An audit enhances the credibility of a company’s financial reports prepared by its directors (LAWBOOK CO). The function of auditors is to audit or review the accuracy of company’s financial report. According to Corporation Act section 310(a) and 310(b), auditors have right to access to company’s information. After AWA v Daniel’s case, the importance of auditing was coming out. In the case of HIH collapse, regulators and corporations come to realise auditors should work independently.
The regulations amendment is coming through years and improving with the conflict occurred. In this report, it would focus on by studying and summarizing the AWA Ltd v Daniels case and HIH ...view middle of the document...
Eventually, AWA claimed that Koval’s activities led to loss of $ 49.8m and the auditors were negligent in the carrying out of the two audits and that their negligence was the cause of its loss.
The final judgement of the case was the auditors were not available whether the actions were in contract or in tort. According to The Law Reform (Miscellaneous Provisions) Act 1956, Section 9 of the definition that indicated that the AWA should be guilty of contributory negligence at numbers of level. The chairman, Hooks should be responsible to a greater extent than any other directors for the performance of the board as a whole and each member of it (Lawbook.co). Meanwhile, the action was brought by the director, who should be rely without verification on the judgement and a director should be aware of circumstance that no person with any degree of prudence would relied on the particular judgment, information and advice.
Company Auditor Registration and Regulation Reform
During 1993, the Ministerial Council for Corporations decided to present regulation of company auditors to view and review the auditors’ behaviour is act for a organization benefits( ). In the Company Auditors, Report of a working Party of Ministerial Council for Corporations (1997), which was focusing on reviewing and recommend positive amendment to the regulations in order to improve the auditing quality toward a company.
Started from the qualification requirement toward the auditors’ registration and try to guarantee the accuracy and profession of the auditing report. For cooperating and monitoring the auditors’ behaviour and corporation’s action, the financial and business regulators and monitors are required to working together or seeing into the corporation to make sure they are doing accordingly to the regulation. The issues, conclusions and recommendations were around the questions of 1) the person should perform the registration and supervisory functions; 2) the appropriate requirement and qualification for pre-requisite for regulation; 3) the procedures and form should post registration take; 4) the appointment and removal of company auditors and 5) the person should undertake disciplinary function.
In AWA Ltd v Daniel’s case, though the auditors were not liable for the company financial crisis and collapse, it draws widely attention toward the auditing report with company operation. In recommendation 7.1-7.3, which recommended a listed company should have an audit committee and the relationship between non-directors with the audit committee. In recommendation 8.7 to 8.15, which requires company disclosed all their auditors’ information and the company power delegation. In recommendation 7.6 indicated the independency requirement toward auditors.
For all the recommendations raised in the report that was drawing attention toward the importance toward company’s auditing. The regulations require auditors maintain their professional in the aspect and act for the benefits...