Independent Auditors Report and Consolidated

Question: Discuss about thee Independent Auditors for Report and Consolidated. Answer: Introduction: The standards of auditing requires the audit company to perform the audit of any company with sensible consideration and auditing skills that anticipates the company would be an expert and filled with relevant knowledge. There is no chance of doubt on the company performing audit which claims that they do have required set of audit skills, signs an agreement with a company as auditors giving assurance on their ability and sensible consideration in any kind of situation (Knechel, 2013). A behaviour that is inadvertent or imprudent results in the breaking of any kind of obligation related to any contact or consideration obligation owed to individual person or a company in tort is characterized as carelessness. Here, in this scenario, Kings Queens showed careless aptitude while performing the audit of Impulse Pvt. Ltd and issued a report with unqualified audit opinion which is inappropriate. Due to this, a financing company, EFL gave loan to Impulse that was already making some serious losses. Here, in this scenario the audit company must be held liable to financing company that is EFL (Dennis, 2015). Whereas, the Impulse Pty Ltd is considered as careless in its manufacturing work. Therefore, auditing company that is Kings Queens is responsible for the damages borne by the EFL that is financing company. The role of an auditor says, common responsibility of an inspector or auditor in covering analysis is to study the appropriateness of management's exploitation of the advance assumption in the preparation of the report related to finance, irrespective of the point that the organization of financial bang does not create message of an precise obligation for fund institute to take careful assessment of the group's capability to get and continue with its responsibility. Therefore, it is the responsibility of an auditor to investigate the organizations comprehension and additional conditions and incidents recognized as dangers of business (Chong, 2008). If Kings Queens would have taken all this into consideration and wouldnt have submitted unqualified report that caused financing company to lose its money as it gave out money to Impulse, this would have saved Kings Queens from the liability to EFL. But alter is the case here. The auditors did not issue a competent report of the manufacturing company showing breach of contract that is directly linked with loss borne by the EFL that is financer. It is also important to consider here the negligibility is not only by the auditing company but manufacturing company also showed careless aptitude towards business that caused to incur loss. So, to some extent both these parties should be held liable in the roles they played. As per professional code of ethics, the manufacturing company is responsible on not repaying the loan it took out from EFL so punishment should be given to Impulse too (Annon, 2010). In this scenario, auditing company has been written by the EFL in prior to lending money to Impulse, the response remains similar that the auditing company which is Kings Queens is held liable to EFL. However, both the parties in this case are explicitly are responsible for the damages. The financing company is excluded here. The EFL has an argument to say that the auditing company misled them by giving them a report that is incompetent. The EFL can claim that they proceeded principally with details that they get from a professional in reviewing and inspecting which is Kings Queens in this situation. As per the professional code of ethics, the party that must be held answerable in situation of damages are registered should be the Kings Queens for carelessness, message of incorrect evidence and break of agreement (ifac, 2006). Actual independence refers to the genuine liberty of the group knows as auditor, or else it is known as the freedom of the intelligence or thoughts. All the more particularly, real liberty is concerned with the perspective that how auditor demonstrate or sends message in a specific situation. Several dilemmas are present in order to figure out if the auditor is actually free, as it is quite difficult to see and quantify the mind state of an individual and his or her uprightness (Dwyer, 2015). Perceived independence is that where an individual is considered under freedom but an individual may not be. A person at this point can be in compromising situation because the objective is not clear. Whereas, it is considered important in conduct of an audit since the credibility to the audit reports is added (Kevin Holland Jennifer Lane, 2012). Integrity Being an auditor assistant, Bob has no integrity. As an auditor it is very wrong to use the financial information of an organization. As a finance trainee, Bob should prepare himself to work on his assignment on his own. This will help him in coming time to avoid using any kind of information of other companies for any purpose. Another solution to this is the embracement of confidentiality by Bob. In order to protect the data acquired as a result of connections of the business, Bob should not reveal any kind of information to third parties without having legitimate and specific power, until and unless it is allowed lawfully (Zain, 2015). Professional behaviour- It is against professionalism for a worker to ask his or her worker to work other than his defined tasks in contract, so is the case with Ace Limited Company. It is considered unethical and highly unprofessional behaviour of an employer. The company should hire someone else for position and train to conduct such duty. If Wendy qualifies as the replacement for the position, then it is recommended that the Ace Limited Company should give Wendy employment for the position and her salary and other benefits should be adjusted as per the amount of work she is exposed to (Lee, 2012). If Leo, the son of the foreman is comprising in testing of some internal controls being an auditor of the firm, then it is very much important for the foreman to look after this and adjust his son in such a role that will help in conducting audit of the firm. The disturbance caused by the Leo in testing of some internal control is an important point for the auditing firm and should be highlighted to the foreman. He should also be given advice in helping out for the proper management of the organization (Knechel, 2013). There are numerous principles that have been embraced comprising the compensation of the annual fee by the Classic Reproduction Pty. For the company it was highly unprofessional to fill with furniture in order to pay for its services. It is a break of an agreement and must not be considered lightly. An action that is professional should be considered for the company in order to pay due amount to the auditing company. Professional behavior as auditing standard is also breached here by Classic reproduction Pty by acquiring auditing services but not paying for them on time. Suck kind of behavior is not acceptable in a highly professional environment. It is also vital to consider that the auditing company, Chan Associates should chase some other parameters in order to receive their money back rather than black mailing classic company to give them share and other inappropriate strategies mentioned. Whereas, the pursued measures should be considered according the guidelines of legal exper ts. Also the auditing company should come up with reports that shows the ability of Classic Company for the payment of bills in future. The failure in payment should also be explained and care should be taken so that such kind of scenario do not occur in future (Zhao, 2013). List of References Annon, 2010. Independent Auditors' Report and Consolidated Financial Statements. Ophthalmology, 117(10), pp. F1-F27. Chong, K.-M., 2008. Do Different Audit Report Formats Affect Shareholders' and Auditors' Perceptions?. International Journal of Auditing, 12(3), pp. 221-241. Dwyer, R. J., 2015. PERCEPTION OR REALITY: AUDITOR INDEPENDENCE AND OBJECTIVITY. [Online] Available at: https://thegaap.net/perception-or-reality-auditor-independence-and-objectivity-in-the-accountability-process/[Accessed 2016 December 2016]. ifac, 2006. CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS. [Online] Available at: https://www.ifac.org/system/files/publications/files/ifac-code-of-ethics-for.pdf [Accessed 07 December 2016]. Kevin Holland Jennifer Lane, 2012. Perceived auditor independence and audit firm fees. [Online] Available at: https://www.tandfonline.com/doi/abs/10.1080/00014788.2012.628157 [Accessed 07 December 2016]. Knechel, W. R., 2013. Do Auditing Standards Matter?. Current Issues in Auditing, 7(2), pp. A1-A16. Lee, C.-C., 2012. An Experimental Investigation of Professional Skepticism in Audit Interviews. International Journal of Auditing, 17(2), pp. 213-226. Zain, M. M., 2015. The Effect of Internal Audit Function Quality and Internal Audit Contribution to External Audit on Audit Fees. International Journal of Auditing, 19(3), pp. 134-147. Zhao, Z., 2013. Independent Directors with Industrial Expertise, Audit Complexity, and Audit Fee. China Accounting and Finance Review, 15(1).