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Recognitions, Measurements & Disclosures of IAS 41 Assignment Sample



Write an accounting essay focusing on IAS 41 accounting standard, incorporating the following:

i. Examine the accounting standards' requirements for disclosures, measures, and recognitions;

ii. Talk about how the accounting standard affects the relevance and faithful depiction of information reporting, which are essential qualitative qualities;

iii. List any three practical difficulties in following the chosen accounting standard and critically examine them.



In this accounting essay, the main goal of the IAS 41 accounting standard is to control how biological assets are transformed into agricultural products. With some exclusions, such as agricultural produce at the harvest point and bearer plants, the accounting principles apply to biological assets. Intangible assets and government funding connected to agricultural pursuits or bearer plants are typically inapplicable. The requirements of the accounting standards are examined in this particular article based on their recognition, measures, and disclosures, as well as the impact of the standard on the core qualitative attributes of information reporting. In the accounting assignment, a few real-world obstacles to this standard's compliance are also mentioned and critically evaluated.

Recognition, Measurements, and Disclosures

Recognition: An accounting standard set called IAS 41 was created to help turn biological assets into agricultural production. The primary purpose of accounting standards is to account for agricultural activities based on produced goods from a company's biological assets. In the year 2000, the accounting standards were released. Biological assets or agricultural goods are recognized when an entity has control over the vents connected to previous transactions (Abdelkhalik, 2019). Future consistency in measuring the entity or fair worth is also a possibility. These requirements are seen to be essential to the acceptance of this specific accounting standard or method.

Measurement: Unless there is an estimation of the fair value at a lower selling cost, the measurement of a fair value can be done consistently. Agribusiness production is valued at fair value less the projected cost of selling at the harvest point since harvested produce is a commodity. With the exception of produce, there is no measuring dependability. All expenses incurred, including the relevant cost to the fair value of the biological assets, are those incurred other than the acquisition price of the biological assets. The only issue with measuring is that there isn't a price for biological assets on the active market that has already been quoted. Since fair value calculations are unreliable, it is necessary to evaluate assets at lower costs through reduced accumulated depreciation and impairment losses. However, if the situation changes in a major pattern, charges free from fair value are required.

Disclosure: IAS41's disclosure requirements are based on the typical loss or gain from recognizing assets and agricultural products, as well as changes in the value of sales within the given period. The requirements also somewhat depend on the entity's biological resources, as defined by the big group (Baigrie and Coetsee, 2016). The disclosure rules also apply to restricted and pledged security titles relating to information about biological assets. The disclosure obligations also cover commitments for the development and acquisition of biological assets as well as risk management plans for funding. Additional disclosures about asset depreciation, the fair value range, and the reasons for not being able to accurately determine fair value are necessary if it is not possible to do so. Along with the overall depreciation that has accrued and the amount that is carried, the depreciation methods, rates, and amounts must all be declared.

Impact of IAS41 on Fundamental Qualitative Characteristics of Information Reporting

Relevance and faithful depiction are regarded as the basic qualitative traits of information reporting. It is regarded as a notion that envisions the truthful reflection and depiction of financial statements that establish the genuine economic status of the firm. Every section of the financial statement, including the operational results, financial positions, and various cash flows, should be given a faithful portrayal (Enyi, 2019). The statements that show a fair and pertinent approach to information reporting should largely exhibit these three qualities: they should be exhaustive, objective, and error-free. To properly assess IAS41's influence on corporate financial reporting, it is necessary to identify any potential implications for the reporting entities. The fair value of the assets that must be reported is calculated using the income from unrealized gains or losses.

The recognition of unrealized gains and losses arising from assets from fair value adjustments to agricultural harvest will have a substantial impact on the businesses' income and other financial statements, ultimately increasing the volatility in reported income. Compared to private entities, the influence on governmental organizations is comparatively bigger. The two fundamental qualities that are essential to financial reporting are faithful and relevant representation. Relevance is a characteristic of information that gives users of financial information the ability to decide while making decisions. When information is utilized to predict a future outcome or to confirm previous assessments of economic events that have a confirmative value, it is said to be relevant (Filip et al., 2017). Even though IAS 41 refers to agricultural production and biological assets, these occurrences are recorded in the financial accounts of businesses.

The revenue for the following year can be predicted using information about the current year's revenue that is related to agricultural output and biological assets. This information also confirms the degree of accuracy of the predictions made in the previous year. The valuation of the user's net assets can be updated using impairment charges relating to biological or agricultural assets. Estimates may not be very accurate because the liabilities of a company dealing with biological assets are unpredictable and legal claims can be extraordinarily expensive. A firm must maintain a particular level of honesty while preparing a financial report based on agricultural output and biological assets. The most crucial deciding factor when deciding the variables of financial accounting is the fact that the amounts of produce each year are changing and not fixed in nature (Zerhan and Sultanolu, 2017). The development of appropriate financial reports for businesses that are accounted for in accordance with IAS 41 depends on the relevance and faithful portrayal of factual events and transactions.

Three Practical Challenges of IAS 41 Compliance

The implementation of IAS 41 in accordance with the accounting standards is complicated by three practical issues.

One of the main issues with biological asset compliance approaches is the lack of an active market. The corporate management must solely rely on the biological assets' assessments and judgements. To study the present economic trends and conditions that were reported on earlier dates, it is necessary to evaluate the markets and market information that are currently available. The fair worth of the biological assets might be determined using the existing prices if the economy remains stable over the long term. According to Scott, Wingard, and van Biljon (2016), a market may not have been developed if the company administration evaluates appropriate data while assets are limited or scarce.

The second issue relating to IAS 41 compliance is thought to be a lack of appropriate valuation techniques. Lack of direction from the national treasury may result in the use of different accounting rules that are based on organizations that are identical. The strategies and needs connected to the economic sector are provided by the treasuries of different countries. The absence of valuation methodologies can be ascribed to a lack of oversight. The organization is nonetheless subject to the requirements' applicability despite the event. The quality of audit departments may express their thoughts if the criteria are disregarded.

A real problem with calculating fair value is the high costs associated with biological assets' accounting for fair value. According to Baigrie and Coetsee (2016), the issue that is regarded as being most important in the case of biological assets is the exorbitant expenditures connected with the evaluation process. When hiring specialists to perform the valuation process, several criteria must be met. Before making contact with an individual, the administration must evaluate their credentials and value knowledge. Despite the fact that the professionals are handling them, the management of the organization is still responsible for how the information is presented. They should analyses the work that was completed as well as the work of the expert on the audit and other financial reporting. The department of the auditor general will audit the underlying valuations, and the administration will give auditors the necessary information on the supporting documentation.


As the management of the companies is ultimately responsible for the proper assessment and evaluation of the financial statements, the three challenges of adhering to or complying with IAS 41 are integral to the final preparation of financial reports for the company. There is a significant amount of impact created on the relevance and the faithful representation of the biological assets that are evaluated by the fair value of assets and agricultural produce. The three factors of initial recognition, measurements, and disclosure are crucial to comprehending the accounting standards intended for both appreciation and the depreciation of biological assets related to agricultural products. Therefore, it can be concluded that the cost and valuation of biological assets in relation to the market are the major determinants of the accuracy of the companies' financial reporting. This accounting standard has a considerable impact on the fundamental elements of information reporting, as evidenced in the financial reports of businesses that trade in agricultural and biological goods.


A.R. Abdel Khalik (2019). Issues in Reporting Financial Instruments: Failing Faithful Representations of Financial Statements. 676-708 in Abacus, [online] 55(4). Available at: doi/full/10.1111/abac.12176 at onlinelibrary.wiley.com [Retrieved on June 4, 2021] .

I. Baigrie and D. Coetsee (2016). An examination of South African public agriculture enterprises' financial reporting compliance. 9(3), pp. 833–853, Journal of Economic and Financial Sciences, [online]. The document is accessible at: https://core.ac.uk/download/pdf/160732061.pdf. [Retrieved on June 4, 2021] .

Enyi, P. (2019). International Journal of Business and Management Review, [online] 7(3), pp. 1–10, "ETHICAL PRINCIPLES AND FAITHFUL REPRESENTATION OF FINANCIAL REPORTS OF QUOTED COMPANIES IN NIGERIA." The document is accessible at: https://www.eajournals.org/wp-content/uploads/Odesanya-O.-S.pdf. [Retrieved on June 4, 2021] .

Huang, Jeny, A., Ca, Z., Filip, A., Hammami, A., Molson, J., Hammami@concordia, A., Magnan, M., and Moldovan, R. (2017). Review of the Literature on the Impact of IFRS 13 Fair Value Measurement. [on the web]. It is possible to get this document at: https://www.ifrs.org/content/dam/ifrs/meetings/2018/january/iasb/ap7c-ifrs-13-literature-review.pdf [Retrieved on June 4, 2021] .

Y. zerhan and B. Sultanolu (2017). Fair Value Accounting for M2M. www.intechopen.com [online]. IntechOpen. Easily accessed at: https://www.intechopen.com/books/accounting-and-corporate-reporting-today-and-tomorrow/m2m-fair-value-accounting [Retrieved on June 4, 2021].

D. Scott, C. Wingard, and M. van Biljon (2016). issues with South African public agencies' financial reporting of biological assets. 139–149 are included in South African Journal of Economic and Management Sciences, 19(1), [online]. Available at: S2222-34362016000100009 (www.scielo.org.za/scielo.php?script=sci arttext). [Retrieved on June 4, 2021].

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An Essay on Accounts Receivable Assignment Sample


"Accounting Issues: An Essay Series—Part I—Cash" [Laux, 2007] explains why this series is necessary. In that accounting assignment article, the relationship between the asset cash and the various accounting characteristics—again shown in the table on the following page—was explored. The analogy of climbing a mountain serves as the foundation for examining the difficulties in initially recording transactions, adjusting the accounts, and reporting the elements through financial statements. That is, during the daily accounting activities ("on the plains"—before the ascent up the mountain even begins), up the "foothills," and finally to the "peak," where we hope economic reality is reflected in such a way that investors and creditors find the information useful in making decisions. We continue in that same vein by discussing the ideas and problems that are most directly related to accounts receivable. You should review the aforementioned paper, paying close attention to the section under "The Conceptual Framework at a Glance," if you need a "refresher" on the hierarchy of accounting characteristics. The following part discusses the general accounting approach to receivables, while the two sections that follow focus on the conceptual relationships and measurement problems that are most obviously related to accounts receivable. The most intriguing headlines and associated articles are presented in the last section for additional research.


Accounts receivable are created when clients buy goods or services with the promise to pay later, as stated in the principles of accounting course. Typically, the gross or retail amount of the initial transaction is added to Accounts Receivable and Revenues to record it. The accountant must estimate how many of those receivables will likely be collected in the future at the end of the accounting period during the adjusting process in order to provide to the statement readers a "net" (collectible) amount that actually reflects an asset (an economic resource expected to benefit future periods as the dollars are collected in cash). This "net realizable value" is the difference between the gross amount in the accounts payable account and the balance in the allowance for bad debts account (a contra-asset account), a balance established during the adjusting process typically through one of three estimation approaches—as a percentage of gross accounts payable, through an ageing of accounts receivable, or as a percentage of sales. While the basic course will cover the specifics of this adjustment process, suffice it to state that (1) it includes an estimate and (2) that estimate is often based on historical data. The theoretical effects of recording gross accounts receivable and identifying uncollectible accounts at year-end are covered in the section that follows.


As seen in the graphic on the page above, the existence of both relevance and dependability for a reported item is what determines how valuable a choice is. Therefore, the reported Accounts Receivable balance (and the related Allowance for Bad Debts account) must be significant to creditors and investors, able to affect how they evaluate past economic events and/or aid in the forecasting of future cash flows. Both of these conceptual connections will be discussed individually.

The closest thing to cash for the majority of businesses is accounts receivable from customers, aside from marketable securities (which, in compared to accounts receivable, typically make up a small percentage of overall assets). It weighs heavily in crucial metrics like the current ratio, the fast (or acid-test) ratio, and accounts receivable turnover and influences creditor decisions like granting short-term loans because it is such a significant asset and component of liquidity. The absolute amount of and changes in Accounts Receivable play a significant role in future cash flow projections, scoring well on the relevance metric.

Readers of financial statements rely on net realizable value (NRV), which is calculated as Accounts Receivable at historical cost less Allowance for Bad Debts (AFBD), to predict future cash flows; however, because NRV depends on an estimate (AFBD), its accuracy is limited. As a result, there is a trade-off between relevance and reliability. Companies can adjust estimated uncollectible accounts to influence revenue, and numerous cases of fraudulent and misleading reporting have recently been reported. Other corporate income smoothing approaches have involved fiddling with this estimate, underestimating bad debts in years where income is falling short of projections, and overestimating uncollectible accounts in years where income is generally exceeding projections. If one organization employs bad debt estimations as a manner of smoothing income while another resists the temptation, this can also affect comparability over time and between companies.

In estimating uncollectible accounts, businesses must provide complete disclosure (explain to statement readers how they arrive at AFBD) and must maintain their basic methodology from year to year, creating the impression of high consistency. However, a degree of flexibility is given in determining the percentages (of gross sales, accounts receivable, or even within the percentages used in the ageing of accounts procedure) that establish the net realizable value, allowing businesses to avoid true consistency from year to year and hindering the statement reader's ability to predict future cash flows from a given year's net amount. The conceptual linkages that are related to the measurement of accounts receivable are examined in more detail in the section that follows.


Two key measuring concerns are involved in accounts receivable analysis:

• Does the level of gross receivables reflect actual economic activities or events?

• Does the Allowance for Bad Debts reflect the amount of money that won't be recouped?

The first is about recognizing revenue, while the second is about recognizing and matching expenses. The crucial phase of revenue recognition is thoroughly covered in the majority of introductory accounting courses, making it abundantly clear that both the buyer and the seller must meet certain requirements before businesses should formally measure and record revenues (and the associated account receivable) in the accounting books. However, many "beyond-GAAP" blunders have happened at this point. (The following part will provide a presentation of some of the headliners.) Here, on the plains of routine accounting, accountants may choose to do so or may feel under pressure to do so, resulting in the early, exaggerated, or even fraudulent valuation of linked revenues and receivables. Recognition indicates non-GAAP accounting, and the resulting Accounts Receivable are exaggerated, if the company has not performed its duties (fulfilling a service contract or delivering a product with a restricted right of return) and/or if a client has not made a credible promise to pay the firm. The company's financial situation has not improved, it has not acquired any new assets, and there is no guarantee of future cash flows. Accountants must reflect this economic reality because that is the current state of affairs.

Similar to this, accountants must appropriately record an amount of AFBD that reflects the dollars of receivables that will not be collected, an expense to be recognised as Bad Debts Expense. Since this is based on an estimate, there is more room for error (accountants are not expected to be 100% correct), but viewers of financial statements should be able to trust that every attempt has been made in good faith. In other words, accountants shouldn't try to slant the estimate in any direction; instead, they should use their best judgement based on the data that is already available and other facts or prognostications (such as a generally acknowledged economic rebound or recession). This idea, known as "neutrality," improves the fundamental quality of dependability. The allowance method of recording bad debts also represents an effort to follow the matching principle by recording the expense related to uncollectible accounts in the same accounting period as (and hence "matched" with") the related revenues.

A few restrictions also apply to accounts receivable accounting. If a corporation has a history of very few uncollectible accounts, it can choose not to use the recommended strategy as mentioned (estimating uncollectible amounts and creating a contra-asset account) (low bad debt expense). This is the idea of materiality, which says that if the difference in income (and/or assets, in this example) is not significant, GAAP-based procedures can be abandoned. The expense of using the allowance technique may be seen as outweighing the advantage of the increased accuracy because it necessitates more work in predicting uncollectible accounts and leads to more complex accounting. Therefore, the cost-benefit limitation is relevant. Finally, the idea of conservatism encourages accountants to report the net amount (net realisable value—NRV) at the lower end of the acceptable range when faced with a range of defendable (logical) values for assets like accounts receivable. The reported NRV should be closer to $48,000 than $49,000, for instance, if an accountant thinks that between $1,000 and $2,000 of the $50,000 in gross receivables may be uncollectible. Be aware that conservatism DOES NOT advocate underestimating the amount of receivables that should be collected. It only advises that one should move to the lower end for assets within a reasonable range. Keep in mind that the objective is to reflect economic reality, not to deceive creditors and investors into thinking the company is in worse shape than it actually is!

Naturally, the headlines all too frequently imply that companies have actually attempted the exact opposite—overstating Accounts Receivables (and/or understating AFBD) in an effort to boost the stock price, obtain necessary funding, or to meet specific ratio criteria. A few of the incidents are listed in the section that follows.


While not every sensational headline focuses on companies that have fabricated receivables, many do feature a preferred strategy for reporting fictitiously high income—overstating revenues, which is frequently coupled with too optimistic or even phantom accounts receivable. The ZZZZ Best case was among the most notable of the false accounts receivable/revenue scandal headlines. Young businessman Barry Minkow, once known as the "Wonder Boy of Wall Street," inflated the worth of his carpet cleaning company through phoney sales and receivables, valuing it at almost $350 million but ultimately selling it for less than $60,000. 1 Even though the Enron tale highlights the misuse of Special Purpose Entities and the corresponding beyond-GAAP reporting, it was also guilty of improper financial reporting in relation to both sales and receivables. It misestimated future contract values using internal models in an effort to increase compensation and the company's stock price. For example, it reported the gross amount of the energy contracts it brokered for buyers and sellers rather than the more reasonable fees earned by Enron. In Wells [2004], a Canadian company is featured, and European companies have also joined the fray, lest you think that these kinds of false comments are only made by American businesses.

It is more customary for businesses to simply speed up revenues and receivables in an effort to boost earnings and match analyst projections. For instance, Sunbeam employed a "bill and hold" method (See Spiceland, p. 330), whereby they sold products to merchants at steep discounts prior to the "season" in which such sales typically occurred, and then stored the products in third-party warehouses to be delivered at a later time. As a result, the assets and revenues were transferred to a previous quarter, which improved the reported profitability and financial condition for that time. 3 In the early 1990s, IBM employed a set of deceptive practises that were considerably worse.

When machines were simply relocated to storage facilities prior to installation, receivables would result. This might be seen as a more egregious example of revenue recognition breach because IBM's "product" contained more than simply machines and installation; it also included client training and satisfaction. IBM also offered reimbursements if prices fell within a specific time period (a likely occurrence, making the ultimate receivable much less valuable).

Last but not least, in the variety of accounts receivable systems, this asset may be misstated due to a subpar calculation of the bad debts contra account, whether intentional or not. Giving accountants the freedom to forecast future collections might lead to either too high or too low net realisable values and bad debt expense. Overstating accounts receivable (and understating bad debt expenditure) served as a stepping stone to blatant false reporting in the cases of MCI and CFS, respectively. Finance manager Walter Pavlo initially turned to crime, embezzling millions of dollars, narrowly avoiding a nervous breakdown, pleading guilty to a number of offences, and receiving a sentence of 41 months and $5.9 million in restitution. This was after initially being found guilty of hiding bad debt to temporarily boost MCI's dwindling earnings. 5 Similar to this, Commercial Financial Services (CFS), a business that specialised in purchasing past-due credit card debt, was described by Zellner [1998] as being able to recover a staggering 30 cents on every dollar invested (in an industry in which the norm is 15 to 23 cents). The chief executive officer and the rest of his board of directors resigned as a result of the discovery of this inflated asset, endangering the stability of this emerging market. Other instances exist, but this one should serve as an excellent illustration of the potential consequences of poor accounting and/or accountants.

Less frequently, empirical investigations are conducted in the field of accounts receivable. Accounts receivable and the allowance for bad debts are both taken into consideration in one fundamental study [Lev and Thiagarajan, 1993] for using accounting data to assess the quality of earnings. According to the authors, disproportionate rises in accounts receivable (compared to sales) are associated with losses in future earnings, whereas the provision for bad debts has little or no impact on how to assess earnings persistence. The majority of empirical research cover the broader subject of manipulating and managing earnings. Rosner's 2003 paper, "Earnings Manipulation in Failing Firms," and Beneish [1999] are two of the greatest of these studies. The first looks on whether failing businesses are driven to fabricate financial data in order to hide their problems. When compared to control, non-distressed enterprises, the author finds that increases in accounts receivable are considerably bigger, which raises the possibility that financial difficulty is concealed by overstating receivables. In a similar vein, Beneish finds significant overstatement of accounts receivable in a study of profits manipulation in a group of enterprises from 1982 to 1988. According to a third empirical study by McNichols and Wilson [1988], businesses on the verge of failure use this adjustment much more frequently than businesses with more stable financial standing. This study specifically examines the use of the bad debts provision for masking true earnings patterns.

What then are the solutions to the manipulation conundrum? Receivables should be recorded at market value (rather than at the face or "gross" amount), according to a guest editorial by Robert Sterling in a 2003 issue of Abacus. However, estimation would still be necessary both when the receivable is added to the books and again when the financial statement date arrives. Wells (2004) provides a useful road map for identifying fraud, but he makes no suggestions for stopping it. Sarbanes-Oxley clearly tackles the issue in a more general approach by making executives more aware of their duty to verify the correctness of the reported receivables.


This article served as the second in a series of succinct pieces created to link the theoretical ideas of the conceptual framework to the different accounting components. The post highlighted a few approachable publications that addressed the measurement concerns related to receivables, looked at some headline stories, and provided insights into the asset known as Accounts Receivable. The series' next article will examine the main issues that accountants deal with when measuring and reporting inventories, another recent source of accounting crises.


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ACCT20080 Governance & Ethics Assignment Sample

Assignment Details

Weak corporate governance, creative accounting and compromised independence of statutory auditors are the three most unholy trinity for dilution of ethical practice and public trust of the corporate world.

The corporate scandal of Satyam Computer Services Limited is a classic business case where confluence all three phenomenon, weak corporate governance, creative accounting, and compromised independence of statutory auditors, can be found.

In 1992 Satyam Computer Services Limited was listed on the Bombay and Hyderabad stock exchange and in 2001, the company was listed on the New York Stock Exchange. Over the years the company projected a phenomenal growth and operated in 66 countries. Its high-profile clients include General Electric, Qantas, Nestle´ and British Petroleum. Satyam and its chairman Ramalinga Raju received awards for excellence in corporate governance, professional conduct and for the company’s corporate social responsibility.

As the business grew, the company also claimed the growth of its employees upto 53,000 and out of this inflated figure 13000 were ghost employee. These ghost employees’ salaries were used as legal deductable expenses to siphon out company’s profit. This deception was maintained more than a period of 10 years because of weak corporate governance, compromised professional conduct of auditors, and due to creative accounting.

Based on the suggested readings and other literature review write a reflective essay of 3000 words in this format covering following aspects

1. Part A Highlight conceptual understanding of corporate governance, creative accounting, and independence of statutory auditors.

2. Part B Conduct a literature review on ethical issue relating to weak corporate governance creative accounting and compromised independence of statutory auditors.

3. Part C Discuss the corporate scandal of Satyam Computer Services Limited and explain why do you believe the corporate scandal of Satyam Computer Services Limited happened due to:

a) Weak Corporate Governance, b) Creative Accounting, and c) Compromised Independence of Statutory Auditors.

4. Part D In the APES 110 Code of Ethics mention about – “ The fundamental principles are integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour“ Explain how these fundamental principles were violated or compromised by the chairman Ramalinga Raju, the Companies’ Corporate Governance team and Statutory Auditor.

5. Part D Provide a recommendation based on literature review how corporate governance can be strengthened, how to detect creative accounting and how to strengthen the public trust of Statutory Auditors

Please note your literature review should not be limited only to suggested readings.

You must submit:

You must submit an individually written essay about ethical behaviour and ethical decision- making in the following format:

1. Title Page

2. Executive Summary (indicative only- 10% of the word limit)

3. Introduction (indicative only - 5% of the words limit)

4. Maximum of 2,000 words, consisting of Parts A, B , C , D and E (as shown above). Use headings to clearly indicate which part is being answered. Provide in text reference.

5. Recommendation & Conclusion (indicative only 500 words)

6. References


1. Executive summary

The accounting statements serve as the foundation for determining the financial health of the Organizations. The reliability, transparency, and authenticity of the financial statements positively reflect the ethical integrity of the company which helps in attracting various investors to the Company. On the contrary, poor quality of the financial statements harms the brand image of the Organizations and causes hindrances in the flourishment and prosperity of the Organizations. Corporate Governance strategies are pivotal to the success of Organizations and help in averting future risks that would otherwise harm the reputation and progress of the Organizations adversely which is evident from the Satyam scandal case. Adherence to the code of ethics in accounting helps in maintaining reliability, transparency, and fairness in the financial statements which would preserve the trust of the investors. The study has revealed the different ways in which the ethical integrity of the financial statements was harmed had triggered one of the biggest financial scandals in India. Furthermore, the study has highlighted the role of creative accounting that was adopted by the Organizations to maneuver the financial statement to acquire the trust and faith of the investors.

The case of Satyam Services revealed that the financial statements were manipulated and the acquisition of Maytas Infrastructure was initiated by the higher executives of the Company to bridge the existing gaps in the financial statements and cover the manipulation. The study has also emphasized the impact of compromising the independence of the statutory auditors that negatively influence the authenticity and reliability of the audit reports to justify the monetary health of the Organizations which triggers future risks. Furthermore, different recommendations have been provided to enhance the overall quality of corporate governance, detect creative accounting, and preserve the trust of the public in the statutory auditors.


The study aims to highlight the concept of corporate governance, creative accounting, and the role of the independence of statutory auditors for best assignment help. The study has revealed the different ethical issues budding due to weak corporate governance strategies in the Organizations, the prevalence of creative accounting, and the independence of the statutory auditors in the Organizations. Satyam Computer Services Limited was one of the most renowned Companies in India and had also received numerous awards for performing exceptionally well also the Company was the first to implement International reporting Standards into the accounting system. The study has focused on the role of weak corporate governance, the devastating impact of creative accounting, and the independence of the statutory auditors that had led to the corporate scandal of Satyam Computer Services Limited. Furthermore, the study has also emphasized how the different ethical principles were violated by the Organization. Moreover, different recommendations have been provided in the study to probe creative accounting and improve the functioning and conduct of the statutory auditors which would help in restoring the trust and faith of the public.



a. The concept of Corporate Governance

The case study of the scam of Satyam Computers serves as an eye-opener for all the Organizations of the present era to adopt suitable corporate governance initiatives to prevent the possibility of risks and frauds in the future. Satyam Computers was one the leading Organizations in India and had also won several awards but due to the misrepresentation in the financial statements, the reputation of the Company was damaged adversely. According to Rishi & Singh (2011), Organizations in the present era must prioritize the different interests and the needs of the investors by implementing suitable corporate governance strategies. Furthermore, the corporate governance strategies adopted by the Organizations would help in monitoring and modifying the different Organizational processes and strategies that would help in mitigating the possibility of future risks that are harmful to progress and growth.

Corporate Governance encompasses different rules, regulations, and principles to align the functioning of the Organizations with the various needs and requirements of the stakeholders (both internal and external stakeholders). The Corporate Governance policies and regulations are effectuated by the higher management team of the Organizations. Furthermore, good Corporate Governance strategies implemented by the Organizations help in positively reflecting the responsibility of the Organizations toward the stakeholders (Naciti, Cesaroni & Pulejo, 2022). The Corporate Governance policies are also aimed at preserving transparency and fairness in the different operations and initiatives that are undertaken by the Organization. Moreover, Organizations that are committed to Corporate Governance are also able to reduce the susceptibility to future risks that harm the brand image and reputation adversely.

b. Creative accounting

Creative accounting is the strategy of deriving benefits from the existing gaps in the accounting laws, regulations, and standards to maneuver the financial record of an Organization. The application of creative accounting makes the financial records of an Organization appear fair, transparent, and compliant with the different legal regulations and policies. Furthermore, creative accounting makes the financial statements of an Organization appear as steady through maneuvering, but in reality, the monetary health of the Organization is poor (Bhasin, 2016).

c. Independence of statutory auditors

Saha & Roy (2015) have highlighted the role of the independence of the statutory auditors which play an active role in triggering huge monetary scandals in Organizations. The study has emphasized the role of the statutory auditors in the monetary scandals that occurred in India, the U.S.A, and the U.K.
Considering the case of the monetary scandal in Satyam Computer Services, no safeguards were present, and the external evaluation of the auditing operations performed by the statutory auditors was not done properly. Furthermore, no standard framework was available to the statutory auditors who had done the auditing operations in Satyam Computer Services which had raised the independence of the auditors. Henceforth, the existing loopholes in the auditing process played an active role in the occurrence of the monetary scandal in Satyam Computer Services in India (Roy & Saha, 2016).


a. Ethical issues arising from poor Corporate Governance

According to the research study of Benson & Ganda, 2022,), a poor corporate governance system harms the overall Organizational performance which worsens the sustainability of the Organizations in the long run and worsens the relationship with the stakeholders. Furthermore, the Organizations have to disclose the reports of corporate governance and business sustainability annually, weak corporate governance policies cause a decline in the Company's performance which reflects in the financial records and sustainability reports. Henceforth, the decline in Organizational performance negatively influences the relationship with the investors and the stakeholders due to the lack of accountability and commitment of the Organizations. The Organizations also adopt various corruptive practices to maneuver the performance of the Organization which triggers corruption, and fraud, and also negatively reflects fairness and transparency in the overall Organizational functioning.

b. Ethical issues arising from creative accounting

Creative accounting makes the financial statements of an Organization appear transparent and fair despite the poor financial condition of a given Organization in reality through maneuvering. Creative accounting makes the financial statements of an Organization appear in compliance with the different legal regulations and policies but the financial statements in reality are in contravention of the different ethical standards and laws of accounting. Furthermore, creative accounting violates different accounting ethics and also increases the susceptibility of the Organizations to fraud which destroys the reputation and credibility of the
Organizations adversely.

Creative accounting also violates the different ethical principles in the field of accounting which results in the misrepresentation of the financial statements of an Organization. Firstly, when the accounting statements are maneuvered, the integrity of the financial statements is harmed which negatively impacts the relationship with the stakeholders. Secondly, creative accounting causes bias in the financial statements which harms the overall objectivity of the financial statements. Thirdly, creative accounting derives the benefits from the loopholes in the accounting laws and standards to manipulate the financial statements which are in contravention to the professionalism in the field of accounting.

c. Ethical issues due to the compromising of the independence of statutory auditors

The auditors must perform the different auditing operations independently without getting influenced which could otherwise lead to the misrepresentation of information and harm the reputation of the Organization (Threats to auditor independence, 2022).

When the auditors get influenced and are biased by the superiors of the Organization, the reliability and the fairness of the financial statements get negatively impacted which would ultimately cause a decline in the overall financial stability of the Organization. Furthermore, the superiors of the Organizations often bribe the auditors to maneuver the financial statements, and sometimes the auditor might be an employee of a given Organization due to which the flaws committed get covered due to which the ethical integrity is harmed. The good relationship of the higher executives with the auditors triggers bias due to which the auditors get coerced to apply creative accounting to falsely represent the financial statements of the Organization which is in contravention the accounting ethics.


The role of weak corporate governance, creative accounting, and compromised independence of the statutory auditors in the corporate scandal of Satyam Computer Services Limited have been discussed below-

a. Weak corporate governance

The analysis of the case of the corporate scandal of Satyam Computer Services Limited had given an idea of the role played by a lack of a positive purpose and poor evaluation strategies of the different Organizational processes and operations in the downfall of the company. Furthermore, the different observations that were made from the financial statements of Satyam Computer Services Limited included misrepresentation of the revenue generation and misrepresentation of the liabilities and the assets of the Organization. Furthermore, manipulation was also observed in the salary accounts of the Organization and the fundraising strategies adopted by the Organization. The irregularities in the financial statements of the Organization had got revealed during the acquisition of Maytas Infrastructure Limited. Poor leadership strategies, lack of authenticity and transparency of the financial statements, and poor documentation methodologies worsened the effectiveness of Corporate Governance in the given Organization (Bhasin, 2013).

Moreover, the Company lacked a suitable code of conduct and did not implement suitable policies and regulations to monitor the various processes and operations which were in contravention of the interest of the Organizational shareholders.

b. Creative accounting

The concept of creative accounting was prevalent in the case of the corporate scandal of Satyam Computer Services Limited. The financial statements were actually in contravention of the different regulations and policies of the Indian regulatory authorities. The financial statements of the Organization were manipulated using creative accounting. Furthermore, the strategy of the acquisition of Maytas Infrastructure was initiated to mitigate the existing gaps and loopholes in the financial statements of the Company (Bhasin, 2013).

c. Compromised independence of the Statutory auditors

The ethics of auditing was violated adversely by the auditors while auditing Satyam Computer Services Limited. The threats on the grounds of self-interest, familiarity, and intimidation were observed in the corporate scandal case of Satyam Computer Services Limited (Bhasin, 2013).

PricewaterhouseCoopers had conducted the auditing operations in the Organization but no irregularities in the financial statements were detected by the auditors which indicate the compromised independence of the statutory auditors. Henceforth, further investigation into the case revealed that the auditors did not verify the different suspicious financial transactions properly which had negatively reflected the code of conduct in the Company.


The violation of the various fundamental accounting principles in the Satyam scandal has been discussed briefly below-

a. Violation of integrity

The financial statements were found to be manipulated by Satyam Computer Services Ltd. which was a violation of the ethical code of integrity (Duska, Duska & Kury, 2018). Furthermore, the auditors of Satyam Computer Services Ltd. had carried out the auditing operations for nearly ten years and were unable to identify the manipulation in the financial statements.

The conduct of the organization with the investors was also deceptive due to the manipulation of financial statements that were done to make the company's financial statements appear stable which was in contravention of the ethical code of integrity in accounting.

b. Violation of objectivity

The fraud that PricewaterhouseCoopers was unable to detect (audited Satyam Computer Services for nearly 10 years) was detected by Merrill Lynch in nearly 10 days which indicates the lack of objectivity in the auditing operations (Duska, Duska & Kury, 2018).
Furthermore, the auditors might have colluded with the higher officials of Satyam Computer Services Limited due to which the financial misrepresentation was overlooked which is a violation of the ethical code of objectivity.

c. Violation of professional competence

Satyam Computer Services Ltd. was the first Indian Organization to implement International Financial Reporting standards but the monetary scandal negatively reflected the commitment to the professional competence of the Organization.
The manipulation of the financial statements and lack of detection of the creative accounting signifies the gross violation of the ethical code of professional competence by the given Organization (Duska, Duska & Kury, 2018).

d. Violation of confidentiality

The financial misrepresentation in Satyam Services indicates that the manipulation of the financial statements was done for personal advantage by the higher authorities which violated the ethical code of confidentiality (Duska, Duska & Kury, 2018).

e. Violation of the ethical code of professional behavior

The violation of the different regulatory compliances and standards (like the regulations of SEBI) of accounting was observed in the case of manipulation of the financial statements in the Satyam scandal which was in contravention of the ethical code of professional behavior.


a. Recommendations for strengthening the Corporate Governance

According to Veselovsky et al. (2018), one of the major ways in which corporate governance could be strengthened in Organizations is through the evaluation of the quality of corporate governance after regular intervals based on different parameters. Firstly, the activities and the priorities of the shareholders must be determined and checked with the existing corporate governance strategies in the Organizations and necessary modifications must be made. Secondly, the dividend and the compensation policies in the Organizations have to be evaluated and modified periodically when irregularities would be identified. The functioning of the auditors and the audit reports must be evaluated by the Organizations to make the necessary improvements in the Organization and ensure adherence to the different regulatory compliances and policies. The brand image of the Organizations in the mind of the shareholders has to be identified and the gaps and deficiencies have to be bridged adequately.

b. Recommendations for effective detection of creative accounting

As per Al-Olimat et al. (2020), creative accounting practices could be detected through the application of the cognitive capabilities of the auditors. Firstly, the recruitment board in the Organizations must evaluate the academic performance and the skillset of the auditors. Secondly, the awareness and knowledge base of the auditors on the different auditing laws and participation in various training and development programs have to be evaluated to determine the competency of the auditors in detecting creative accounting. Furthermore, the proficiency of the auditors in using the different tools and technologies used in the auditing processes must also be determined.

c. Recommendations to strengthen the public trust of statutory auditors

According to Ottaway (2013), the audit reports must be scrutinized properly by the Organizations which would help in determining the existing gaps and deficiencies in the accounting statements. The MAFR strategy that has been recommended in the given study would help in enhancing the independence of the statutory auditors in the Organizations that would help in improving the effectiveness of auditing. Furthermore, the U.K. re-tendering regime that has been highlighted in the study would also help in improving the reliability and the monitoring of the accounting statements which would help to preserve the public trust.

4. Conclusion and Recommendations

Corporate Governance serves as the foundation for reinforcing the brand image of the Organizations and ensures that the Organizations adhere to the different regulatory compliances and policies. The study helped in understanding the importance of the different educational credentials and skill sets that are needed to be evaluated for hiring auditors for Organizations. The recruitment of qualified and proficient auditors helps in identifying the various deficiencies and gaps in the accounting system of the Companies which degrades the reliability, transparency, and authenticity of the financial statements. Furthermore, the financial scandal of Satyam Computer Services Ltd. served as an eye-opener and a guiding force to the different regulatory authorities and the auditors to improve corporate governance strategies and detect creative accounting. The independence of statutory auditors plays a major role in improving the overall effectiveness of auditing operations and preserving public trust. PricewaterhouseCoopers (PwC) was the auditor for Satyam Computer Services for nearly 10 years which had lowered the independence of the statutory auditors and harmed the quality of the financial statements due to the presence of bias and involvement of higher management. Henceforth, the irregularities in the financial statements of the Organization were undetected by the auditors of PwC but Merrill Lynch was able to detect the irregularities within a tenure of 10 days. A gross violation of the various ethical codes of accounting was observed in the given corporate financial scandal of Satyam Computer Services Ltd. Moreover, the authenticity of the audit reports and compliance with the different regulatory standards forms the base of the Organizations to brighten the brand image that facilitates growth and flourishment.

The different recommendations based on the financial scandal of Satyam computer services Ltd. have been discussed below-

Firstly, the corporate governance strategies in the Organizations are needed to be evaluated periodically and the necessary improvements have to be made which would help in averting the possibility of future risks by resolving any kind of irregularities that have been identified. Furthermore, Organizations should prioritize the different needs and requirements of the stakeholders before formulating different Corporate Governance strategies.

Secondly, the Organizations must modify the recruitment strategies and criteria for hiring the auditors after regular intervals which would help in hiring the relevant candidates. Furthermore, recruiters must not only evaluate the academic credentials of the auditors but the skill sets, training, and awareness programs attended must also be evaluated which would facilitate better detection of irregularities and improve the quality standards of auditing.

Thirdly, the Organizations must ensure that the performance of the auditors is not biased by any kind of external influences and is aligned with the different fundamental accounting principles. The audit reports must be evaluated and verified by the Organizations to detect the presence of any kind of irregularities.

References list


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ACCY902 Forensic Accounting Assignment Sample

The following must be included/followed:

- An essay of approximately 300 words on a separate page. A concise summary of the main aims, arguments, and conclusion(s) reached in the essay

- Introduction - Provide a clear and concise- introduction of the topic and how the essay will address the topic in the remainder of the content.

- Body/main evaluation - relevant and specific - discussion of the issues identified well, developed arguments, use of examples and research throughout to support arguments.

- Conclusion - strong, clear, concise summary of findings and recommendations.

- Are ference list including all references that have been used AND cited in the essay, with the heading REFERENCE LIST and presented starting on a new page. DO NOT list references that you did not cite in the essay.

- Harvard referencing must be used (both in-text referencing and a reference list)

- 12p font

- 1.5 line spacing

Explain the role of forensic accounting in preventing, detecting and overcome financial crimes such as cybercrime, money laundering, financial fraud and terrorist financing.



Forensic accounting is the application of financial and investigative abilities to settle disputes in civil and criminal cases (Akinbowale et al., 2020). In investigation, the accountants applies the principles, theories and discipline to facts to handle any kind of financial dispute but a relevant process is followed for crime detection. The essay for assignment help focuses on role of forensic accounting in financial fraud detection and prevention.


Forensic accounting includes the role of skilled auditors, accountants, and researchers of legal and financial records who are engaged by businesses to look into any potential indications of fraud or to simply stop fraud from happening (Utomwen and Danjuma, 2015). There is increasing problem of financial fraud such as money laundering, finances provided to terrorist, etc (Mc kinsey and Company, 2019). Considering example of Enron Accounting Scandal in 2001, company had biggest accounting scandal of $70. The full extent of Enron's wrongdoing was only discovered when the accountants looked beyond the inflated numbers (not like auditors going through all financial statements). In the end, Enron was accused with disguising debt agreements, manipulating stock prices and debt ratings, and making false statements about its financial position and earnings (The financial cell, 2021). Due to the fact that there will be a public jury in the fraud case, this is critical. However, internal auditors may not be able to provide the evidence required by a court or regulatory agency. Risks of consultant negligence and legal liability may arise if checklists are utilized in lieu of consulting an internal auditor (Tiwari and Debnath, 2017).

The process of forensic accounting starts with obtaining as much information as possible from customers, suppliers, stakeholders, and anybody else associated with the organisation (Enofe et al., 2015). Next to this, accountants perform a study of any background information that is been provided, as well as a review of any financial statements is been given, in order to find any flaws or faults in the reporting of those financial statements (Okpako and Atube, 2013.). The next step is to talk to employees to see if they can provide any light on where the fraud is taking place. Among the many things accountant will look at the foundational ideas of the business, employee evaluations, management styles, and the overall structure of the firm (Akinbowale et al., 2020). The forensic accountant will next attempt to draw conclusions from the data they have gathered when this stage is complete. Therefore, it is important to incorporate forensic accounting in financial operation so that future risk is avoided (Utomwen and Danjuma, 2015).


The essay concludes that to detect and prevent fraud organisation require an integration of specialized knowledge, auditing, data collection and analysis and taking a certain action. Organisation require a role of an expert accountant as it looks towards the financial operations and it regularly search for errors and it also monitors the poorly documented transactions.


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ACCY962 Wire Card Scandal Essay Sample

Your essay should cover the following:

The Wirecard collapse in Germany raised several issues with regard to accounting and auditing. Discuss three audit issues that arose during the Wirecard collapse. Refer to APES 110 in your answer.

Students must reference at least 5 academic journals (and 5 or more newspaper or professional accounting magazine articles), and any applicable audit or ethical codes or standard(s). Students should also identify any other standards or references to the Code of Ethics for Professional Accountants, which should have enabled the auditor(s) to identify and address the problems in the Wirecard Audit. Less than 10 references will be considered insufficient.


APES 110 Code of Ethics for Professional Accountants is a set of rules and regulations a professional auditor must comply with while auditing its client is based on the International Code of Ethics for Professional Accountants (including International Independence Standards) and the Final Pronouncement: Revisions to the Code Pertaining to the Offering and Accepting of Inducements of the International Ethics Standards Board for Accountants (IESBA), published by the International Federation of Accountants (IFAC) in April 2018 and July 2018 respectively, and is used with permission of IFAC (Apesb.org.au, 2022). In relation to APES and the violation of the code of ethics, a case of multi-billion fraud by Wirecard is addressed.

According to an article published by ABC News, the CEO of a prominent payments company Wirecard and two other ex-managers of the company was charged with fraud and false accounting, and it is believed that they had a significant role in the collapse of the company in 2021 (abcnews.go.com, 2022). For Assignment Help, The allegations raised by Germany's prosecutors stated that most of the company assets and its revenue were made up and presented in the company's financial statements. As mentioned in the article published by the Financial Times, 1.9billion euros were missing from Wirecard's accounts (ft.com, 2022). The article published by ABC News also stated that ex-CEO of Wirecard, Markus Braun, knowingly signed off on the false financial reports (abcnews.go.com, 2022). The prosecutors mentioned that Wirecard recorded false revenues attributed to several partnerships with international companies; the company used fake documents to show that the company had funds. Wirecard's former head of accounting and the managing director of a subsidiary company based in Dubai were also charged with fraud and false accounting. The banks were severely affected as the fraud cost them nearly 3.1 billion euros. The banks which provided funds for the company have to write off the loans (abcnews.go.com, 2022).

The first issue discussed is the Breach of Integrity. According to the Code of Ethics for Professional Accountants (including Independence Standards), section 100.1 A1 states that the accountancy profession is responsible for acting in the public interest (Apesb.org.au, 2022). The accounting professionals are not exclusively responsible for satisfying the requirements of the client or the organisation employing them. However, in the case of Wirecard, the organisation's members did not comply with the ethical code of APES 110 (Apesb.org.au, 2022). The members acted in the interest of the legal entity hence violating the code of ethics.

Under Subsection 111 - Integrity, R111.1 states that a member should comply with the principle of integrity (Apesb.org.au, 2022). This subsection necessitates the members to be direct, straightforward and honest in all sorts of business and professional relationships. However, this code was also violated by the CEO of Wirecard, Markus Braun and EY (Ernest &Young), the independent auditing firm (Ft.com, 2022). The independent auditor of Wirecard, Ernest &Young, has long speculated foul play by the company (Reuter.com, 2022). The auditing company decided to closely monitor Wirecard's payment settlements by partners in Asia. Upon scrutiny, it was discovered that the online merchants supposedly identified as Asian clients of Wirecard did not exist (Bloomberg.com, 2022). The executives of Wirecard carefully orchestrated the records to make the auditing firm believe that the payments were genuine and the partners in the Asian region were real. This is a direct violation of the APES 110 code of ethics. R111.2 under subsection 111 - Integrity states that a member should not be associated with having knowledge of returns, communications, reports or other information where they believe the information under clause (a) contains false or misleading financial statements, (b) contains information or statements presented carelessly (c) omission or obscuring necessary information which may mislead (Apesb.org.au, 2022). In this regard, Azim and Sharif (2021) stated that the member of Wirecard violated clause (a) of APES 110 code of ethics, as the CEO of the company knowingly signed off the financial statement, hence associating himself with the falsified financial statements.

Under subsection 111 - Integrity, 111.2 A1 states that presenting a reconciled financial report concerning a breach under R111.2 effectively disassociates the organisation's member from such breach of code. According to Apesb.org.au (2022), this violation could have been avoided if the CEO of Wirecard had provided a reconciled report with respect to the breach under R111.2. As Engelen (2021) mentioned, the CEO of Wirecard did not take such action and continued to present falsified statements and reports to the auditing firm and mislead them for nearly a decade. According to Krahnen and Langenbucher (2020), the APES 110 code of ethics has also laid down a provision under subsection 111 - Integrity; R111.3 allows the member of the organisation to take necessary steps to dissociate themselves when he or she becomes aware of a breach under R111.2 and is being associated with the event. As stated by Stadtmann and Croonenbroeck (2019), there were no such steps taken by the CEO and the executives of Wirecard; it implies that the CEO and the executives of the company were aware of the fraud, and this took place in their supervision and knowledge.

The second issue identified is the threat to compliance. A parliamentary investigation listed several incidents where Ernst & Young failed to take necessary steps to unearth the multi-billion euro fraud by Wirecard. According to the article published by Bloomberg, the documents and reports presented to Ernst & Young by Wirecard executives were either verbally or written statements. The documents were not substantiated by neutral third parties such as foreign banks. The auditing firm came under severe criticism for auditing Wirecard, and a criminal lawsuit was filed against the auditing firm. The article published by Bloomberg also stated that Ernst & Young was the sole auditor of Wirecard until the company's collapse; the auditing company defended itself by stating that they were a victim of an elaborate fraud.

APES 110, Section 120, subsection 120.1 states that certain circumstances in which a member functions might threaten compliance with the stated fundamental principles of ethics (Apesb.org.au, 2022). Under section 120, subsection 120.2, the conceptual framework has mentioned the approach for a member under clause (a) that to identify threats to compliance with the fundamental principles, clause (b) states the evaluation of threats identified, and clause (c) focuses on addressing the threat by mitigating or decreasing it to an Acceptable Level. Apesb.org.au (2022) has also stated that section 120 has set out the requirements and application material along with incorporating the conceptual framework to aid members in compliance with the fundamental principles and adhering to their responsibilities to act in the interest of the public. These requirements and application materials consist of an elaborate set of facts and situations along with several Professional Activities, relationships and interests. These may create scenarios where the threat may arise to comply with the fundamental principles. They also prevent Members from deciding that a scenario is permissible just because the code does not explicitly prohibit it.

In light of the conceptual framework of APES 110, Section 120 and the case of Wirecard, it can be said that Ernst & Young did not adhere to the fundamental principle. There could be several reasons for the auditing firm not adhering to the laid out fundamental principle of APES 110. As mentioned by Stadtmann and Croonenbroeck (2019), one fine example is when Ernst & Young conducted an Anti-Fraud investigation called Project Ring in 2016. The investigation conducted by the auditing firm discovered several accounting issues in the books of Wirecard. According to Fortune (2022), the auditing firm came across nearly 20 issues in their books. However, according to Azimand and Sharif (2021), Ernst & Young still signed off the financial report based on late replies from Wirecard's board, and Ernst & Young certified the 2016 financial statements without following up to get written verification. As stated by Voss (2020), to a certain extent, this action of Ernst & Young implies that the auditing firm might have been in some kind of threat which prevented the firm from complying with the fundamental principles of the audit and accounting code.
Subsection R120.9 re-evaluates and addresses threats that have been removed or lowered to an acceptable level if new information or modifications in facts and circumstances are discovered. Therefore, Ernst & Young, at the time of discovering the threat, could have taken the necessary steps to lower it to an Acceptable Level (Apesb.org.au, 2022).

The third issue which was discovered was the non-compliance with law and regulations. As per section 360(1), auditors of Wirecard are required to comply with fundamental auditing and accounting principles. It is the auditor's responsibility to apply the framework conceptually, which is identified in section 120. This framework helps auditors to identify and evaluate threats. Section 360(2) defines that Ernst & Young is unaware of the non-compliance of law and regulation of auditing standards (Apesb.org.au, 2022). Because awareness of non-compliance creates integrity and professional behaviour, which helps to protect the public interest from threats. Ernst & Young does not maintain suspected non-compliance-related laws and regulations during auditing in Wirecard. Section 360(3) defines awareness of non-compliance to help the auditor assess the matter's implication (Apesb.org.au, 2022). It also helps to assess possible courses of action where auditors should make an activity-related chart for their auditing team.

During auditing in Wirecard, every member of the team should follow the chart to complete the audit. As per section 360 sub-section 3 clauses (a), law and regulation help disclose Wirecard's financial statement items and help determine material amounts. Clause (b) defines other laws and regulations not directly related to the Wirecard financial statement to determine material amount and disclosure (Apesb.org.au, 2022).

Other laws and regulations affect the operating aspect of a business. Other laws and regulations affect business and avoid Wirecard incurred material penalties related to expenditure. In the given case, auditors do not respond to suspected non-compliance and non-compliance. Due to this, the public interest is affected (Jo et al. 2021).

Auditors should maintain integrity and professional behaviour; auditors are required to communicate those matters that affect the financial statement of Wirecard. In the given case, auditors are required to communicate cash transactions if auditors find any deficiency between the cash book and bank statement (Nyreröd et al. 2021). The auditor does not communicate this material transaction to the appropriate authority or those charged with governance of Wirecard, or it also happens that the auditor communicates material transactions, but the appropriate authority refuses to rectify the transaction. It is also the auditor's responsibility to give an adverse opinion or disclaimer of opinion in their auditor's report (Jo et al. 2021).

The auditor omitted this section in their opinion. Management and those charged with governance of Wirecard are also responsible for seeing whether client business is conducted in accordance with law and regulation. Management is also responsible for assessing and identifying NOCLAR for any individual who is working under the client's direction, a member of management, any individual who is charged with Wirecard governance and any member of management (Nyreröd et al. 2021). Wirecard fines and other consequences depend upon NOCLAR. It also affects the financial statement of Wirecard. NOCLAR also harms potential investors such as creditors, investors, the general public and employees. Due to non-compliance with law and regulation in the case of NOCLAR, Wirecard collapsed and was bankrupted. And it harms creditors, investors, the general public and employees (Jo et al. 2021).

According to Ft.com (2022), priority is given to the investigation of Wirecard's ex-executive by Munich prosecutors. No one has been charged as a result of either inquiry. Former CEO Braun, who is in judicial custody, denies any involvement or awareness of involvement in the payments business he formerly ran. Although Ernst & Young had some unexpected help from inside the company, it was still a difficult situation for the company. Some employees at the organisation were ecstatic when they learned that Wirecard was a scam in June 2020. People acquainted with the scene said that a senior Ernst and Young partner ecstatically exclaimed, "We nailed them." It is still unclear why Ernst & Young was unable to "nail" the Wirecard scam sooner.


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