Audit Assurance And Compliance : Impulse Pty Limited
In this given case study on Impulse Pty Limited, it is noted that Impulse is an entertainment system manufacturing company established in the year 2005. King & Queen considers as one of the independent auditing firms for the company Impulse Pty Limited starting from formulating policies (William, Glover and Prawitt 2016). Given the situation on 30th June 2012, it has been argued that Impulse Pty Limited gone through several problems relating to liquidity position as well as stock in hand. At the time of preparing financial statements for the company Impulse Pty Limited, King & Queen fails to take these situation of Impulse into account that leads to an unadjusted scenario noticeable in the financial reports (Stuart 2012). Hence, Easy Finance Limited was one of the finance company who provides financial lending activities to other business. EFL Limited aims at providing large loan to Impulse Pty Limited after reviewing the financial reports. In other words, main thought process of Impulse Pty Limited was to deal as well as recover from its continuous downgrading financial position causing severe trading issues. Therefore, Impulse Pty Limited had been bankrupted for the year 2012 because of implications of major issues relating liquidity position as well as inventory levels whereby EFL suffers hugely from major effects of given event (Simnett, Carson and Vanstraelen 2016).
It depends widely on the role of Independent Auditors for rendering common responsibility for preparing financial reports for actual historical data of the company from the perspective of financial or trading activities (Messier 2016). There are various financial reports that majorly reflect the financial position of the company on specified time because of cash flows as well as operational outcomes. In other words, particular events can be adjusted for a specified time for publishing the future financial reporting time. Therefore, auditor requires rendering important aspects of events prior towards preparing financial reporting in case of bringing material effects on the developmental factor of financial reports in association with company (Louwers et al. 2013). This means auditors require conducting necessary adjustments for disclosing the critical facts on the financial position as well as condition for business within the specified time.
In this particular case study, written clarification is provided about seeking advice from King & Queen by EFL in relation to rendering loans to Impulse Pty Limited (Glover, Prawitt and Messier 2014). It was regarding the legal liabilities that may not be faced by King & Queen whereby independent auditing form gives right information on current financial position of EFL. In case EFL gets ready for providing appropriate amount of loan after viewing the financial reports as reflected by King & Queen. This means getting credible information regarding the original financial standpoint for Impulse Pty Limited by a lending organization (Eilifsen et al. 2013). It means rendering loan after receiving the actual financial details regarding the company named as EFL for viewing at the liability of King & Queen for future consequences activities.
In the given context, there are important guidelines mentioned in the paragraphs 93 to 97 of PCAOB Auditing Standard number 5 (Arens, Elder and Beasley 2012). This is the way where auditing firm such as King & Queen conducts important integrated audit report based on financial statements of Impulse Pty Limited. On the contrary, the internal control is associated by applying auditing approach for maintaining the critical condition. This means rendering specific direction regarding the subsequent events after viewing at the financial reports as well as internal control for business organization. It requires providing correct advice for helping King & Queen after avoiding the liabilities in relation with subsequent events. It means maintaining the guidelines as mentioned in the auditing standards based on given practices as well as approaches at the same time (Arens, Elder and Beasley 2014).
Auditing Independence has tow broad aspects that is discussed for understanding the nature of auditors. It is discussed regarding difference between actual independence as well as perceived independence depending upon appearance. This requires achieving the auditing process goals after looking at the contributing factor. Actual Independence means independent functioning of auditors whereby auditors are influenced directly with freedom of thinking capabilities. In other words, actual dependence refers mainly regarding the independent state of the auditors. Several factors shape the independent approaches of an auditor after dealing a particular situation (Stuart 2012). Therefore, specific freedom made in decision-making process has been viewed at the time where especially the company directors compromise positions of auditors. It leads to difficulty for measuring the mental state as well as attitudes of individuals. This can be highly challenging fact for measuring the objectivity of auditors. It is in regard with emerging important as perceived independence of auditors.
There are certain key regulatory requirements as well as auditing standards in association with auditing process as designed by the Australian Securities and Investment Commission (ASIC) (William, Glover and Prawitt 2016). Several guidelines are mentioned in the areas as mentioned in ASIC as maintained by independent auditors regarding practices.
In the first scenario, Bob has copied as well as utilized given financial information from the books of Club Casino in order to developing his university assignment. In other words, he mainly removed the possible references in relation with Club Casino that has chances of auditing breach that arise, as he did not even inform Club Casino for any practices (Simnett, Carson and Vanstraelen 2016). This means Bob is an Independent auditor who should avail proper consent regarding Club Casino for utilizing the financial information before data application and fulfilling basic educatory requirements.
In the second scenario, it discusses on Wendy involvement to Ace Limited whereby company requires auditor rotation requirements as mentioned in ASIC (Stuart 2012). In accordance with the guidelines, there are enforceable law undertaken by the auditors involved for developing reports concerning major areas of business activities if company is more than 5 successive years.
In the third scenario, it refers to assigning Leo in given auditing process for the company named as Precision Machinery Limited. It has been observed for understanding the nature of appointment meeting the adequacy level as well as effectiveness of nature (Simnett, Carson and Vanstraelen 2016). It relates with quality review programs as well as disciplinary procedures concerning professional accounting bodies.
In the fourth scenario, it refers to the events between Chan & Associates as well as Classic Reproductions Pty Limited. It means the application of registration requirements in the most appropriate way (William, Glover and Prawitt 2016). Therefore, it requires arranging for full settlement activities for the claims relating to auditing fees by an auditing firm named as Chan & Associations. It relates association with Classic Reproductions for not fulfilling the auditing requirements.
Arens, A., Elder, R. and Beasley, M., 2014. Auditing and assurance services-An integrated approach; includes coverage of international standards and global auditing issues, in addition to coverage of the AICPA Clarity Project, PCAOB auditing standards, the Sarbanes-Oxley Act, and Section 404 audits, 15. Aufl., Boston.
Arens, A.A., Elder, R.J. and Beasley, M.S., 2012. Auditing and assurance services: an integrated approach. Prentice Hall.
Eilifsen, A., Messier, W.F., Glover, S.M. and Prawitt, D.F., 2013. Auditing and assurance services. McGraw-Hill.
Glover, S.M., Prawitt, D.F. and Messier, W.F., 2014. Auditing & assurance services: a systematic approach. McGraw-Hill Education.
Louwers, T.J., Ramsay, R.J., Sinason, D.H., Strawser, J.R. and Thibodeau, J.C., 2013. Auditing and assurance services. New York, NY: McGraw-Hill/Irwin.
Messier Jr, W., 2016. Auditing & assurance services: A systematic approach. McGraw-Hill Higher Education.
Simnett, R., Carson, E. and Vanstraelen, A., 2016. International Archival Auditing and Assurance Research: Trends, Methodological Issues and Opportunities. Auditing: A Journal of Practice and Theory.
Stuart, I., 2012. Auditing and assurance services: an applied approach. McGraw-Hill/Irwin.
William Jr, M., Glover, S. and Prawitt, D., 2016. Auditing and Assurance Services: A Systematic Approach. Auditing and Assurance Services: A Systematic Approach.
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