The latest scandals in the world of audit - OLYMPUS & MF GLOBAL
In both of the companies you have 3 of the BIG 4 which are involved. In MF case, it is PWC - whether they had issued an appropriate emphasis of matter paragraph in the audit report regarding the material uncertainty (ISA 570) that existed in MF Global financial statements. This should have been done given the fact that IAASB had already issued a guidance note regarding the matter and how to manage through such a scenario. They should have also increased audit risk profile for the client given the amount of financial instruments that MF was involved in, the company was already not used to this type of investments (past understanding of the client).
On the other corner, we have KPMG which may have failed to detect material misstatement caused by fraud - ISA 240 that existed within the giant OLYMPUS. Whether there is a failure or not, we have to wait for the investigators and regulators to go through the audit firms approach. The worst part would the one holding the ball when the shit hit the ceiling EY, which has been the auditor since the removal of KPMG. In this case the CEO said that he "believed" that auditors involved were professional. Whether there is a poor quality audit done or not, again we will have to wait - but one thing for sure, it will be really messy in the audit world of Japan.
This brings us to Malaysian audit scenario - students that are studying for ACCA qualification, please ensure that you act professionally all the time, else we have the scandals that brought down PWC Japan in 2006/2007 - Reuters (2011)
Make sure if you are being pressure to act unethically or forgo an issue - do not just accept it, know your ethical grounds and stand up against it - contact ACCA via email for help.
This would also increase the need for ethical questions to be increased in the coming term say Dec 2012/June 2013 papers of P7 and F8 ACCA.
In both of the companies you have 3 of the BIG 4 which are involved. In MF case, it is PWC - whether they had issued an appropriate emphasis of matter paragraph in the audit report regarding the material uncertainty (ISA 570) that existed in MF Global financial statements. This should have been done given the fact that IAASB had already issued a guidance note regarding the matter and how to manage through such a scenario. They should have also increased audit risk profile for the client given the amount of financial instruments that MF was involved in, the company was already not used to this type of investments (past understanding of the client).
On the other corner, we have KPMG which may have failed to detect material misstatement caused by fraud - ISA 240 that existed within the giant OLYMPUS. Whether there is a failure or not, we have to wait for the investigators and regulators to go through the audit firms approach. The worst part would the one holding the ball when the shit hit the ceiling EY, which has been the auditor since the removal of KPMG. In this case the CEO said that he "believed" that auditors involved were professional. Whether there is a poor quality audit done or not, again we will have to wait - but one thing for sure, it will be really messy in the audit world of Japan.
This brings us to Malaysian audit scenario - students that are studying for ACCA qualification, please ensure that you act professionally all the time, else we have the scandals that brought down PWC Japan in 2006/2007 - Reuters (2011)
Make sure if you are being pressure to act unethically or forgo an issue - do not just accept it, know your ethical grounds and stand up against it - contact ACCA via email for help.
This would also increase the need for ethical questions to be increased in the coming term say Dec 2012/June 2013 papers of P7 and F8 ACCA.
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