Auditing Reflection
INTRODUCTION
This report consists of 5 reflections related to auditing standards and each case was extracted from internet sources. The purpose of this report is to reflect and understand each case.
REFLECTIONS
First reflection is on China sky case for its non-compliances with SGX. Next is the case on corporate governance where new rules were proposed to improve risk management and risk control. Third will be the extracted information of executives’ compensation in Australian companies. Then, the forth reflection is talking about the famous McKesson & Robbins scandal. Lastly, it was a reflection on China Shenghuo Pharmaceutical Holdings,Inc, a trade receivables fraud was detected by Cohen Milstein.
2.1 REFLECTION 1
There are many arguments over China Sky pending cases due to its non-compliances with the bourse’s order and the challenge on SGX. For every listed company and its director, they should appoint an independent auditor to provide assurance about various aspects of the company’s activities such as internal control assessments and reviews. However, the arguments against allowing employees to join audit committee are that own employees is viewed as part of the client by the external auditors. There might be conflict of interest in which increases the chance of hiding certain liability items or limiting the external audit to access fully on the information required to form opinion. Overall, if the company should allow its own employees to join audit committee, the quality of the audit report will be affected. Its creditors and shareholders might lose confidence of the company’s financial reports. There is also a need to take into considerations of their attitude and willingness to pay fair amount for audit work. Hence, in order to comply with the recommendation for independent audit committees, an external retired director with relevant financial experience is viewed as a better candidate. However, there are
This report consists of 5 reflections related to auditing standards and each case was extracted from internet sources. The purpose of this report is to reflect and understand each case.
REFLECTIONS
First reflection is on China sky case for its non-compliances with SGX. Next is the case on corporate governance where new rules were proposed to improve risk management and risk control. Third will be the extracted information of executives’ compensation in Australian companies. Then, the forth reflection is talking about the famous McKesson & Robbins scandal. Lastly, it was a reflection on China Shenghuo Pharmaceutical Holdings,Inc, a trade receivables fraud was detected by Cohen Milstein.
2.1 REFLECTION 1
There are many arguments over China Sky pending cases due to its non-compliances with the bourse’s order and the challenge on SGX. For every listed company and its director, they should appoint an independent auditor to provide assurance about various aspects of the company’s activities such as internal control assessments and reviews. However, the arguments against allowing employees to join audit committee are that own employees is viewed as part of the client by the external auditors. There might be conflict of interest in which increases the chance of hiding certain liability items or limiting the external audit to access fully on the information required to form opinion. Overall, if the company should allow its own employees to join audit committee, the quality of the audit report will be affected. Its creditors and shareholders might lose confidence of the company’s financial reports. There is also a need to take into considerations of their attitude and willingness to pay fair amount for audit work. Hence, in order to comply with the recommendation for independent audit committees, an external retired director with relevant financial experience is viewed as a better candidate. However, there are
References: " Statement on Proposed Auditing Standard on Confirmation." Public Company Accounting Oversight Board. N.p., n.d. Web. 28 Mar. 2013.