Essay on Independence Issue in Hih Case
Introduction:
This essay discusses about the corporate collapses in the new millennium. In recent years the Australian corporate sector has witnessed the failure of number of corporations, including HIH Insurance, Harris Scarf, One. Tel, Ansctt Australia. This paper focuses on the financial audit of HIH insurance, which collapsed on 15th March 2001. This was the largest failure in Australian business history. Royal commission was appointed investigate re-issue of HIH Insurance collapsed with debt estimated $5.3 billion Australian dollars (Mirshekary, S, 2005). A brief review of the incidence of corporate failure will be provided prior to an analysis of the collapse of Health International Holding (HIH) and the involvement of its auditor, Anderson. The issue of audit independence is of basic importance in the collapse of HIH. In order to give arguments it is mandatory for all professional auditors to comply with the joint code of professional conduct conventional by the Society of Certified Practicing Accountants (CPA) Australia and the Institute of Chartered Accountants Australia (ICAA). The collapse of the insurance giant HIH in Australia and Enron in United States has been mechanism for considerable changes in financial report auditing. Many of these changes focus on the presence and extent of the auditor independence. A major issue of the Auditor independence is the treats to independence are usually restrained and difficult to measure.
Overall scenario behind the corporate collapse in Australia
In recent years, the failure of Arthur Andersen as one of the biggest auditing firm and its involvement in the issue of the unexpected collapses in Australia(HIH) and USA(Enron and WorldCom). The reasons behind the corporate collapses were regulatory failure, gross fund mismanagement, their excessive discounting, management’s self interest, price cutting strategy, lack of transparency and integrity in the corporation etc; (Tina et al. 2005). During the year 2001,
This essay discusses about the corporate collapses in the new millennium. In recent years the Australian corporate sector has witnessed the failure of number of corporations, including HIH Insurance, Harris Scarf, One. Tel, Ansctt Australia. This paper focuses on the financial audit of HIH insurance, which collapsed on 15th March 2001. This was the largest failure in Australian business history. Royal commission was appointed investigate re-issue of HIH Insurance collapsed with debt estimated $5.3 billion Australian dollars (Mirshekary, S, 2005). A brief review of the incidence of corporate failure will be provided prior to an analysis of the collapse of Health International Holding (HIH) and the involvement of its auditor, Anderson. The issue of audit independence is of basic importance in the collapse of HIH. In order to give arguments it is mandatory for all professional auditors to comply with the joint code of professional conduct conventional by the Society of Certified Practicing Accountants (CPA) Australia and the Institute of Chartered Accountants Australia (ICAA). The collapse of the insurance giant HIH in Australia and Enron in United States has been mechanism for considerable changes in financial report auditing. Many of these changes focus on the presence and extent of the auditor independence. A major issue of the Auditor independence is the treats to independence are usually restrained and difficult to measure.
Overall scenario behind the corporate collapse in Australia
In recent years, the failure of Arthur Andersen as one of the biggest auditing firm and its involvement in the issue of the unexpected collapses in Australia(HIH) and USA(Enron and WorldCom). The reasons behind the corporate collapses were regulatory failure, gross fund mismanagement, their excessive discounting, management’s self interest, price cutting strategy, lack of transparency and integrity in the corporation etc; (Tina et al. 2005). During the year 2001,