ACC320 Audit and Assurance Semester 2, 2019 Assessment 2: Essay This assessment is worth 20% of your final grade and is to be in essay form. Essay length is 1,500 words (excluding references). Due...

CRITICAL ANALYSIS OF HIH INSURANCE COMPANY
Table of Contents
Introduction    3
Analysis    3
Conclusion    7
References    9
Introduction
The study of accounting fraud may be considered to be one of the most significant aspects of the studies of business and accounting as the process of such study involves consideration of several factors which are both internal and external to the business. Moreover, such study may encompass the evaluation of ethical framework of the organisation and the lapse of the same or any external or internal stakeholders as well. The instant essay delves into such analysis and evaluation of HIH Insurance Company, an Australia based insurance company that got liquidated in the year 2001, after the corporate collapse which is considered to be one of the largest corporate collapses in the Australian corporate history, with the total estimated losses amounting to $5.3 billion.
At the very beginning of the study, the researcher provides a brief introduction to the topic followed by the organisational overview so as to provide the overall idea regarding the background of the topic. In the subsequent sections of the essay, the underlying causes of the collapse have been discussed. Also, the researcher has identified the key people who were involved in the process and also the use of any creative or fraudulent accounting practices are analysed. In addition, the discussion focuses on the instant reactions on the part of other stakeholders as well, as far as the collapse is concerned.. Lastly, the researcher has also presented a hypothesis what auditing activity – if undertaken in a professional manner prior to the collapse - may have reduced the likelihood or the severity of the collapse. Finally, the essay is being wrapped up by way of concluding note.
Analysis
HIH Insurance Company (hereinafter may be referred to as “HIH” or the company or the firm, as the case may be) was one of the Australia’s largest insurance houses before its collapse in the year 2001. The company was spread through its operations widely across Australia and New Zealand and had a strong customer base across the nation. In the year 2001, Australian Prudential Regulation Authority (APRA) issued a show cause notice to the management of HIH and consequently it was estimated that the total worth of the business had almost been nil with drastic fall of equity and massive proportion of debt. As a result, the provisional liquidators were appointed and the event led to one of the biggest corporate failures in the Australian history till date.
According to the author (Betta, 2016), one reason that leads most corporate to disappointment was terrible administration. As the governing body was the individuals who settled on an ultimate choice, they just depended on the report and the appraisal from the reviews. the HIH framework was serving personal circumstance. The governing body just preferred to hear and peruse the uplifting news in this way the supervisory group regularly was "frequently flying visually impaired" they...