Financial Analysis and Auditing Research

Question: Discuss about the Financial Analysis and Auditing Research. Answer: Introduction: Auditing refers to the process of testing and inspecting various kinds of accounts of an organisation. In this process, the auditors need to be honest and ethical at the time of conducting the audit operations of the organisations (DeFond and Zhang 2014). On the other hand, the auditors need to comply with all the necessary rules and regulations of auditing. In case of David Jones Limited, the company conducts its audit operations on a yearly basis. As per their latest financial report, Ernst Young was the audit partner of the organisation. The main aim of this study is to verify that whether the company has paid any money for any kind of non-audit services. In this regard, it is necessary to evaluate all the auditing aspects of the organisation (Furnham and Gunter 2015). As per the declaration of the organisation, it has developed a policy related to the independence of external auditor and the provision of non-audit services for assuring feasible practices in audit and financial governance. In order to ensure the policy success, the conflict of interest has been removed between the auditor and David Jones. The external auditor, Ernst Young, provides an independent declaration to the board and committee of David Jones in order to confirm its independence. In addition, it is the responsibility of the external auditor to confirm that it has not conducted any engagement, which would damage its independence in compliance with the Corporations Act and APES 110. The audit committee of David Jones would review along with approving or declining, when deemed necessary before the commencement of engagement. This is associated with the individual engagement for the non-audit services having fees above $50,000 or expected to be above $50,000. The audit committee of David Jones would not provide any work to Ernst and Young, if the former believes that such activity would violate the Corporations Act 2001 and APES 110. David Jones has prohibited its external auditor from providing certain services. These services constitute of developing financial statements and accounting records, design and implementation associated with systems of information technology along with valuation and internal audit services. The above table mainly depicts the overall audit and non-audit services, which Ernst Young has provided to David Jones during 2012 and 2013. It is inherent that the external auditor has provided assurance and taxation services to the organisation along with auditing and reviewing its financial statements. The total amount of non-audit fees paid on the part of David Jones to Ernst Young has amounted to $169,568 (88,200 + 81,368) in 2013 and $55,500 in 2012. The non-auditing services are subject to procedures of corporate governance and the audit committee has reviewed such services. Such review would help in assuring that the non-audit work would affect the objectivity and integrity of the auditor (William Jr, Glover and Prawitt 2016). References: Davidjones.com.au. (2017).[online] Available at: https://www.davidjones.com.au/~/media/David-Jones/Corporate/ASX-and-Media/2013/DavidJonesLimited2013AnnuaReport.ashx [Accessed 9 Jan. 2017]. DeFond, M. and Zhang, J., 2014. A review of archival auditing research.Journal of Accounting and Economics,58(2), pp.275-326. Furnham, A. and Gunter, B., 2015.Corporate Assessment (Routledge Revivals): Auditing a Company's Personality. Routledge. William Jr, M., Glover, S. and Prawitt, D., 2016. Auditing and Assurance Services: A Systematic Approach.Auditing and Assurance Services: A Systematic Approach.