Auditing Semester 1, 2018 INDIVIDUAL CASE STUDY ASSIGNMENT – WRITTEN REPORT Case study You are member of a team assigned to undertake research on major reasons and consequences of poor performance,...

INDIVIDUAL CASE STUDY ASSIGNMENT – WRITTEN REPORT
Table of Contents
Executive summary    3
Introduction    3
Methodology    3
Findings    4
The implication of the findings    10
Conclusion and recommendation    11
References    12
Executive summary
In the recent time, many of the company have ended its operation as they fail to adapt to the changing market needs. In the current research, we will conduct the study over the collapse or demise of the General Motor which was once leading the Australian market. For identifying the cause of the company failure we have collected data from the secondary sources to identify the reason behind the company failure. Further, we have identified few of the reason why the company has failed to adjust to the changing market condition. At last, the report provides few of the suggestion which the company should have adopted in order to avoid collapse.
Introduction
There are many big companies which fail as they didn’t adapt to the changing times and situation in the market. In the current study, we will be evaluating the case of the demise of the general motor in the USA. The company at the point of certain times was selling more than 50% of the cars in the US at present which has declined to 20%. The company had the systematic problem for a decade which leads to falling off the company. The company approach of decentralized operation with coordinated control was good till the time company was dominating the industry. The assessment identifies the major issue faced by the company and the action company should avoid in order avoiding failure.
Methodology
This one of the most important part of the research and has a huge impact on the outcome of the research. For the current study inductive approach has been followed in which key focus is on general assumptions which are specific and apply to the study. The philosophy followed in the current study is interpretivism in which the information gathered from the secondary sources is interpreted. The data for the research is obtained from secondary sources including books, article, news and from the internet. For the current research only authenticated sources has been considering so that the outcome of the research is appropriate. The collected data is analyzed using the qualitative approach as the data collected is theoretical. Also, a proper care of ethics has been taken and the prior concert is obtained before collecting information. In the research, we have also obtained the information from the news articles which were published in related to company failure. Also for the task, we have reviewed the auditing standard to identify the reason for the company failure.
Findings
It is common knowledge in the industry that an audit plan offers the particular guidelines auditors have to follow when conducting an external audit. External public accounting firms conduct external audits to assure outside stakeholders that the firm’s financial statements are prepared by generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS) standards. The International Standards on Auditing (ISA) states that the auditor has an objective to plan the audit to ensure that the audit process is effective. The plan shall establish a general audit strategy that sets the audit’s timing, scope, and direction, and that guides the audit plan’s development. 
Approach of Auditor in the segment of risk based auditing
Audit risk assessment planning consists of eight critical steps (Gray, 2007). As in the particular case of general motors, the financial auditor must carry out an initial audit planning for assessing the overall risk. This step involves accepting the client & continuing with the audit program & identifying the client’s key reason for needing an external audit (Johnstone, et al., 2014). We must then obtain an understanding with the client & select staff, from the client’s side, for the Engagement. Secondly (2), we must understand the client's industry & business. This is a key success factor for designing an effective audit program. It is essential that an auditor has a detailed knowledge of the automobile industry and the overall business of General Motors. Among the business & industry dimensions that the auditor must be keen about are external & industry the environment, business processes & operations, management & governance, strategies & objectives & performance & measurements.
Thirdly (3), the auditor must assess the client’s business risk. Using disclosure procedures & controls, the auditor must gain access to material information about business (Lee, 2006). Also, management must inform the auditor & the audit committee associated with the GM group responsible for any internal control’s substantial deficiencies, incorporating the material weaknesses. The auditor then (4) carries out analytical procedures at preliminary level. This incorporated the overall comparison of GM’s financial ratios with the standard ratios of industry. The aim is to have a view of how the client makes an overall comparison to the industry, as well as in order to determine any change...