Assessment for HI5026: AUDIT & ASSURANCE SERVICE By Druma Shukla VBE2027 Memo 1 FROM : Druma Shukla ADDRESS : 123 St NSW 567 TO : Dewey, Cheatem and Howe Mr. Tu Dewey ADDRESS : XYZ Street, ABC Town, NSW 1234 Email Address : xyz@abc.com Date : 25/05/2015 SUBJECT : Deregulation of General Purpose Financial Statements (GPFS) and to concede the quality of GPFS to market forces. Dear Mr. Dewey, I am writing this memo to acknowledge you’re concerns regarding the impact of market forces on the quality of the GPFS. Let me begin by saying that the importance of accounting standards in GPFS has been realized in many ways. The GPFS that …show more content…
Secondly, the principles and the agents also have different outlooks towards risk. The manager might be more willing to invest in certain areas of the company, which to the owners might see as loss, or over-investment with no chances of gaining profit or vice versa. Hence, there is always a need for a third party to come in and investigate the financial situation of the company in every regard, so that the principle can make informed decisions about where and how to invest his/her resources. …show more content…
Auditing the company regularly is essential to the steady growth and increase of the company because it not only keeps a look out for unsavory practices, ensuring that the employees aren’t conducting any illegal actions without the management’s permission. Furthermore, audits on GPFS that follow accounting standards allow all agencies to access fair information about the company and its finances. This makes the decision making process simpler and more conducive to the advancement of the company. Lastly, I would like to bring attention to the fact that the demand and supply chains keep fluctuating depending on many factors. People do not spend money to satisfy the needs of the market, hence these market forces cannot control the auditing process or affect the auditing and construction of the GPFS. You’re concern over the impact of market forces on the quality of the GPFS will hopefully be put to rest after going through the reasons mentioned above, outlining the importance of auditing and it’s relationship to accounting standards in the GPFS. Regards, Druma