Auditing Limited Business Risk

Question: Define the Auditing for Limited Business Risk. Answer: Assessment of HIH Insurance Limited business risk In regards to business risk of HIH it could be related to the global, local and control environmental perspective. Hence, it could be built on the basis of terms so as to create an adequate understanding of the insurance industry and also how HIH fits under the SWOT analysis. Therefore, the best approach tends to be the profitability and structuring of the industry which assists in handing the insurance industry which tends to be competitive with the increased competition price range (Hooks, 2011). Hence, it tends to lead in handling the insurance in the Australian industry which appears to be relatively dependant on regulation levels. Therefore, for insurance and the superannuation commission they tend to be considered as the Australian body that tends to partially hold the commonly known Australian Prudential Regulatory Authority (Gay Simnett, 2012). Therefore, in an instance where the company sees some form of close insolvency it tends to indicate that there exist some form of ri sks which are often associated with insolvency. Therefore, the pertained agreements made tend hold the capacity meets as well as the debts under which the companies fall. Therefore, in pertinence with the existence of some profitable and structures there tends to be the need creating some focus in regards to business which tends to have relatively few clients who will aim at launching the industry. Hence, this could lower the profits in the industry. In regards to the concept of solvency and its relation to the capacity of debts. There tends to exist the importance of determining solvency on basis of financial and non financial factors where the business has capability to pay or is unable to pay off its debts (Fiedler, 2007). Hence, need of determining solvency based on financial and non financial conditions of the company. In cases where a firm is capable of handling auditing risk challenges it tends to assist in the issuing of unqualified audit that is built on the basis of financial statements. They are mostly based on holding procedures and plans as per risk which are inherent, control and detection risk. As for inherent risk it tends to handle financial statements for instance in HIH Insurance Company its the maintenance of solvency margins and the liquidating contributors. Hence, it includes reinsuring of different policies along with provision of file with marine insurance practice that often differs with the professional related insurance. The control risk is the material error which fails to be detected by the internal systems (Whittington and Pany, 2000). Hence, HIH possess completeness and accuracy in their general ledger thus failing to perform some of the recoincilatins of ledger and the bank accounts. At times their performance tends to be built on some diverse procedures that entail massi ve reliance for documentation process in the externally environment. In detection risk it has different auditing procedures built on performance and fails to detect material error and assertions. Therefore, in the case of HIH the internal audit documents tend to fail in performing the appropriate procedures which then assists in building their performance due to insufficient plans, future income tax benefits and goodwill. 2a. Here there exist a relation to the issuing of unqualified auditing opinions that often tend to relate to auditing risks which isnt managed. Hence, auditors have limited knowledge which makes them not understand inherent risk based on changes done the previous year. Thus, the primary emphases are mainly on the audit report that indicates auditing concerns in terms of HIH practices. Hence, they dont investigate about the full notification of different parties. Hence, the case that is related mostly on clients works on performance to prove the insufficient planning which tend to relate to the goodwill that is commonly known as deferred acquisition cost and the income tax benefits. In cases where client decide to hire former auditors, it tends to have a great effect on the independence of external audit. Since there may have existed close relationships formerly and the auditors were able to handle challenges with the parties and influence they hold (Crous, 2012). For the creditors they aim should be minimizing solvency regulations which state that an entity can be solvent in and only after declaration is done by director. Thus, the reports tend to relate in determination of management along with ongoing concerns. Hence, HIH should aim on the cash position where there is an extension of analysis and is abused on operation and financial matters. The risks often tend to receive relation from pricing and position claims which reserve policy that tend to handle work on investment decisions. Hence, these facts are vital for insurance firms to use with risk pricing ability (Shailer et al, 2007). Hence, there presentation should be built on handling capability of provisions where there is need of developing prudential margins. The negligence deeds by HIH insurance tends to be related with the acceleration of changes in terms of legislation. At times there occurred some crisis in prices and insurance availability. These are largely based on negligence. Therefore, the primary issue tends to relate to the charges that tend to be politically reinforced with the direct liability sequence found in government and the re-insure. Hence, commencement of the legislative changes follows the escalations in the public liabilities and guidelines. The primary fact is built on failure which offers evidence in relation to risk management that fails to shape and perform. The directors tend to act negligently in making analysis about the strategy for carrying out their investments which tends to be associated with the appreciations of risks that often relate to different data sources. Hence, the risk management failure can be perceived as an act of the management style which applies handling HIH down the work. Therefore, the fall of HIH tends to be based on the high compensation payment found within the litigious community that tends to extend the liability for negligent effects. Hence, the system tends to be divided in different jurisdictions that establishes liability and contributes to negligence which is often proportional to the known liability factors (Rittenberg, 2012). 3. Similar to our case, companies tend to hire external auditors for the purpose of auditing themselves. External auditors are termed as accountants who work independently for a certain firm (Messier, 2000). Therefore, it is their duty to examine firms records and operation to make sure that the available financial statements are correct. Hence, in our cases HIH want to hire external auditors because; they tend to ensure whether HIH is compliant with all the available internal revenue service rules, external auditors are also credible as they evaluate the financial statements and make sure they are true similar to the companys process. They tend to have a unique role compared to the internal auditors as they are able observe operation from the outside and determine where the company is wasting time and money. HIH believes that compared to internal auditors, external auditors can look at the same factors similar to internal auditors and double check their work. Hence, they are perceiv ed to have an effective role in HIH auditing process compared to the internal auditors. The participation of one firm in providing the auditing and consulting services often tends to have carry some several benefits. First, the use of same firm that offers audit services have enough knowledge in regards to company, this means that less time is used in billing and training efforts so that the client can familiarize himself with the system (Messier, 2000). Secondly, the service provider easily develops considerable experience that works on dealing with challenges that are uniquely set to the clients industry (Robertson et al, 2002). Therefore, they provide the best practices that benefit the firms operation and system. Thirdly, it is perceived that the engagement of the same firm in providing non-audit service provides superior quality consultation decisions that are effective to the firms strategies. The circumstances under which professional accountants such as internal and external auditors operate tend to create specific threats in terms of compliance with fundamental ethical standards. Hence, we could term these circumstances as a violation because it may threaten the auditing process in that: There may be self interest threats this is in regards to the financial or other interest that could inappropriately influence the professionals accountants judgment (Ricchiute, 2003). There may be advocacy threat where professional accountants tend to promote clients or the employers position to a point where professional auditors objectivity becomes compromised. Hence, this is an act of ethical code violation. There may also be a violation of ethical codes in regards to familiarity threat. Here, threats may take place as a result of close relationship between client and the auditors where they become too sympathetic to their interest. Lastly, self review threat violation may occur when accountants fail to appropriately evaluate the results of the previous judgments made by other accountants, individuals or firms. Therefore, they fail to rely on previous judgment meaning that this is an ethical code violation (Eilifsen, 2006). In regards to the report policy recommendation on governance and financial reposting with finalization under the CLERP 9 amendments, the CLERP 9 was set for the purpose of including the bills in the leading up to the expected enactments. Hence, it tends to deal with some personal liabilities where breach as well as other auditor independence affects the accounting standards. Therefore, the focus in such a case mainly involves handling of duties that tend to bind directors, secretaries and business officers. In regards to recommendation we could base it on officer class which is concerned with management (Stuart, 2012). Therefore, it tends to be held under the performance of significant functioning where it attracts legal duty. Hence, the impact developed will have relevant functions where there will be attainment of advantage rather that working on information to gain proper advantage (Arens et al, 2006). Since, instances of financial reposting tend to be built on ASX they tend to lo ok for disclosure as well as the executive remuneration that exist in the market, hence this tends to announce employment contracts that allow different diverse responsibilities and practices. References Rittenberg, L. E. (2012).Auditing and assurance services. Crous, C. (2012).Auditing and assurance services. Maidenhead, McGraw-Hill Higher Education. Best, P. J., Shailer, G. E. P., Fiedler, B., Arens, A. A. (2007).Auditing and assurance services in Australia: an integrated approach. Frenchs Forest, N.S.W., Pearson Education Australia. Fiedler, B. A. 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