Corporations Legislation Amendment (Audit Enhancement) Bill 2012
Auditing is one of most important aspects of financial institutions. Today, the auditing firms in Europe in general, and in Britain in particular are in a state of shock in the wake of recent media reports regarding the prevailing irregularities in the financial sector. The company's crisis can be explained by the influence of external factors, they can be the determining cause much of its success or failure without giving up their course on the influence of internal factors must also be taken into account (Bovee, 2005). This approach can help guide the development of more accurate diagnoses for the company in crisis. A global treatment of the problems of accounting involves the study of the relationship between the company and its environment from a spatial perspective, the question that arises is how to characterize and describe the space within which the company exists.
Scope of the Essay
The essay aims to analyze the statement issued ICAA (Institute of Chartered Accountants in Australia and provide an analysis and present views on the bills issued with respect to the auditing bill.
Overview of the Press Release
The press release was meant to introduce and enforce regulation with respect to auditing. These regulations were meant to increase the efficiency of transparency in audits. David Bradbury, Parliamentary Secretary to the Treasurer, introduced these legislations in the House of Representatives to improve the efficiency of the audits. The bill was passed on 18 Jun, 2008 after certain reading and approvals from different bodies. Before analyzing the bill, we need to evaluate the need and situations that led to the enforcement of such regulations.
Need for Auditing
Auditing is one of the most important tool for establishing internal controls. Internal controls are essential element in reducing fraud and risk, internal control involves looking after things, which can help in maintaining the financial information that depicts accurate position of company, internal controls includes segregation of duties, policies and procedure, it includes safeguarding of assets and red flags for fraud, these red flags are different checks in accounting process, moreover without internal control company will be seen as unlocked door with the drawer cash register, with the hope that no person will steal money (Alles, 2005). On the other hand, declining trend of economy can result in a great loss for specific people in company if controls are not placed. There are many employees in companies who are honest, but these can be tempted and there is a strong probability that employee can be involved in embezzlement, when they see a large sum of money in front of them. This fact is true, particularly if owner of business have not implemented any internal control, or deployed a shared control for controlling finance of business.
Purpose of Auditing
The main objective of the audit is to help firms establishing the reliability of accounting (financial) statements of economic agents and improved compliance with their financial and business transactions regulations to check (Alles, 2004):
Whether all the assets and liabilities reflected in the report;