen in terms of recording of the overtime and compensation in the audit, when the information provided is seen to be insufficient in nature. The same has been questioned with true and fair view. It has been further discerned that the blind eye to the irregularities has been specific with the tax affairs of the client. Some of the ethical concerns have been observed in the manipulative concerns that the financial accountants do not show it to be true. This has been further seen to make the people aware of the conflicts of the interest in the business dealings.

The various nature of the ethical decision has been seen to emerge from the myriad of the varying nature of the professional accountant. The main concern of the accountants has been discerned in a particular way which may be trivial but lead to severe consequences for the concerned group to testify the scandals. The field of ethics is seen with the possibility of decision of stating right or wrong. The consequences of the action justify this possibility and motivate the action focusing the intentioned behaviour (Icas.com. 2017).

Case study: ABC Learning Centre

Based on the past cases, ABC Developmental Centres was once known as the major publicly listed child care operator globally. The market capitalisation was discerned with $ 4.1 Billion with total company worth of $ 296 million.  The expected decrease of 42% in the profit during the second half of 2007 was further seen to decrease with $ 37.1 million and the lack of ability to service a debt of $ 1.8 billion, which was the main reason for it being defunct. The main reason for the liquidation of the company was seen due to the increasing obligations for the debt services and the inability of the auditors to sign off the accounts. The federal government has been seen to inject $ 22 million to keep the child centre operational until 2008. The demise of the ABC learning centre has been seen to be the main form of the reason which has been seen to be associated to the government subsidies and auditing fraud.  The main concern for the organization has involved a staff cost of 80% to 90% of the operating revenues. ABC learning centre was only able to achieve a total profit of 30% and the huge discrepancy in the report has been seen as the main concern for the company (Crikey 2008). 

Another challenge has been seen in form of the collapse of HIH founded in 1968. The main collapse has been seen with the collapse of $ 8 billion assets and this has been identified to be one of the largest insurance firms. The offsetting of the assets with the insurance claims and debts has been seen as the reason for the failure of the company. Some of the other charges on the company have been seen in terms of the dissemination of the information to be false. On one occasion the company was seen to be charged for misleading statements and failing to discharge the duties and in the best interest of the company (Sirtes, Lo Surdo and White 2016).

Another ethical issue with the accounting fraud has been further seen to be identified in case of Target Corporation. It has been seen to be discerned that Target has been seen to be accounted of performing inflated income by $21 million in the six months to December 31 last year.

The early initiative to address the recent regulatory attempts to improve the audit quality in Australia has been seen to be related “Australian Securities Commission (ASC)”, formed in 1 January 1991 and based on the “ASC Act 1989”. The main reason of ASC has been seen to unify the corporate regulator around Australia by the replacement of the “National Companies” and “Securities Commission” and the “Corporate Affairs offices of the states and territories”. The corporate regulator has been further seen in terms of the “Australian Securities & Investments Commission (ASIC)” from in 1^st July 1998. The act has been further to be responsible for safeguarding of the consumer protection in terms of the deposit taking, superannuation and insurance (Securities, A., 2013).

Case study: HIH

“The Corporations Legislation Amendment (Audit Enhancement) Act 2012” has been seen to work along with “Australian Securities and Investments Commission (ASIC)”. The FRC has been seen to remove the existing auditor with the independence function taken from FRC. The main role of FRC has been seen to provide advice for the report in relation to the quality of the audit conducted with the Australian auditors. “The Australian Auditing and Accounting Public Policy Committee (APPC)” is seen to share the interest of the audit quality. APPC has been seen with the opportunity to assist FRC for discharging of the revise role in relation of the audit value in Australia. Some of the main intentions of the improvement opportunities have been discerned in from of defining of the audit quality, steps which needs to be taken to address the gap in the audit expectation. Some of the other steps have been further taken based on the financial reporting initiatives and move forward with reporting of the role of considering various aspects of companies prospects and risks (Frc.gov.au. 2017).

“Financial Reporting Council (FRC)” is seen to be responsible for performing variety of activities which has been seen to be associated to define the effectiveness of the financial reporting in Australia. Some of the important functions provided by the body have been seen in terms of the various types of the Auditing and accounting standards which has been seen to be conducive in addressing for the private and public sectors, for providing the strategic advice as per the quality of the audit conducted (Frc.gov.au. 2017). FRC has been further seen to monitor the development in auditing standard and concerns associated to international accounting. The statutory considerations under the Part 12 of the “Australian Securities and Investments Commission Act 2001 (the ASIC Act)” have been seen to be the main initiative taken by FRC.

The main initiatives taken by FRC has been seen in term of defining the audit quality, Bridging the audit expectation gap, Financial reporting initiatives and Other developments impacting audit in Australia. ASIC is identified as the key regulator as per the “Corporations Act” with the main responsibility for the investigation, surveillance and enforcement of the various types of the financial reporting standard which has been seen to be directly related to the  “Registered company auditors (RCAs)”. Some of the main enforcement has been directly seen to be related to the independence and audit quality requirements (Aph.gov.au. 2017). The ASIC audit inspection is seen to promote the high quality in maintaining the various types of the high standards associated to address the various types of the financial reporting standard which has seen with the various types ten obligations related to ten audit performed in terms of the investors and the conduction of the surveillances and projects covering the RCAs. The audit inspection has been further seen to be based on promoting the high quality external audits in terms of the various types of the public interest entities in Australia. ASIC issues in terms of the confidential inspection report to deal with the potential challenges has been shown in the in the audit report (APPC 2017).

Case study: Target Corporation

The “International Auditing and Assurance Standards Board (IAASB)” and a “Framework for Audit Quality" has been seen to include the various types of the major factors which has been able to ensure the audit quality along with the considerable amount of the  aspects for maintaining high quality of the standard in the audit report. The various types the key elements in the proposed framework has been seen to include inputs in form of the audit firm's culture and the skills affecting the effectiveness in the audit processes and the procedures followed for quality control. The various types of the outputs has been further seen to be discerned in from of recognising of the issues of the stakeholders which has been seen to be associated to the ability to recognise the stakeholders such as regulators and has the ability to influence others. The interactions is associated to the nature of the quality which has been seen to be considered as per the involvement of the stakeholders such as auditors, management and various types of the other regulators of the audit process. The legislative context has been seen to be based on the various types the factors which has been seen to be conducive to address the different types the factors related to the charges based on the regulators and the governance maintained during the audit procedure. The context of the regulatory and the legislative environment has been maintained with the consideration on the various types of the factors for the audit operatives. The main impact on the operational aspect has been seen to be based on the various types of the consideration made for the corporate governance and financial reporting framework.

The audit expectation has been seen to broadly refer as the difference of the financial statement and the public opinions which has been perceived by the auditors with the responsibilities. The auditor’s responsibilities in terms of the fraud detection has been seen to be considered based on the various types of the depiction which has been able to state on  the audit expectation gap. APPC is further seen to support the various types of the discussions which has been able to state whether the financial report of the company need to consider more forward looking statements. Such initiative has been further seen to be considered as per the various types of the initiatives to include the broad company prospects and risks.  IAASB is considered as another body to discuss on whether the company should be able to report on more forward looking statements to enhance the auditor’s reporting quality. In July 2013, IAASB has released an exposure draft with a view to seek views in terms of the stake holders and enhance the audit report on an international basis.      

In the late 2012, the IAASB has been seen to release an exposure draft seeking the main views from the proposed “International Standard on Auditing (ISA) 720”. There has been some consideration which has been seen to be associated to extent the scope of the exact standard and the auditor's responsibilities.

Regulatory attempts to improve audit quality

It has been further discerned that there has been number of the changes which has been seen to be based on the amendment of the various types of the audit enhancement programs.  The several numbers of the changes of the audit enhancement programs has been seen to be depicted in terms of the “Corporations Legislation Amendment (Audit Enhancement) Act 2012”. This particular act has been further seen to be related to the various number of the factors which ash been seen to be conducive in terms of the various types the reporting made in terms of the Audit quality in Australia.

The main form of the key changes associated to the ASICX audit regulation has been seen to be considered as per the introduction of the audit reports and publication on the annual transparency and the conducting of the Audit procedure in terms of the various types o the initiatives taken by the listed companies. ASIC has asked the firms on improving on the consistency of the execution of the audit and address the improvement based on the ASIC’s publication of the inspection report. The audit deficiency notification has been further seen to be related to report the issues on audit deficiency (Aph.gov.au. 2017).

Conclusion

The study has been able to discern the various nature of the ethical decision has been seen to emerge from the myriad of the varying nature of the professional accountant. The main concern for the accountants has been further discerned in ways which may be trivial but lead to severe consequences for the concerned group to testify the scandals. Based on the past cases, ABC Developmental Centres was once known as the principal publicly listed child care operator in the world. The main challenge for the liquidation of the company was seen due to the increasing obligations for the debt services and the inability of the auditors to sign off the accounts. Another challenge has been seen in form of the collapse of HIH founded in 1968. The main collapse has been seen with the collapse of $ 8 billion assets and this has been identified to be one of the largest insurance firms. The offsetting of the assets with the insurance claims and debts has been seen as the reason for the failure of the company. The early initiative to address the recent regulatory attempts to improve the audit quality in Australia has been seen to be related “Australian Securities Commission (ASC)”, produced in 1 January 1991 and based on the ASC Act 1989. The main purpose of ASC has been seen to unify the corporate regulators around Australia by the replacement of the “National Companies” and “Securities Commission”. “The Corporations Legislation Amendment (Audit Enhancement) Act 2012” has been seen to work along with “Australian Securities and Investments Commission (ASIC)”. The FRC has been seen to remove the existing auditor with the independence function taken from FRC. The main role of FRC has been seen to provide advice for the report in relative to the excellence of the audit conducted with the Australian auditors.

References

Aph.gov.au. (2017). Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014 – Parliament of Australia . [online] Available at: https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Corps_Deregulatory_2014 [Accessed 6 Sep. 2017].

Aph.gov.au. (2017). Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014 – Parliament of Australia . [online] Available at: https://www.aph.gov.au/Parliamentary_Business/Bills_LEGislation/Bills_Search_Results/Result?bId=r5359 [Accessed 6 Sep. 2017].

APPC “Audit Quality in Australia” | Financial Reporting Council. (2017). Frc.gov.au. Retrieved 6 September 2017, from https://www.frc.gov.au/documents/publication/appc-audit-quality-in-australia-2014/

CFO. (2015). How Artificial Intelligence can Boost Audit Quality. [online] Available at: https://ww2.cfo.com/auditing/2015/06/artificial-intelligence-can-boost-audit-quality/ [Accessed 6 Sep. 2017].

Crikey. (2008). ABC learning collapse is a policy failure. [online] Available at: https://www.crikey.com.au/2008/11/07/abc-learning-collapse-is-a-policy-failure/ [Accessed 6 Sep. 2017].

Frc.gov.au. (2017). About the FRC | Financial Reporting Council. [online] Available at: https://www.frc.gov.au/about_the_frc/ [Accessed 6 Sep. 2017].

Frc.gov.au. (2017). APPC “Audit Quality in Australia” | Financial Reporting Council. [online] Available at: https://www.frc.gov.au/documents/publication/appc-audit-quality-in-australia-2014/ [Accessed 6 Sep. 2017].

Icas.com. (2017). [online] Available at: https://www.icas.com/__data/assets/pdf_file/0020/5474/Taking-Ethics-to-Heart-Helliar-Bebbington-ICAS.pdf [Accessed 6 Sep. 2017].

Securities, A., 2013. Investments Commission 2011. Regulatory Guide 246: Conflicted Remuneration.

Sirtes, G., Lo Surdo, A. and White, R., 2016. Corporations law and class actions: Court recognises indirect or market-based causation in shareholder claims. LSJ: Law Society of NSW Journal, (23), p.80.