Auditing Standards Committee of Auditing Section

Question: Discuss about the Auditing Standards Committee of Auditing Section. Answer: Introduction: There are relative two significant threats, which are identified from the above-depicted situations. Self-Interest Threat is the first major concern, which is might hamper the overall viability of the auditing report. According to Section 290.106, if threat arises from member of the assurance team then it must be eliminated by terminating or removing the person (apesb.org, 2016). In addition, removing the auditor from the team might help Fellowes and Associates reduce the overall risk from the auditing procedure. Ma (2016) mentioned that detection of auditing risk is essential for validating auditors report. On the other hand, Smith (2013) criticizes that some auditors use unethical measures in conducting audit procedures, which violates the rules laid down by GAAP and IFRS. According to section AUST290.41.3, Self-Interest Threat mainly arises, when member of the assurance team could financial benefit from the audit procedure (apesb.org, 2016). In the current situation, one of the audit members has shares of the company, which increases the chance of self-interest. This situation is mainly a threat to the audit procedure, which might in turn hamper the overall viability of the audit report. The conflict of interest could not help in depicting viable and actual audit report, which could in turn hamper auditors creditability. Kumar Sharma (2015) stated that complying with rules and regulations mainly allow auditors to increase authenticity of the auditors report. Fellowes and Associates valuing intangible assets of HCHG According to APES 110, section 290.174 290.179 relevant valuation issues could be evaluated (apesb.org, 2016). In addition, the section mainly depicts asset valuation, which is to be conducted by the auditor to detect any variation in valuation. According to section 290.176, mainly states the valuation problems only arises if subjective degree is used in determining the actual value of the assets. In this specific case, self-review threat is detected from the situation, which might hamper audit engagement. Moreover, the main threat circulating intangible asset valuation is the subjective observation, which is taken by auditors during the auditing procedure. Ojo et al. (2016) mentioned that identification of material misstatement could mainly improve the overall viability of the auditors report. However, Abernathy et al., (2015) argued that intangible material misstatement could be identified, as subjective observations are valued on personal preference. Thus, material misstatement of intangible assets is the maximum threat, which might hamper the overall viability of the audit report conducted by Fellowes and Associates. In addition, the section 290.174 290.179 is mainly identified as the viable law portrayed by APES 110, which might influence the auditing report of the company (apesb.org, 2016). In this regard, Elliott, Fanning Peecher (2016) argued that valuation of the overall auditing report might be reduced is material misstatement is fairly higher than estimated. Depicting the actions that could be taken by Fellowes and Associates to eliminate potential threats arising from the independent situations: After evaluating the overall scenarios relative measure could be taken, which might in turn help in validating the audit procedure. In addition, the overall limitations and threats detected in the situation could be reduced by using relevant actions depicted in APES 110. First situation: The first situation mainly has two distinctive threats, like Self-Interest Threat and Financial Interest in an Assurance Client. These two threats mainly need different types of measure and action, which could help in reducing misstatement of the audit report. In addition, AUST 290.41.3 "Self-Interest Threat and Section 290.106 Financial Interest Assurance is mainly identified as the major APES 110 rule, which might be used in understanding the threat reducing viability of the audit report (apesb.org, 2016). Moreover, Townsend (2016) mentioned that using relative APES 110 regulations mainly allow auditors to prepare ethically viable audit report. The overall section depicts that auditor might be removed from the audit team if it has financial interest or relationship with the auditing firm. This measure is adequate to reduce the ethical process or misstatement arising in the auditing procedure. In addition, the auditing team could dispose the indirect financial interest of the team members, which might in turn hamper viability of the audient report. Removing the members from audit team could mainly help in reducing the financial interest and material misstatement from audit procedures (Ma, 2016). Second situation: The second situation mainly states the intangible asset valuation threat, which could be detected in the audit procedure. In addition, this threat might hamper the overall viability of the assets valuation, which in turn might detect financial stability of the company. In this context, Elliott, Fanning Peecher (2016) mentioned that additional audit report mainly allows the company to ensure investors regarding financial stability of the company. Moreover, the company will need an additional valuation from independent auditor, which might be used in detecting the actual valuation of the intangible assets. On the other hand, Ojo et al. (2016) criticises that intangible assets valuation could be changed with different auditors, as observation is mainly subjective. In addition, the company to reduce threat from valuation could use professional accountant. Moreover, the company could arrange new accountant or auditor for evaluating the intangible assets (apesb.org, 2016). This, valuation could mainly help in reducing the misstatement, which could be depicted in the financial report of the company. Both the situation mainly depicts the unethical auditing process, which might be detected from valuating financial records of Health Care Holdings Group. Moreover, using relevant section of APES 110 could mainly help in reducing the overall auditing threats, which might increase misstatement in the auditor report (apesb.org, 2016). Reference: Abernathy, J., Hackenbrack, K. E., Joe, J. R., Pevzner, M., Wu, Y. J. (2015). Comments of the Auditing Standards Committee of the Auditing Section of the American Accounting Association on PCAOB Staff Consultation Paper, Auditing Accounting Estimates and Fair Value Measurements: Participating Committee Members.Current Issues in Auditing,9(1), C1-C11. apesb.org (2016). Retrieved 27 December 2016, from https://www.apesb.org.au/uploads/standards/apesb_standards/standard1.pdf Elliott, W. B., Fanning, K., Peecher, M. E. (2016). Do Investors Value Financial Reporting Quality Beyond Estimated Fundamental Value? And, Can Better Audit Reports Unlock This Value?. Kumar, R., Sharma, V. (2015).Auditing: Principles and Practice. PHI Learning Pvt. Ltd. Ma, N. (2016).Regulation of auditor change in Australia: audit pricing, reporting lag and equity valuation implications(Doctoral dissertation, University of Technology, Sydney). Ojo, M., Ali, A., Lee, T. H., Mohamad, R., Yusof, N. Z. M. (2016). The Audit Expectations Gap: Mitigating Information Asymmetries.Analyzing the Relationship between Corporate Social Responsibility and Foreign Direct Investment, 162. Pcaobus.org. (2016). Retrieved 27 December 2016, from https://pcaobus.org/Standards/Auditing/Pages/AU110.aspx Smith, J. A. (2013). Ethical Business Practices Overview.Ethical and Legal Issues for Doctoral Nursing Students: A Textbook for Students and Reference for Nurse Leaders, 237. Townsend, S. R. (2014).The regulation of auditor ethical behaviour in Australia(Doctoral dissertation, Macquarie University).