Auditing and Assurance Services  

 Auditing and Assurance Services
 
Table of Contents
Introduction	2
Discussion	2
Conclusion	7
References	9

Introduction
Auditing is considered to be a procedure to examine the financial records of the organizations in order to identify whether they are appropriate or not. The external auditors evaluate the financial records comes from outside the company and give their independent opinion. Big 4 accounting firms are the largest accounting organizations in the world. The firms have provide wide range of auditing and accounting services including taxation services, external audit, business and management consultancy and risk control and assessment. They also provide huge career and employment development opportunities to auditors and accountants all around the world. A British investigative journalist stated that the “big four” accounting organizations need to be examined by the banking royal commission (Hay, 2017).It was being stated that the behaviour and practices of the firms should be investigated just like the activities of the banks are being investigated. During financial crisis, many questions raised about the value and role of the external audits. Many financial institutions had bailed out or collapsed within the shorter period due to the unqualified audit opinions. It was being found that the auditors lack the required expertise to manage the financial accounts in an appropriate manner. It is also being argued that there is some limitations within the basic auditing model as the auditors have become financially reliant on organizations. The conservative approach to quality of audit is also imperfect because it gives less devotion to social and organizational context of auditing. The organizations have diversified complex financial instruments and new forms of investments; it can be difficult to audit some transactions in the traditional way. 
Discussion
Agree or disagree with the statement 
The British investigative journalist stated that the bank royal commission should carry out an investigation on the “big four” accountancy firms of Australia because of their activities in overseas. Bean Counters, a book of the journalist depicted the case of Ernst & Young, Deloitte, KPMG and PricewaterhouseCoopers having massive interest conflict because they sell the constancy services to same organizations whose accounts were independently auditing. The primary interest was not to get numbers but to obtain earn money for themselves. The dual roles of the firms imposed significant impact on the global economy (Cannane, 2018). It is being argued that if the audit firms would have done their job appropriately then the financial crisis would not have occurred in the way it happened. The organizations sold the ludicrous sub-prime mortgages in the financial crisis period and their financial state would had spotted by their auditors far earlier. KPMG carry out the audits in US for the top subprime auditors. The account books did not clearly depicted the mortgages of the organizations (Phylaktis, 2014). The audit firms does not only audit but also advice on financial products, financial transactions and package up the derivative products. Thus, the auditors play a significant role in confirming that the organization is carrying out its operations in an appropriate manner.
The journalist stated that the big four accounting firms within the financial system had become the insiders and they are being forced for maintaining the outsider status. The big four firms senior partners stated that the firms earns two thirds of their income from marketing and advising worldwide and third comes from auditing. The governments are also paying huge amount of money for their consultancy services. The banking royal commission should investigate the activities of “big four” accounting firms (O’Hagan, 2018). The senior partner of PricewaterhouseCoopers was banned for 15 year and finned from the Financial Reporting Council after failure in raising concerns about the collapse of BHS. CEO of RBS, Fred Goodwin brought Deloitte for which he had worked but shortly the firm failed to raise concern about its finances before the taxpayer was being compelled to bail the bank due its own inappropriate decision making. Despite of this, a pay rise was received by Deloitte from RBS in 2008 and John Connolly, the senior partner received £5.2 million pay package in the next year. An investigation was carried out by Financial Services Authority into RBS with the help of PwC (Brooks, 2018). Deloitte was replaced by EY in the year 2014 which was being sued in 2010 by New York prosecutors over the allegations of Lehman Brothers collapse. In 2015, the firm by paying $10 million was able to settle the lawsuit and also paid for damages made to the investors in 2015. 
Audit Commission, a public accountancy body audited an amount of £200 billion spent by around 11000 public organizations. The Audit Commission determined many financial scandals car