Auditing & Assurance Services : Business Elements and Connections
Describe about the Auditing & Assurance Services for Business Elements and Connections.
1. Discussion onfeatures contribute in rising inherent risk estimation
The importance of the Assurance and Auditing services continuously expanding in the recent business connections of the current business elements and henceforth these plays important role during the time spent differentiating the inherent exists inside the association. These particular administrations helps in differentiating the own weaknesses and the strengths of the association of business. Astonishingly, the weaknesses seem to be dealing with the documentation of the transactions regarding the organization can execute by the help of Auditing and the Assurance services. Apart from this, it helps in preparing reports from the documented data by the accountant regarding the financial events which took place inside the fiscal year. However, the auditing services advantages for the business entities it has some inherent risks and there are factors that have significant contribution for the incensement of inherent risks assessment at a financial report level. There are a various factors which are essentially contributed in developing inherent risk assessment. With considering the fewer basic elements, which is identified while undertaking the case study analysis, for instance, constructing inadequate structures regarding the elements of business seems to be lacking the professional ethics. With considering the case study of One Tel, it is focused the organization seems to be standing out of many Australian Organizations and it is the fourth largest media transmission company in Australia. Although the finishing importance was achieved, the company seems to be led down just inside the six operation year. It is focused in the case that the senior most administration staffs of the association are reveling with ruination with the consideration of adequate professional ethics in the organization. Apart from this, the organization lacks the talented competency, respectability and the impartiality seems to be driving the organization in an dreadful destination. Auditors' part was vigorously censured on account of One Tell Company (Vona, 2008). In addition, thus the organization's financial activities need to experience stringent examined process. Other than this, the organization needs to confront the peril of liquidation. Additionally, the stowing away financial data is portrayed in a detailed manner. The auditor's execution in this matter has been taken in a magnificent path; in any case, for this situation their execution was not appropriate keeping in mind the end goal to judge of the firm. On account of examining the firm, the viability and in addition productivity of the examiner appeared to be disposed of, as the danger evaluation with a specific end goal to the procedure of Auditing has been missing. By making viable judgment, the insufficiency of the professional ethics can be judged. Additionally, in this particular way the lack in corporate administration can be discovered besides, along these lines the organization was setting off to the liquidation state. The organization made huge losses by making wastages of the assets of the organization and off base choice by the top administration of the organization drove the business firm to the liquidation level. Along these lines, on account of One Tell both the auditors firms BOD and Ernst and Young are inadequate in honesty and they were one-sided for the top members of the administration.
Recognition of known aspects in strategic business risk estimation
The Auditing and Assurance Services helps in perceiving the in house issues and the operational wasteful aspects and by giving additional consideration regarding the issue. The issues can be decreased, thus that the organization can enhance its productivity and adequacy. Along these lines the organization can guarantee its further development and improvement, thereby the entire stakeholders of the organization are profited by Auditing and Assurance Services.
As indicated by the financial report of the business elements, it can be watched that in a balance sheet/ financial position report of the organization the risk proportion is constantly developed. Aside from this, it is likewise watched that in the income explanation of the firm the operation benefit is much lower than the operation cost. The suppliers' installment and in addition the compensation of the staffs is additionally much higher the installment got from the clients of the business firm. In this way, the organization needs to face huge losses for the business operation by the organization (Vellani, 2007). Aside from this, the investment activities of the organization were likewise misfortune for the organization in light of the fact that the firm put huge amount of cash in the plant and equipments. In addition, just financing exercises by the organization made benefit for the organization. Besides, as indicated by the income statement or profit and loss statement of the organization, the business firm has brought about severe losses. In 2000, the business firm got accomplishment in accomplishing enormous development yet disregarding the development the business firm was running in losses. For the most part the business firm and its administration have comparable goals and also focus for the eventual fate of the business firm. Be that as it may, once in a while the tenet does not work and the organization's goals shift from the goal of the administration staffs of the organization (Ruhnke and Schmidt, 2014). Additionally, in those cases the issue starts, as on account of One Tell happened. This specific circumstance of the business firm is called Principle Agent Problem. One Tell confront the comparable issues and it was the key purpose behind the breakdown of the organization.
2. Discussion on inherent risk features and their role in growing inherent risk estimation
The basic parts of the Auditing and Assurance Services are to examine the financial statements of the organization and think about the information from the financial information with the genuine information. The examiners use to give audit report after finishing of the inspecting errands. The audit report on a firm gives real data about the financial condition of the particular firm. The audit report enhances the trust on the firm and it enhances the expectation of the organization among the speculators, shareholders and clients of the organization. As a rule an outsider direct the evaluating in this manner, its dependence is expanded. The auditor fundamentally deals with entire stakeholders’ advantages and the advantage of the organizations. For this report an Australian business organization named One Tell has been undertaken and all the essential hypotheses and ideas will be discussed in light of this firm. According to the case study of One Tell it is clearly observed that Improper corporate administration is seen in this particular case, it was the key purpose behind the destruction of the business firm, and that drove the business firm to the condition of liquidation. As a result of the poor corporate administration, the administration structure of the organization turned out to be extremely poor and with poor administration structure the organization couldn't have the capacity to convey satisfactory execution that help the organization in surviving. The administration of the organization was involved with 4 individuals, who are the non executive director of the organization. Out of the 4 directors, 3 were liable to each year election. The fourth one is Jodee Rich, the CEO of the organization who was not elected by the shareholders of the organization (Nwogugu, 2011). Toward the end of 1988 the organization expanded its board and includes four more individuals. Additionally, among the eight board individuals, out of them, there are 3 individuals who were secondary classmates of Jodee Rich. The audit and financial report board of the organization included two individuals who were near Jodee Rich the CEO of the organization. The financial committee individuals were not free chiefs with the positions they hold in the organization. Examination conducted by ASIC alongside Institute of Chartered Accountants of Australia distinguished that the business firm had conceded consumption of 48 million AUD. Other than this, the organization acquired losses that were more prominent than 40 million AUD. The audit partner and the external auditors were discovered liable, as a result of overstretching the Australian Accounting and Auditing models and charged forty eight million (Marchetti, 2012). In is viewed notwithstanding of greater salary of 2.3 million AUD the executive directors of the organization got rewards of 82.5 million AUD when the business firm was experiencing the losses of 292 million AUD in 2000. It is recognized that to conceal the data from the general population, these rewards were set apart as delayed expenditures and the foundation expense of the business firm in Europe was made according to the key worldwide development arrangement of the organization.
3. Judgment on the risks as high medium or low
The analysis shows that the organization has high risk level and it would be not possible for the company to attract more customers towards the organization. The income statement shows high expenses that affected the operations of the company. The increase in expenditure means the profitability of the company will decrease or even go to loss (Labbi, 2005). The competition in the market increased that imposed significant threat to the company. The subscriber was offered services at much lower rate by other telecom operators. The companies Optus and Telstra offered cheap packages and One Tell offered high rates.
The management level was not able to cope up with the current situation of the company. The strategies implemented by the company were not effective which lead to low employee turnover, sales turnover and profitability. The operating cost was high which decrease the working capital of the company (Kenny, Blacker and Allerton, 2014). The decrease in working capital ratio means that the company is appropriately utilizing its assets and the liabilities was much more that the assets. The financial ratio helps to determine and analyze the financial performance of the company which shows profitability, revenue, expense, profit or loss during a specific period of time.
Recognition of the primary aspects intended for useful decision-making
The decision making process was influenced by different factors. The failure of billing system affected the operation of the organization as well as obstructs the decision making processes. The IT workers and the auditing process also affected the company and it needed immediate improvement. The chief executive officers were responsible to plan and execute the projects. The evaluation of the working progress and increasing the quality of services was appropriately achieved by the management department. The failure of accounting system, internal control and billing system also was a serious issue for the company (Harris, 2009). Therefore, in order to increase the market reputation it is important for the company to develop strategies and increasing the base of the customers. The improvement in the accounting system will help to manage all the information and data of the customers as well as employees. The billing system should be improved and providing proper service at reasonable rate will help the company to grow. Delay in the process of delivery also unable the company to track the details of sales. Therefore, it has been examined that the accounting process was not efficient and affected the operation of the company. The analysis of the company’s performance shows that the management department was not efficient to manage the operations of the company. The process of accounting failed that lead to loss of data, inaccurate data entry and inefficient control system. The fall of the company was an example for other telecom companies in the world. The management department should learn lessons from the failure of internal control system of the company. The increase in expenditure affected the profitability of the company and also influenced the decisions of the investors.
Harris, E. (2009). Strategic project risk appraisal and management. Farnham, England: Gower.
Kenny, D., Blacker, S. and Allerton, M. (2014). Reculer Pour Mieux Sauter: A Review of Attachment and Other Developmental Processes Inherent in Identified Risk Factors for Juvenile Delinquency and Juvenile Offending. Laws, 3(3), pp.439-468.
Labbi, A. (2005). Handbook of integrated risk management for e-business. Boca Raton, Fla.: J. Ross Pub.
Marchetti, A. (2012). Enterprise risk management best practices. Hoboken, N.J.: Wiley.
Nwogugu, M. (2011). Risk in the global real estate market. Hoboken, New Jersey: Wiley.
Ruhnke, K. and Schmidt, M. (2014). Misstatements in Financial Statements: The Relationship between Inherent and Control Risk Factors and Audit Adjustments. AUDITING: A Journal of Practice & Theory, 33(4), pp.247-269.
Vellani, K. (2007). Strategic security management. Amsterdam: Butterworth-Heinemann.
Vona, L. (2008). Fraud risk assessment. Hoboken, NJ: J. Wiley & Sons.