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Additional information:
The case hones in on the audit dynamics and defense presented by the audit firm (A. F. Ferguson & Co. Chartered Accountants) for the year 2013, to assess the shortcomings in the conduct of the audit of Tri-Pack’s financial statements for that year’s end.
Short Summary:
This case looks into an instance of an audit failure in the context of a Pakistani listed company, Tri-Pack, whose financial statements for the year 2014 showed a material mis-statement (which reduced 2013 profits after tax by around 88%). This led to an investigation by the regulator (Securities and Exchange Commission of Pakistan) into the audits across 2012 – 2013, culminating into a stern warning being issued to the engagement leader (partner) for having: failed to exercise an attitude of professional skepticism; failed to perform the audit to obtain reasonable assurance around Tri-Pack’s financial statements being free from material mis-statement either due to errors or fraud; and failed to bring out material facts about the affairs of the company and make a report to the shareholders thereof . The case hones in on the audit dynamics and defense presented by the audit firm (A. F. Ferguson & Co. Chartered Accountants) for the year 2013, to assess the shortcomings in the conduct of the audit of Tri-Pack’s financial statements for that year’s end. It simulates the work of an audit quality head who is reviewing Tri-Pack’s audit file in order to ascertain whether the objectives of the audit were met and what lessons can be drawn to leverage towards future audit engagements. The case will thus provide students with an opportunity to understand the mechanics by which an audit may fail (i.e. material mis-statements arising out of error or fraud paving way into ‘audited’ published accounts), as it navigates through regulatory compliance (with ISAs - International Standards of Auditing) performed by the auditor albeit in vain.
