MCA- ASSIGNMENT PRESENTATION

PRESENTED BY
SHAHID MOOSA
QUESTION (C)
• International Standards on Auditing are aimed at improving audit quality that
would reduce the inconsistencies in audit practices around the world
• Convergence and harmonization of international auditing standards that
would eventually create one set of globally accepted auditing standards is
more of a desirable thing than it can be more practical
• There are several reasons why there achieving international convergence and
harmonization of auditing standards are not practical
WHY NOT PRACTICAL
• Differences in legal, cultural, economic, political make it more difficult
• Even countries who have adopted or committed to adopt ISAs still want to
customize it as per their countries auditing environment
• All countries do not have strong professional auditing bodies. Hence may lack
the technical knowledges required to interpret the ISAs correctly
• Difficulties of translating the ISAs to own language
• Changes in political arena
WHY NOT PRACTICAL
• Least developing countries still reluctant to adopt. These countries lack strong
regulatory bodies
• Influential countries such as USA and Australia are yet to adopt
• Some countries not willing to accept international standards as it may lower
their nationalism and undermine their customs
• Small countries consideration are not taken into account
WHY NOT PRACTICAL
• Impossible to formulate ISAs that reflect auditing environment of all countries
and their requirements. Hence in appropriate standards may have been
issued due to compromise
• Lack of coordination between international and national standard setters.
• ISA has been too slow to meet the demands of various stakeholders
• No proper mechanism to monitor the compliance level
IF PRACTICAL WHAT COULD BE THE RESULTS?
• High-quality comparable financial information for investors
• Improve efficiency of the capital market
• Less cost of producing audit report
• Countries do not have resources to formulate their own standards can adopt
ISAs
QUESTION (D)
• Several lessons learned
• Main three cases used were Satyam Computers, Transmile, and Healthsouth
• Other cases also used
QUESTION (D)
• Satyam, Transmile, HealthSouth
• Overstated revenue and assets
• Created fake documents
• Senior executives colluded
• Others (WorldCom, Lahman Brothers, AIG and Qwest Communication)
• Use disguised accounting practices
LESSONS LEARNED
• Expectation Gap still exist
• Auditors failed to perform sufficient audit procedures to detect fraud
• Lack of communication in reporting
• Lack of professionalism skepticism from auditors
• Failure to detect internal control deficiencies even thought it had existed for
year
LESSONS LEARNED
• Expectation Gap still exist
• Auditors not having the backbone to standup against frauds that involve
senior executives and large companies
• Auditors being too close to the management
• Not able or too slow to learn from past mistakes
• Auditing environment remain same or too slow to keep pace with changing
business environment
Q&A