Nedgroup Audit Case

In this stage, the auditor should meet with company heads and discuss the processes of the internal accounting and also accept any recommendations from the organization.

Communicate access audit results, concerns, and recommendations for improvement and corrective action plan request to management

This paper contains the summary of the details and results of the audit tests on

To correct the financial pitfalls of the company, Breeden required members of the Audit Committee to have strict financial expertise and demonstrate appropriate behavior. He proposed that the committee hold eight meetings per year, two of which included the General Counsel. Previously, the Audit Committee spent only three to six hours a year overseeing the financial activities of the organization with annual revenue in the tens of billions. Breeden sought to bring the internal audit department; the CFO and the finance team together in the same physical location where they were previously geographically separate. These changes would be beneficial, as it would improve internal communication and increase the involvement of the Audit Committee in the financial operation and reporting of the company. The Audit Committee would be responsible for reviewing the performance of the CFO as well as the external auditors. Breeden believed the more transparency the Audit Committee had the more accountability it would be able to place on the Financial Team, leading to better financial reporting practices.

The Public Company Accounting Oversight Board adopted a new auditing standard concerning related party transactions, significant unusual transactions, and a company’s financial relationships and transactions with its executive officers (PCAOB Standard No. 18, 2014). The goal of these new regulations is to improve auditor performance requirements with regard to evaluating and responding to the risks of material misstatements associated with related parties (Cohn, SEC, 2014). Investors will benefit from these new adaptations to the auditing standards because the auditors will perform a more thorough examination of related parties resulting in a better understanding of these relations (Cohn, PCAOB, 2014). The old standards in these areas were seen to be insufficient by the Board. If action was not taken, the transactions with these close relationships could increase the risk of material misstatements in a company’s financial statements. “’The new auditing standard and amendments we adopted today address transactions and relationships that have been contributing factors in a number of financial reporting frauds,’ said James R. Doty, PCAOB Chairman. ‘Subjecting these areas to enhanced auditor scrutiny may help avert corporate failures and avoid harm to investors’” (PCAOB Standard No. 18, 2014). Doty also pointed out that Enron was brought down by related party transactions and a company, Dynegy, was almost destroyed by significant

1) What additional work could the Internal Audit Department perform prior to issuing the audit report?

There are five main steps in conducting an effective internal audit namely planning the audit schedule, planning the process audit, conducting fieldwork, reporting on the audit, and undertaking the follow-up review. It is critical for the organization to be fully involved in every stage of the audit process. However, an effective audit process should limit the disruption of ongoing activities and minimize the time spent in engaging the organization (Hermanson and Rittenberg

Auditing is the efficient critical examination done by one person or group of people’s independent from the system audited. To do an audit, confirmed information must be present and some standards by which the auditor can evaluate the information. Another is gathering and evaluating any information to determine whether the information being audited is identified in accordance with establish criteria to satisfy the purpose of the audit and also auditors must be competent to identify the types and amount of evidence to accumulate to reach the correct conclusion after the evidence has been examined and finally the preparation of the audit report, which is the communication of the auditor’s findings

Executing the Audit – Upon arrival at the Company’s premise or on board the vessel, the auditor must first request for an opening meeting with the management or the master and other designated personnel to discuss the audit process. Following a formal introduction of the Auditor(s) to the Company or ship management, the rationale and objectives of the audit must be declared. A summary of the methods to be employed, followed by the official communication line must be established and unanimously agreed upon. During the audit, objective evidences can be collected both by interviews with personnel and observations of activities/conditions. Corrective actions on Non-Conformities from previous audits must be verified with the element 9 and 12 of the ISM Code.

Auditor Communications with the Audit Committee and the Board of Directors: Policy Recommendations and Opportunities for Future Research

In the beginning, this report briefly describes the nature of auditing issues including the independence of auditor – Arthur Anderson and its compliance of auditing standards about the collapse of HIH insurance from five articles. Secondly, it discusses and highlights some ethical issues, stakeholders including the relationships between HIH directors and its auditing team, and outlines their financial and non-financial problems around HIH’s stakeholders. This report also analyze HIH’s auditing issues applying on the agency theory and review common benefits with the role of an auditing firm – Arthur Anderson in HIH’S collapse.

The entity should ensure, honest, legal and ethical act. There should also be code of conduct mentioning how to behave during work, not to cheat or steal but if it happens then strong action would be taken.

We have done general operations audit of ABCD 1234 AND company WLL from 1.11.2012 to 20.11.2012 and submitting the draft audit report below..

Firstly, setting up the audit objectives and scope, preparing relevant documentation, deciding time period for the audit.

Recommendation and suggestion are provided by the researcher. The major once are the audit department shall extend its scope in assessing risks proactively, create continuous and direct contact with management, to have harmonious relationship and develop their value adding role.