Auditor Independence Under The Corporation Act Case Study

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Discuss the Issue of Auditor Independence in the Context of Corporations Act 1. Introduction Audits can enhance the reliability of fiscal statements and give stockholders more confidence. Auditors can operate and monitor the fiscal statement. During the process of auditing, it is very important for the auditors to independently implement the responsibility. In the case of HIH collapse, it shows an audit failure. In order to find the reasons of HIH collapse, this paper will discuss the auditor independence under the Corporation Act. In this paper, firstly, it will describe the auditor negligence. Secondly, it will state the regulations of auditors and auditors’ independence. Thirdly, it will analyze the role of auditors in the HIH collapse. Fourthly, it will discuss the regulatory response. Fifthly, it will review the regulatory response. Finally, it will make a conclusion and reflections. 2. Auditor Negligence Based on the Company Acts, auditors should implement their responsibility on auditing company accounts. The responsibilities of auditors appointed under the Companies Acts will be regulated by the Acts. That is to say, the auditors are responsible to make a company’s true fiscal status. However, the responsibility of auditors just is to work carefully without any suspicious. Where cheat happens, the auditors will not be held to have been careless for losing to observe it. On the case of AWA Ltd v Daniels (1992) 7 ACSR 759, it show the auditor’s negligence. AWA engaged in importing and exporting electronic devices. AWA determined to hedge against currency volatility via buying foreign currency against the agreement for imported products. Koval was hired to operate the foreign exchange. Koval’s trading led to AWA to ... ... middle of paper ... ...ate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 4. Corporations Legislation Amendment (Audit Enhancement) Act 2012 5. Daniels v Anderson (1995) 37 NSWLR 438 6. Geoffrey, Flint. (1997). Non-executive directors’ general law duty of care and delegation of duty: but do we need a common law duty of care? Bond Law Review, 9 (2), 199-201. 7. John L, Carey. (1970). The rise of the accounting profession: To responsibility an authority. Panel on Audit Effectiveness, 3 (5), 1937-1960. 8. Review of Requirements for the Registration and Regulation of Company Auditors.(1997). 9. Review of Current Australian Requirements and Proposals for Reform. (2001) 10. The Companies Act 1985, Sections 151, 155 and 156 11. The Treasury, Australian Auditor Independence Requirements - A Comparative Review (2006) 12. The Trade practices Act 1974 (Cth) 1

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