Anthony’s Orchard is a family fruit trading firm in the United States and fruit growing orchards in Washington and California. The financial year for Anthony’s Orchard changed from September to December and took effect in 2009. An audit is carried out on the financial statements of Anthony’s Orchard to determine the financial position of the firm as presented to the public. The discussion below shows a summary of the response to the regulatory management compliance as outlined by the internal and external auditors. Anthony’s Orchard is a public firm in the sense that it serves the interests of the United States residents (Pearson, 2009). Despite the efforts of the management in Anthony’s Orchard to counter the inherent financial deficits, the external auditors and stakeholders have worked under the laws to provide unbiased financial reports.
According to Sarbanes Oxley Act, the audit is carried out independently without interference from the management. The Anthony’s Orchard is controlled majorly by the board of management which sets forth the direction which the firm follows. In conducting financial and accounts audit, there is a need to incorporate the external auditors, who are required by the law to perform a fair audit on the firm’s accounts (Silveria et al. 2012). As evident from the case study, the management has the full control on the information concerning the control of the Anthony’s Orchard; it means that the internal auditors must apply the disclaimer of opinions to audit the financial statements. In a situation where the management is involved in altering the scrutiny of the financial statements, the law allows the internal auditor to skim through the clients’ financial record. In providing a disclaimer of opinions, the auditor is unable to gather accurate information regarding the evidence in the audit records. Therefore, the fact that Anthony’s Orchard is a public firm, there is a need to appoint a third party who will act as an external auditor to conduct a scrutiny of the financial statements according to the guidelines of the laws governing a company.
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The external auditor plays a significant role in providing the real report on the financial statements as the law requires them. Some positive impacts accrue to Anthony’s Orchard firm as a result of involving the external auditors in examining the financial statements. According to Silveria et al., (2012), the external auditor evaluates according to the requirements of the law and therefore presenting the reality in the firm. The stakeholders of the firm depend on the report provided by the external auditor for decision making. After the audit is completed, the firm’s stakeholders which include government agencies, the public and investors can decide on whether to proceed to be part of the business or not. The management of Anthony’s Orchard firm can determine the areas to make changes to improve on the weak points. However, since the external auditor is independent, the recommendations made by the external auditor may inconvenience decision making, thus draining away all the possibilities of progress. In examining the internal controls, the external auditor will change the financial reports to help the decision making for the firm.
The key entities in Anthony’s Orchard are the stakeholders, the clients, the public and the government agencies. Each of the entities mentioned above plays an equally important role in promoting the financial reporting of Anthony’s Orchard firm. Clients are the people who are involved in providing internal documents, presenting support documents relevant to financial transactions and cash in general and explaining how processes take place in the firm. In auditing the Anthony’s Orchard firm’s records, the clients are responsible for providing all the factual materials relating to financial transactions for audit. The clients, also, are responsible for keeping documentation of the relevant information about cash Tattam, (2015). Stakeholders are other vital entities in shaping the firm’s progress. For instance, investors affect the audit process in the sense that the rights of investors should be protected. The public is directly affected by the auditing results in the way they change their view on their firm. The government sets the guidelines for evaluating financial records.
Transparency in governance and compliance systems is best described by accountability, a virtue that supersedes the concept of being responsible for the operations of a firm. In Anthony’s Orchard firm, the management can build up transparency by allowing the external auditors to carry out full scrutiny of the financial records as required by the law. In the case where the management regulates how the audit process is done, the auditors will be forced to use a disclaimer of opinions which is not important to the firm. Besides, compliance systems refer to the requirements of the law regarding the examination of the firm’s financial statements. The roles of the management and the board in Anthony’s Orchard firm are to assess the direction of the firm and the future possibilities. The command oversees the daily activities as well as recruiting the employees who carry out operations in the firm. Also, Anthony’s Orchard firm needs immediate actions taken upon the financial systems, and therefore the management through the clients present the financial documents necessary for evaluation.
Anthony’s Orchard firm has made efforts to fight against corruption and bribery in the operations. According to their mission which aims at “to enhance consumers’ awareness of apples and apple orchards continually”, the Anthony’s Orchard firm keenly follows the stipulated laws governing bribery in the “Foreign Corrupt Practices Act (FCPA)” by adhering to the requirements of the state. The regulatory agencies that affect the activities of Anthony’s Orchard firm include the government, stakeholders and the auditors both external and internal. The government is responsible for setting rules and standards that protect the operations of the firm as well as stipulating the guidelines on how the business should operate. The stakeholders, on the other hand, shape the general outlook of the firm by taking their respective responsibilities accordingly. For instance, the investors develop the firm by investing more in the firm or less according to the conditions. The rules and regulations that would be favorable for Anthony’s Orchard firm are operational rules restricting the operations of a firm. According to Tattam, (2015), a firm under these rules should not get involved in other activities other than the ones stated in the objectives of the firm. By adhering to the rules and regulations, Anthony’s Orchard firm will operate effectively and meet the desired vision.
In a wrap-up, Anthony’s Orchard firm needs scrutiny of the financial records for the best future performance. I would recommend that the management of the firm to allow for full examination on the financial records for the auditors to have the concrete decision making on the progress. In a legal environment, the laws allow the auditors to provide fair reports on the current status as well as providing better ways of financial documentation and record keeping. However, the management of Anthony’s Orchard firm has control over the progress of the firm and how they are steered to push for the desired changes in the future. Besides, continued compliance with regulatory systems is an additional advantage since the law well protects the operations of the firm.
References
Pearson, G. (2009). “The Regulatory structure”. Financial services law and compliance. Cambridge University Press.
Silveria, P. et al (2012). “Aiding Compliance Governance in Service-Based Business Processes. IGI Global.
http://mym.cdn.laureatemedia.com/2dett4d/Walden/ACCT/6610/mm/06/AnthonysOrchard/index.html
Tattam, David. (2015). “Compliance Risk Management” Protecht Risk Management Insights.
