Auditing Principles

1588 Words Feb 7th, 2018 6 Pages
The author if asked to explain the role of external auditors in the collapse and how the expectations of shareholders and stakeholders likely figured into that collapse and the auditor malfeasance that led to the same. The author is asked to give two recommendations regarding the changing of the existing requirements for auditing standards as a means to close the audit expectation gap.
Cause of One.Tel Collapse
It is clear from the data that BDO Nelson Parkhill (BDNP) and One.Tel had a very odd and controversial relationship, and there are two major reasons for saying that. First, the regulatory bodies in Australia pointed to some major issues with the fiscal and accounting reporting for One.Tel for the years running from 1997 to 2000, the last few years before One.Tel's collapse, to the extent that there were 48 different items or action flagged as being deficient or suspect. BDNP was fined $48,000, in part for some very questionable accounting which included about $40 million in deferred expenditures and about the same amount of concealed debt (Monem, 2011).
Another red flag that went up with the One.Tel/BDNP relationship is that the former was paying a substantial amount of its fees to BDNP in the form of non-audit services (NAS). In fact roughly half of the fees paid to BDNP from 1997 to 2000 were for things other than…
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