Table of Contents
The accounting scandal at Tata Finance involved a little-known subsidiary of the company, Niskalp Investment & Trading Company. The subsidiary, after incurring huge losses from its large investment in technology stocks, uses intercorporate deposits to maintain its minimum capital adequacy ratio. Moreover, the company opts to desubsidiarise Niskalp to protect its balance sheet by not having to disclose the losses of its subsidiary anymore. This measure failed to remedy the company’s financial problem. After the condition was revealed to the public, Tata group dismissed Dilip Pendse, the senior operating officer for making the unauthorized investments. Pendse claimed that Tata group executives were aware of the fraudulent transactions but the latter disagreed to his statement. To clear their names, Tata retained AFF to investigate the scandal. The audit report confirmed Pense’s allegation and criticized the quality of the company’s corporate governance. Upon public disclosure, AFF retracted the report and dismissed Kale. This has caused AFF’s reputation in distress. Auditor’s Dilemma
The A. F. Ferguson & Company’s dilemma is whether to withdraw of their audit report after it was publicly known. The report which was expected to clear the names of Tata Group’s executives turned out to support Dilip Pendse’s allegation that they were aware of the deceitful transactions. AFF’s independence was threatened by Tata Group because the firm audits several of the largest Tata companies and this close affiliation enhanced AFF’s stature and prestige within the country’s accounting profession. As an independent auditor, AFF has a responsibility to the public. In order to maintain public trust and confidence in the accounting profession, AFF must adhere to standards of ethical conduct that embody and demonstrate integrity, objectivity, and concern for the public. Auditor’s Question
How can the auditor decide on withdrawing the audit report? Research Question
What are the criteria to be considered by the auditor to establish quality audit report? 2.
What are the standards involved in withdrawing an audit report?
What are the threats posed by the engagement to the auditor?
How should the auditor deal with these threats?
What recommendations can be made to reinforce the independent audit function?
In the 10th century a group of Iranians fled Iran as refugees in search of somewhere to practise their religion freely. The Iranshah Atash Behram at Udwada - the most scared fire temple in India, which houses the flame that brought by the Parsis on their flight from Iran. They finally ended up on the shores of Gujarat and were granted leave to stay there, thus founding the Indian Parsi community (Parsi being Gujarati for Persian). Over the next centuries, Zoroastrianism survived with just a few minor cultural differences creeping in India. The Zoroastrian response to the increasing urbanisation and cultural diversity of the 20th century was one of flexibility and integrity that reflected the three core values of good thoughts, good words and good deeds. The respect for Zoroastrianism grew through its generous and healthy contributions to the societies it encountered, and its reputation for the honesty of its businessmen. Although there was a decline of the priesthood and the global dispersion of the sparse population of remaining Zoroastrians has become a serious issue for the survival of the Zoroastrian faith. However, the same readiness to defy adversity and insistence on remaining true to the values of Zoroastrianism prevails. These are the same qualities which have ensured its survival for the last 3000 years. The Parsis were among the most ardent supporters of India’s long struggle to become independent of Great Britain. India’s largest privately owned company is controlled by a Parsi family, as is the Tata...
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