Methodological Auditing and Assurance Research MyAssignmenthelp.com

Question: Discuss about the Methodological Auditing and Assurance Research. Answer: Introduction: The management of business firm HIH Insurance Limited needs to evaluate different business risk that is associated to the firm. The lack of capacity to retain customers, high financial risk, decrease in financial capability as well as over trading of certain activities are some of the most common business risks that the companies face. The current analysis is essentially based on given case study on the firm HIH Insurance Limited. Analysis refers to evaluation of the functionalities of the firm HIH Insurance Limited that helps in analysing business risk of the firm. This in turn can help in conduction of proper judgement for the future period. On scrutiny, it can be observed that the business enterprise HIH Insurance limited encounters challenge of aggressive competition as well as implementation of costly strategies in the future period (Basu 2016). This study aims to analysis the current state of the corporate governance of the firm before the breakdown. This essentially requires i nvestigation of signals as given by the managerial authority in the process of determination of different activities for encountering challenging scenario. Again, the main concentration is mainly on investment of different shareholders and finances provided by different policyholders, this in turn, can help in detection and supervision of diverse asset risk. In addition to this, the investment strategy of the firm HIH Insurance Limited can be evaluated for assessment of the business risk that can essentially stem from underwriting performance. This can occur owing to different reinsurance policies compounded from asset risk for future purpose. This also makes certain neutral influence from diverse investment results gathered from risk profile referred to as the HIH Board. In essence, these attributes can be noted as the investment guidelines of the company. Intrinsically, the Investment Committee intends to frame strategic asset allocation suggestions. Current procedures involve cer tain limitations along with exclusions on different asset classes as supervised by the FAI. Addition to this, the Investment Committee also meet up quarterly in a formal manner for the purpose of assessing present process of allocation of assets (Eilifsen et al. 2013). List of several inherent risk factors that can affect HIH at the financial report level Integrity of administration of the business- In case if the administration of HIH Insurance Limited lacks integrity, then this can lead to poor status or else bad reputation of the firm specially in the business arena (Simnett et al. 2016). Expertise and experience in management, thorough knowledge along with alteration for stated period- In essence, it is vital to take into account factors such as immaturity of administration along with deficiency of knowledge extensively impacts the process of preparation of pecuniary report. Pressure on administration of organization- There are times when incentives for administration leads to erroneous presentation or else misstatement in the pecuniary declarations. In essence, this includes attributes namely cash flow issues, improper operating outcomes along with improper liquidity presentation (Simnett et al. 2016). Nature as well as characteristics of concerned business- The company HIH Insurance Limited has more than a few prospective benefits that can help in instituting reputation along with consistent revenue basis essentially for particular cases of inherent risk. Nature of business entity affects the capital structure strategies. However, this leads to augmentation of inherent risk for specific transactions with different sovereign party (Junior et al. 2014). Facts and findings of pertinent court cases that Anderson needs to refer to for determination of the likelihood of the partnership being liable to: HIH Insurance Limited primarily concentrates on different operational exercises of the Royal Commission for knowing different accounting factors. Arthur Anderson accomplished the external audit task of the firm since the period 1971 to the starting of the period of collapse during the year 2001. The clientele are hereby probable to acquire guidance concerning several audit risk subject to different cases as well as common regulations (Prakash and Sivakumar 2014). Essentially, evaluators play a significant role in the process of maintenance of effective control that in turn can help in avoiding errors as well as diverse mistakes. As per the case Pacific Acceptance Corporation Limited against the Forsyth, it can be hereby said that opinions of the evaluators essentially depend upon financial reports that need to be in compliance with requisite standards as well as laws of accounting. In addition to this, an appraiser also need to view at definite points concerning performance of duties in normal course of time. This can be related to operations of Kingston Cotton Mill that indulges in due care intelligence for analysis in the upcoming period. Again, auditors also need to take into account different debtors as well as creditors for any kind of assistance for utilizing different financial pronouncements (Bdard and Courteau 2015). Conditions that need to exist for existing negligence actions to be upheld Different conditions that need to exist for negligent actions are as mentioned below: Appraisers encounters certain difficulties that can be associated to the computer informational risk. This involves considerable alterations in computer information risk concerning conversion of novel systems (William Jr et al. 2016) Inappropriate allocation of financial resources is a condition or attribute in existing negligent cases. Essentially, members of the staff need to have requisite skills to carry out the operational actions at the firm Lack of support of the business entity along with poor focus in the final procedure of audit occurs in different negligent cases There is also huge amount of depend on essentially the computer informational risk. This risk is required for supporting different core businesses of the firm for specific operational context for higher inherent risk Auditors might fail to assess certain notions or else misstatements in financial statements because of negligence or else due to shortage of time (William Jr et al. 2016) Reliability along with intricacies lead to risks of commitment of diverse errors as well as misrepresentations simultaneously HIH can hire experienced assessors who have the potential to minimize the risks encountered by business concerns. Assessors might make use of different disclaimers that can helps in limiting liabilities from annual financial reports of the corporation HIH Insurance Limited. Particularly, these type of cases call for the need of proper attention by assessors and this can turn can lessen negligence (William Jr et al. 2016) Reasons behind HIH hiring prior members of external audit team The company HIH Insurance Limited appoints members for the audit teams for diverse reasons. Majority of prior members of external audit teams are essentially acclimatized to the operations of the corporation HIH Insurance Limited. Again, assessors need to have adequate experience for satisfying the financial concerns of the associated business concerns. However, administration of HIH Insurance Limited has the opportunity to function with assessors for development of strong association with the firm. However, in certain case if any erstwhile auditor become client, then there occurs risk that can be related to interdependence strategies (DeFond and Zhang 2014). Nevertheless, it might happen that former assessors are acquainted and are friends with the existing assessors for years and operating together simultaneously. Thus, present assessors are of the opinion that earlier assessors have great integrity and this characteristic cannot lead to any type of fraudulent actions. Advantages of having the same firm providing both the auditing as well as consulting services Auditing as well as consulting services by different external assessors plays significant role of senior consultant that can help in savings of cost. As such, the assessors intends to deliver exclusive solutions for different difficulties. Again, assessors also have the need for acquirement of knowledge and advise diverse solutions to probable clients. In addition to this, accountability of the assessor that can render effective consultancy facilities to different potential clients (Ren et al. 2015). Essentially, the assessors can become familiar with different financial actions at the business corporation HIH Insurance Limited. Circumstances that represent a violation of ethics standards The business concerns HIH Insurance Limited needs to abide by ethical regulations while undertaking functional actions in an appropriate manner. The major type of risk includes augmented inherent risk that stems from kind of relationship that are in line with trading partners. This essentially leads to different risks that occurs from recording of different financial transactions that are carried out for initiation of business actions of HIH Insurance Limited. In itself, pervasive business risk includes certain attributes namely, technical capability that is required by workforce (Knechel and Salterio 2016). Administration of HIH Insurance is accountable for arrangement as well as preparation of precise and at the same time fair reports explaining financial position of the business concern. In essence, corporate governance can be referred to as a scheme along with procedure that sticks to corporations that is monitored over different prudential actions. This helps in preserving integ rity operations over internal control framework at particularly HIH Insurance Limited. According to the Ramsay Report as well as CLERP 9, definite suggestions are put forward for improvement of auditing function. This necessarily renders arrangement of annual reports with necessary as well as warranted corporate revelations (Knapp 2016). Declaration from assessment committee recommends ways different matters concerning non-audit services can be taken into account. So far engagement is concerned, partner as well as review partner serve for a time period of around 5 years and are carefully chosen as Managers. As such, the suggestions offer distinct understanding of exclusive auditing operations for forthcoming financial years. Professionals from around the world habitually consider in providing assessment services grounded on financial declarations. Enhancement of the assessment functions helps in examining positive impacts for numerous auditing actions in the upcoming period (Furnham and Gunter 2015). Thus, it can be hereby inferred that the business concern HIH Insurance Limited encounters business risk similar to any other accounting firms. Qualified and professional assessors can effortlessly resolve as well as provide professional assistances to all the clienteles that in turn can aid in the process of accomplishment of impending goals of the firm. So it can be hereby mentioned that the given case study concentrates primarily on explaining corporate disclosures dimensions that are essentially consigned by the firm HIH Insurance Limited. In addition to this, this study also lists down more than a few inherent assessment risk facets that in turn can help in successful application of plans in the future in a proper manner. References Basu, S.K., 2016.Auditing Assurance. Pearson Education India. Bdard, J. and Courteau, L., 2015. Benefits and costs of auditor's assurance: Evidence from the review of quarterly financial statements.Contemporary Accounting Research,32(1), pp.308-335. DeFond, M. and Zhang, J., 2014. A review of archival auditing research.Journal of Accounting and Economics,58(2), pp.275-326. Eilifsen, A., Messier, W.F., Glover, S.M. and Prawitt, D.F., 2013.Auditing and assurance services. McGraw-Hill. Furnham, A. and Gunter, B., 2015.Corporate Assessment (Routledge Revivals): Auditing a Company's Personality. Routledge. Junior, R.M., Best, P.J. and Cotter, J., 2014. Sustainability reporting and assurance: a historical analysis on a world-wide phenomenon.Journal of Business Ethics,120(1), pp.1-11. 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