HOLMES INSTITUTEFACULTY OFHIGHER EDUCATION HA3032 AuditingTrimester 1 / 2013ASSIGNMENT 1You are...

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HOLMES INSTITUTEFACULTY OFHIGHER EDUCATION HA3032 AuditingTrimester 1 / 2013ASSIGNMENT 1You are required to read the following statement issued by ICAA (Institute of Chartered Accountants in Australia and provide an essay of 1,500 words. It should be properly referenced and must be primarily of your own work.Press release: Legislation to improve the quality and transparency of the auditing process has been introduced into the House of Representatives this week by Parliamentary Secretary to the Treasurer David Bradbury. The Corporations Legislation Amendment (Audit Enhancement) Bill 2012 is the result of a Treasury review of audit quality and extensive stakeholder consultation during 2011 on measures that are designed to enhance audit quality and ensure that Australia's regulatory framework remains in line with international best practice.Measures in the Bill include:• Requiring audit firms to publish an annual transparency report if they conduct audits of 10 or more significant entities• Empowering ASIC to issue an audit deficiency report in relation to an individual audit firm if it identifies an audit deficiency in the auditor's quality control system or the conduct of an audit that may be detrimental to the overall quality of the audit• Removing duplication of ASIC and Financial Reporting Council (FRC) audit inspection responsibilities so that ASIC continues its audit inspection program and the FRC focuses on providing strategic policy advice and reports on the quality of Australian audits.• Allowing ASIC to communicate directly with an audited body.• Allowing a two-year extension to the five-year auditor rotation requirement where it will not give rise to a conflict of interest and will prevent the loss of knowledge and experience where rotation could undermine the quality of the audit.• Discuss your opinion on regards to these five points.ICAA report: Reforms to enhance Audit QualityAvailable from: www.chartered accountants.co.au/industry-Topics/Audit-and-Assurance Other sources:AUASB websiteCPAA websiteRequired:Discuss the following in your essay (approximately 1500 words )What each of the above actually refers to and what it means.What is your view, giving a rational explanation to your view (you may use other sources to support your view, properly referencing). Why do you think that these measures were introduced?The due date for this assignment will be week 6 (must be lodged by 5.00pm on the Friday). Please note: a soft copy must be lodged on Safe assign by the due date and a hard copy provided to your lecturer.Hints for this assignmentThere are six points that is included from the billDiscuss first three points what does it actually means? And discuss each points in each paragraph .As the first three points comes under pacific acceptance case, how did ASIC changed the rules of the audit and accounting. How the rule changed and what are the things that were changed and implemented now.After that discuss 4th and 5th points what does it actually means? Discuss it in each paragraph. Talk about the AWA case and relate these points with AWA cases. How these things did came into effect in the auditing standard.The last one is conclusion, your opinion on these five points.Do proper referencing

David · Accepted Answer

For the purpose of improvement in quality of auditing, placing more responsibility on auditors of 
corporate entities and better corporate governance, the Financial Reporting council has framed certain 
rules that are required to be complied with different entities. An outline on important rules, their 
applicability, rationale and appropriateness is given below: 
Sr. No. Requirement Explanation 
1 Annual 
Transparency 
Report 
a) Applicability: Every individual auditor OR audit firm OR authorized 
audit company that has carried out audit of 10 or more specified 
entities during 12 months (i.e. from 1st July of the year till 30th June of 
next year) has to publish an Audit Transparency Report. The specifies 
entities shall include the following: 
1) Listed companies; 
2) Listed registered schemes; 
3) ADIs (authorized deposit taking institutions) as per The Banking 
Act 1959; 
4) Bodies mentioned under section 3(2) paragraph (c) or (e) of the 
of the Australian Prudential Regulation Authority Act 1998; 
5) Other bodies prescribed by the regulations for the purposes of 
this Act. 
b) Rationale: The rationale behind is to improve quality of audit and 
increasing the level of self responsibility among the audit firms. 
c) Conclusion in my opinion: The policy appears to be very appropriate 
and reasonable on following grounds: 
1) Improvement in quality of audit as the auditors shall perform the 
audit with more responsibility; 
2) Improvement in audit procedures; 
3) Reduction in possibility of non-detection / non-reporting of 
frauds by companies, leading to more investor security; 
4) No adverse affect on auditors as there will not be any significant 
increase in cost of performing audit; and 
5) Assistance to government by increasing self control among 
corporate entities and audit firms. 
2 Audit Deficiency 
Report 
a) Provision: Australian Securities and Investment Commission (ASIC) 
shall have power to verify the work performed by the auditor and if it 
observes any deficiency in audit carried out or audit report issued 
then it may issue an audit deficiency report. However, any serious 
action against audit firm shall be taken after allowing the auditor due 
time and providing opportunity of being heard. 
Audit Deficiency shall include the following: 
1) Non compliance of accounting standards made by auditor, if any; 
2) If auditor fails to comply with the auditor’s independence 
requirements as laid down in provision of law; 
3) If auditor fails to comply with the applicable code of professional 
conduct as laid down in provision of law; and 
4) If auditor fails to comply with the provisions of the Corporations 
Act that deals with the conduct of audits as laid down in 
provision of law. 
b) Rationale: The provision is introduced to ensure audit efficiency of 
audit firms and increasing the self control so as to increase the 
quality of audit work performed. 
c) Conclusion in my opinion: The appropriateness can be evaluated 
from point of view of following: 
1) Audited Entity: This shall improve the review of financial records 
and internal controls of the entity without any additional cost. 
2) Auditor:

HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION HA3032 Auditing Trimester 1 / 2013 ASSIGNMENT 1 You are required to read the following statement issued by ICAA (Institute of Chartered Accountants in...

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