HIH Insurance Statement
Student Term: Jinyun Wang
Student ID: MIT122634
Lecturer Name: Susan Currie
Tutor Name: Leslie Currie
Deadline: 29 as well as 1 as well as 2014
Submitted date: 7/ 2/ 2014 by email
The auditing profession performs a significant role in developing economies for several years. In the insurance industry, the way in which of auditing profession is regulated. The collapse of Health International Holdings (HIH) was recorded because the biggest corporate collapse inside the history of Australia. Also a study of Regal Commission was warranted by the HIH break. Two concerns considered inside the failures of HIH Insurance: Did the auditors apply their tasks and roles? Did the auditors fulfil their auditing work ethically? This survey provides an examination of auditing issues as a result of the failure of HIH Insurance. Between factors which have gave rise to the business failure of HIH Insurance, that of the ethics of auditing career, roles of auditors and effectiveness of audit committee have thought to be particular significance.
1 ) Introduction
HIH Insurance began when MW Payne Liability Agencies Pty Ltd was incorporated simply by Michael Payne and Ray Williams getting started with together to do business of insurance underwriter in Australia in late 1960s. Their functions were around the world, accompanied with businesses working in numerous countries including the United Kingdom, Fresh Zealand, Hong Kong, and the United states of america (Peursem, Zhou, Flood & Buttimore, 2007). There are many varieties of insurances inside the markets of UK, the united states and Quotes, involving compulsory insurance (for example, workers' compensation and third party automobile insurance) and non-compulsory insurance (for illustration, home contents and travelling insurance) (Kehl, 2001). A lot more than 250 part companies made up of HIH Insurance group within a highly complicated structure in the time liquidation. With net assets of $939 million for 31st June 2000, HIH Insurance used to be the second biggest underwriting insurance nationwide. With debt of about between $3. six billion and $5. a few billion, HIH Insurance was placed into eventual liquidation on 15th Drive, 2001 (Peursem et al., 2007). The collapse from the HIH Insurance was considered as the largest corporate failure inside the history of Aussie business. Consequently, the failure contributed to the establishment of any Royal Commission rate to make an investigation on ‘the degree of which will behaviours of employees, administrators, auditors, experts and actuaries give rise to HIH failure or concerned unfavorable company practices' appointed by the Australian authorities (Mirshekary, Yaftian & Get across, 2004). Mainly because HIH Insurance was a key insurer nationwide, its break had a popular impact on contemporary society (Leung & Cooper, 2003). The purpose of this report is always to analyse the audit issues arising from the HIH Insurance collapse. A short of HIH profile is definitely provided prior to the auditing evaluation of HIH Insurance fall. The next element of this paper is dedicated to examine concerns related to HIH audit methods with respect to taxation independence, examine committee and ethical concerns.
2 . Discussion
2 . one particular Audit Freedom
The issue of examine independence can be fundamental significant in the collapse of HIH Insurance. Review independence identifies giving an impartial and aim perspective in the assessment with the results, the performance of audit checks, and the launch of the audit report. This can be one of the auditor's characteristics on most crucial importance. In addition , freedom is basics of objectivity and honesty (Arens, Greatest, Shailer, Fiedler, Elder & Beasley, 2010). According to HIH Royal Commission (as cited in Mak, Deo & Cooper, 2005), the Royal Office discovered that Andersen was not self-employed and had not really...