Impact of Audit Committee Characteristics

Question: Discuss about the Impact of Audit Committee Characteristics. Answer: Introduction: With the consideration of the several risks for the companies, the involvement of the insurance business helps in the creation of the study of the business risks that causes the failure of the company. The exposures are presented for the entire risks that are offered with the creation of the insurance policies. The insurance firms can also handle the risks easily with the creation of the coverage of the policies and henceforth in this undertaken case study of HIH insurance company; it is observed that the policies are gathered as per the risks proved for the company (Emmerich, Racz and Unger, 2006). Besides this the great elevation of the compensation are made for the insurance workers in the market of the California which seemed to be a most important part of the risk. With this, the company has faced a lot amount of the losses that are proved to be exposures for the high risk prone zones and thereby the exposures are made for the company. The inherent risk helps in the creation of the possibilities of misleading and the incorrect information within an accounting statement provides the outcomes from something other than the unsuccessful management of the managerial accounting. With the consideration of the examples regarding the inherent risks, it is perceived to utilize the amount of the judgement for the approximation with the involvement of the financial tools are made. In this given case study of HIH limited Company, the shares are perceived with the creation of dropping of the share prices and thereby the poor financial outcomes as well as the improvement of financial outcomes are claimed for the fund insurance. Henceforth the outcome throughout the year 2000 for HIH insurance company has paid $1.7 million to the auditors for the services. As per the given case study of the HIH private limited, the financial performance seemed to be mismanaged by the seniors managers of the organisation and thereby the company halted with the creation of the fall of the performance. The share price of the company had fallen sharply that impacted the shareholders. For the improvement of this position, the appropriate auditing of the balance sheet is made with the remuneration of the huge quantity of the auditing services. The auditor also helps in gaining the negative performance for the company HIH and thereby the creditors and clients face the worst conditions of the company (Ianniello, 2011). Therefore as per the rules and the regulations, auditor is responsible for the downfall of the company and thereby the company and the auditor are responsible for paying all the debts of the clients and the creditors. The condition depicts the act of the intelligence which seems to be described in this case and thereby this act describes the breaching of the duty of care with the harming of the person. In this case of the HIH, the facts and the findings determine the harms that provide the ways of the harm. The solicitor Bruce Dennis fought the case against Andersen. Thus it also helps in providing justice with the detection of the wrong information that is provided for the case study. For this reason, the plaintiffs are still suing the justice which helps in determining the breaching of the contract of duty. The breaching also shows the injury that must be recovered with the violation of the acts and thereby the case provides the appropriate ways with mentioning the justification of the case. The negligence of the damages also helps in overlooking the provision of the plaintiffs in this case. Three previous partners of Arthur Andersen, an audit firm were appointed by HIH as a part of their audit team. For the last ten years the people of Artur Andersen audit firm had made a lot of money through HIH by being a part of their auditors and thereby there is an established relationship present between the two firms. Andersen had earned about $8 million by auditing the books of HIH and along with that also provide different types of services to it for which made about $7 million. The fact that the two firms have been able to maintain a 10 year long professional relationship proves that they have been able to develop a strong relationship between each other. Having known personnel to handle the auditing process of a company proves to be very beneficial as they tend to give a report in favor of the company (Krenn, 2015). Therefore in this case, the personal relationship shared between the two firms can be considered as the reason for HIH taking the people of Andersens as part of t heir auditing team. Since Andersens have a very strong professional and personal relationship with HIH, they are bound to give a good report for it. The work of an auditing organisation offers and unbiased report of all the financial transactions that are made by the company and the consultancy firm is also expected to recommend in the different ways with the creation of concern for the company. Thereby the expectations also help in the increment of the high tax rates and also help in maximising the profitability of the organisation. The benefits also seemed to be holding the audition consultancy and the offering of the services that are seemed to creating and biasness towards the company. It also helps in the creation of the services that are seemed to be crucial for the organisation and henceforth it maintains the image of the company. The circumstances of this case presented in the case indicate that the company is not sticking to the basic ethical practices. The crucial reason behind this is the external auditing team which is needed to be unbiased towards he company and thereby it also helps in the creation of the impartial financial report for the company. With hiring the firm in an unethical manner, the company proved that the actual financial reports are made fake with the creation of the transactions which raise problems in the company and also created hurdles for the company (Madi, Ishak and Manaf, 2014). It is proved to a part of the violation of the ethical conducts and henceforth the demand of the independent investigation is made. In this case the crucial breakdown of HIH company takes place with the consideration of the future claims and thereby the main rationale of the Ramsays report represents the creation of the appropriate suggestion that are seemed to be requisite for the alterations. Henceforth the responsibility of the auditor is created for showing the actual position of the company in the market environment. The impact of the changes determines the rescheduling of the programs with adding values to the financial report of the organisation. it is made for the appropriate consideration of the capital and thereby the enhancement of the values are made in order to strengthen the credibility of the capital market. This also provides the recognition of the acts that are seemed to be helpful for accessing the credibility and the reliability of the report provided by the auditor. References Emmerich, A., Racz, G. and Unger, J. (2006). Audit committee membership: The interplay with general corporate law.International Journal of Disclosure and Governance, 3(1), pp.16-26. Ianniello, G. (2011). Audit policy in Europe: 2011 The year of reform?.International Journal of Disclosure and Governance, 8(3), pp.209-212. Krenn, M. (2015). The role of codetermination in shareholder oriented corporate governance reform: the case of executive remuneration disclosure.International Journal of Corporate Governance, 6(2/3/4), p.178. Madi, H., Ishak, Z. and Manaf, N. (2014). The Impact of Audit Committee Characteristics on Corporate Voluntary Disclosure.Procedia - Social and Behavioral Sciences, 164, pp.486-492.