Since 2006, a large number of finance companies in New Zealandhave collapsed. Many management and accounting practices impacted the collapseof the finance companies. These practices include the debt...

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Since 2006, a large number of finance companies in New Zealandhave collapsed. Many management and accounting practices impacted the collapseof the finance companies. These practices include the debt funded businessmodel and loans to related parties.

Required:

1.Explain how the following practices impactedthe collapses of many finance companies. Citing the appropriate InternationalStandards on Auditing explain also how they in turn exposed thecompanies’ financial reporting to the risks of material misstatement offinancial statement:

(a) the debt funded business model

(b) loans to related parties

2What are the auditor’s responsibilities forthe following in an audit of financial statements of finance companies? Whereappropriate, cite the relevant International Standards on Auditing (NZ).

(a)debtors

(b)relatedparty relationships and transactions

Answered Same DayDec 20, 2021

Solution

Robert answered on Dec 20 2021
3 Votes
Since 2006, a large number of finance companies in New Zealand have collapsed. Many management and
accounting practices impacted the collapse of the finance companies. These practices include the debt
funded business model and loans to related parties. Required: 1. Explain how the following practices
impacted the collapses of many finance companies. Citing the appropriate International Standards on
Auditing explain also how they in turn exposed the companies’ financial reporting to the risks of material
misstatement of financial statement: (a) the debt funded business model (b) loans to related parties 2 what
are the auditor’s responsibilities for the following in an audit of financial statements of finance companies?
Where appropriate, cite the relevant International Standards on Auditing (NZ). (a) Debtors (b) related party
elationships and transactions 400 words
These practices have impacted all the companies that work in capitalist economy. Economies all
over the world post global financial crisis has formed huge models on...
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