Question 1
Australia has comprehensive legislative and professional requirements concerning the independence of auditors. The main requirements are specified in the Corporations Act, Australian Auditing Standards and the professional standards and guidance issued by the accounting professional bodies. Describe these requirements and discuss whether you believe they are adequate. What changes could be introduced to further improve auditor independence.
Question 2
Audited financial statements play a key role in ensuring the credibility of financial information. However, the 2011-2012 ASIC Audit Inspection program identified problems with auditors 'professional scepticism'. Discuss the nature of professional scepticism and summarise the problems identified by the ASIC inspection program. Recommend regulatory or quality control procedures which could be implemented avoid similar problems in the future.