Sustainable Development and Audit - Assurance Compliance

Question: Discuss about the Sustainable Development and Audit, Assurance Compliance. Answer: Introduction: As stated in the case study on the Impulse Pty Limited is particularly an entertainment system producing company that started its operations during 2005. The case study also mentions King Queen as the independent auditing and accounting firm that has been associated to the Impulse Pty Limited since the period of its inception. The analysis of the case study reveals the fact that during the time of 30th June, 2012, the corporation Impulse Pty has encountering severe difficulties related to the liquidity position of the company along with the level of inventory available at hand. In particular, the financial announcements for the company Impulse Pty Limited prepared for the period 30th June during the 2012 also did not incorporate certain vital business affairs that in turn directed the way towards unadjusted financial circumstances reflected by the financial reports. According to the case study, it can be stated that Easy Finance Limited also simply known as EFL is a financing corpor ation that finances diverse business entities. In addition to this, EFL also distributed loans for carrying out operations of the company Impulse Pty Limited after analysing the financial reports of the firm. The main purpose and goal of the corporation Impulse Pty was to counter and to recognize with the issues that directed towards continuous fall of the economic condition of the corporation (Arens et al. 2012). Lastly, Impulse also faced insolvency during December 2012 on account of collective insinuations of numerous problems connected to the liquidity situation in addition to levels of inventory of the association. Accordingly EFL too had to suffer severely because of the adverse influences of the above mentioned events. In accordance with the explicit roles as well as accountabilities of independent auditors, it can be hereby ascertained that the self-governing auditors have the liability to arrange as well as present financial announcements founded on the correct historical data of the business after bearing in mind the firms financial along with trading perspectives (Carson et al. 2013). However, the financial statements of the corporation have the need to reflect the real financial situation of the business entity throughout a specific duration based on the analysis of the cash flows, pecuniary outcomes, and incomes in addition to gains together with losses as well as expenses (Christensen et al. 2014). Nonetheless, in particular cases, specific events otherwise situations might turn up after the definite date of approving as well as declaration of the financial statement of the business. Hence, it is crucial to regulate and integrate diverse impacts of these happenings in the financial assertion s in the future pecuniary declarations that is to be presented by the company. Besides this, the autonomous and self-regulating auditors also need to ascribe importance to essentially the events that occur before the course of preparation plus production of the financial reports. In fact, the process have the need to consider different material influences of diverse events for preparation of economic statements associated to the business (Christensen et al. 2013). Therefore, there is persistent necessity for undertaking obligatory modifications for unveiling several serious actualities concerning the financial trustworthiness of the business organization for a particular duration of time. Consistent with the effectual modifications in the financial accounts carried out for the period September 2002, the occurrences activated by the revelations otherwise non disclosures referred to the consequential events that involved numerous parties (Duncan and Whittington 2014). According to the case study, it can be established that EFL had to accept enormous losses because of insolvency of the company Impulse. Again, it can concluded that the exact loss is typically caused because of the non-disclosure of accurate financial evidence of the corporation Impulse by the accounting firm King Queen of the corporation Impulse Pty Ltd. It can thus be concluded that the activities directed by the firm King Queen was incalculably unethical as per the norms as we ll as codes of auditing. Therefore, it can be said that the auditing firm is liable to the funding corporation EFL for all the losses incurred by disbursement of enormous amount of credits to the corporation Impulse founded on the financial declaration of the corporation (Eilifsen et al. 2013) A thorough evaluation of the case study replicates the fact that the accounting firm King Queen might perhaps not encounter legal burdens based on definite circumstances. However, the self-regulating auditing corporation might perhaps not encounter legal concerns just in case if it provided the accurate information regarding the monetary situation of the corporation Impulse to the auditing firm EFL once EFL inquired regarding written clarification seeking advice from the auditing firm King Queen associated the economic condition of the business concern. Again, King Queen also had the necessity to offer reliable financial information concerning the corporation Impulse to the funding corporation EFL if it had evidently written about the judgement for pay-out of loan founded on the monetary declarations presented by the auditing firm King Queen. Nevertheless, in case if EFL decided to pay out loans for the operations of Impulse Pty Limited after getting and knowing the authentic fin ancial information about the firm Impulse, then EFL cannot regard King Queen to be accountable for the unpleasant consequences. Nevertheless, consistent with the circumstances conditioned under the section para: (93 - 97) of Auditing Standard No 5 of PCAOB, the assessing firm King Queen had the necessity to carry out an integrated assessment of the financial pronouncement of the business Impulse for generation of a fitting financial declaration of the corporation. This helps to assert regarding the actual health as well as financial security of the company (Glover et al. 2014).On top of this, there was pressing requirement for preservation of internal control associated to the specific tactic of the auditing of the business. However, the maintenance of the overall internal control can facilitate the process of proper assessment of financial declarations and offer appropriate guidance to the assessors. In fact, the proper direction as well as guidance to the accounting corporation King Queen can assist in deterring diverse problems that are essentially related to diverse consequences of proceedings as identified above. Therefore, the auditing firm have the need to conform to different directives related to auditing regulations as well as standards for carrying out the activities of audit in addition to process of deciding diverse methods of audit (Junior et al. 2014). As such, the auditing firm also have the need to stick to the specifications stipulated under the Australian Auditing Standards (AAS) along with the conditions mentioned underSection 336 of the Corporation Act (K. Johl et al 2013). Particularly, King Queen, the self-governed audit firm also needs to analyse and appraise financial reports along with other financial evidences in line with the conditions stipulated under the ASQC 1. Along with this, the auditors have the necessity to keep abide by the standards conditioned under ASA 102. This standard indicates the ethical responsibilities that n eed to be fulfilled during the process of audit, assessments in addition to added kinds of assurance arrangement of the corporation (Louwers et al. 2013).Additionally, the King Queen also had the requirement to adhere to the conditions mentioned according to the section ASA 220 Maintenance of quality control of a specific audit process for accurate assessment of financial announcement accompanied by other past information particularly the financial evidences (Auasb.gov.au 2016). Furthermore, the auditors also have the necessity to keep conformation with the rules and regulations directives revealed under the section ASA240 for comprehending the definite accountabilities of the auditors related to detection of different fraudulent activities in a particular review of financial statement. The process also involves taking into account diverse regulations as conditioned under ASA 250 for conducting assessment of financial report (Auasb.gov.au 2016). As asserted by Messier Jr (2016) independence of auditing refers to two extensive facets that can be analysed for understanding as well as realizing the overall nature as well as individualities of auditors. By itself, there are variances between the concepts of actual independence as well as perceived independence in the process of auditing from the perspective of appearance. Thus, for the purpose of attainment of goals and aims of auditing, the actual along with the perceived independence is essential from the standpoint of the auditing. Again, Schmidt et al. (2016) mentions that actual independence indicates towards actions of auditors that get influenced by the overall thinking capacities of the auditors. In other words, it can be said that the actual independence in the process of auditing is mainly dependent on mental state of the definite auditors conducting the entire process. However, the mental state of the assessors exert huge influence on the entire operative as well as t actics of diverse assessors. However, this too moves the technique that the assessors for handling precise situations related to auditing exercises (Sierra et al. 2013). So, independence in the process of decision making can be witnessed at the time when directors of different firms seeks to discuss positions of particular assessors. However, the actual independence in the process of auditing that necessarily depends on emotional state of the particular individuals is very challenging to determine. Thus, this can be very perplexing to measure the objectivity of different assessors. Nonetheless, perceived independence in the process of assessment and auditing can be regarded as a specific grey area that exists between the usual black as well as white features of auditing and is founded particularly on opinions (Stuart 2012) As stated in the first situation, Bob has copied and applied financial information presented in the books of accounts of the business concern Club Casino in order to make university task. The scenario also mentions that Bob fundamentally eliminated the credible references that are essentially associated to the Club Casino. This led to the prospects of violations of audit as Bob failed to inform Clun Casino for different kinds of auditing practices. Therefore, it can be mentioned that Bob is a self-governing auditor who required authorization from Club casino concerning the application and engagement of financial evidence for filling the main educational necessities. Again, Bob also had to abide by the ethical prerequisites as specified under the section ASA 102 (Auasb.gov.au 2016). Furthermore, Bob had the necessity to stick to the guidelines so as to go along with ethical compulsions during the process of presentation of audit. The second situation elucidates comprehensively the contribution of Wendy to the corporation Ace Limited. However, the company has the system of rotation of auditors according to the conditions of ASIC. Therefore, it is also vital for the assessor to keep compliance with the conditioned stipulated under the section ASA 220 Aus A6.1 for maintenance of Quality Control that mentions about the necessity of the rotation of the auditor (Auasb.gov.au 2016). Again, the Corporation 2001 also states about different necessities of the rotation that are obligatory for resolving diverse ethical requirements of assessors (Auasb.gov.au 2016). In addition to this, according to the regulations conditioned under the ASIC, there are numerous enforceable guidelines for the assessors accountable for preparation of financial reports for respective segments of business and for businesses functioning for more than 5 consecutive years. The third scenario indicates towards the task of Leo in the entire auditing process of the business concern Precision Machinery Limited. Again, the present scenario also reflects the fact that there are different facets of appointment that has the requirement to meet the potential to reach level of effectiveness. The scenario can also be related to different disciplinary processes presented by the professional accounting units. Thus, it is significant to stick to the regulations conditioned under the section ASA 220 for maintenance of quality control of the entire process of audit as well as evaluation of quality of specific evidences of audit. The rules of the ASA 510 Audit Engagement also helps in understanding the laid down directives for audit (Auasb.gov.au 2016). Finally, the fourth scenario mentions about the occurrence that took place between the corporation Chan Associates as well as the Classic Reproduction Pty Ltd. Again, situation also explains the situation related to the implementation of registering requirements in a proper manner (Auasb.gov.au 2016). Therefore, this process requires the planning of complete settlement activities for the specific claims associated to the fees of the accounting concern Chan Associates. Furthermore, the current scenario also mentions about the nature of association with the corporation Classic Reproductions for not satisfying definite auditing obligations. References Arens, A.A., Elder, R.J. and Beasley, M.S., 2012. Auditing and assurance services: an integrated approach. Prentice Hall. Auasb.gov.au. 2016. Auditing and Assurance Standards Board (AUASB) - Home. 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