For a decade, audit firm KPMG had stamped Hyflux’s annual reports with a clean bill of health, attesting to the water treatment company’s ability to continue to operate.

But with the company now facing the possibility of liquidation after a scuppered restructuring deal on Thursday, its shareholders and investors are asking why auditors failed to flag the risk of Hyflux spiralling into heavy debt.

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The Accounting and Corporate Regulatory Authority (ACRA), which enforces Singapore’s strict auditing and accounting laws and standards, said in a statement that it will also “assess if further action is warranted”.

Corporate governance experts believe the accounting and auditing issue is likely to centre on Hyflux’s 2017 books, which the company released in March last year and carry the unqualified opinion of the auditors. It had slipped into the red for the first time in 2017 since its listing in 2001.

Yet two months later in May, Hyflux shocked investors when it filed for bankruptcy protection. Its financial statements were prepared on the basis of going concern – an accounting method that assumes the company will remain solvent and operational indefinitely until proven otherwise.

(Adapted from The Straits Times, 6 April 2019)


In recent years, we have witnessed the sudden collapse of large corporations such as Hyflux in Singapore and Carillion in the U.K. Some investors and analysts have attributed this phenomenon to ethical threats impairing auditors’ independence and objectivity. Critically discuss the extent that external auditors are truly independent from their clients.

Reading and References – The assignment should be supported by an appropriate number of academic references, as well as references to technical literature such as ISA’s and other regulatory references. References should comply with APA 6th ed. style.

Word count should not exceed 1500 words excluding reference list, appendices, the cover page, abstract, glossary and list of tables, figures, charts and abbreviation.

Turnitin report is required and must not be more than 20% similarity index and plagiarism.

Recommended Format:

Introduction – You need to state the purpose of the report, i.e. identify that the report is a critical discussion of the extent that external auditors are truly independent from their clients.

Literature Review – Provides an in-depth review and current issues pertaining to ISA 200, specifically on auditor’s independence and professional scepticism. Highlight latest developments or recent case studies illustrating the concepts or principles, for example the new regulations under the EU Audit Reform.

Please ensure that the references are appropriately cited and presented in the references list.

Analysis of Potential threats to independence and objectivity – Critically analyse the current threats to independence, which also hamper professional scepticism in today’s auditing industry, which has already been subject to more intense scrutiny with tighter regulations implemented. Quote relevant case studies and examples to support your arguments.

Conclusion – Provide an informed conclusion which is justified by supporting arguments in your report.

Marking Grid:

1. Definition (20%)

Key issue(s) are correctly identified and addressed in the report. A main topic is established in the introduction and the report always stays on the topic with minimal digression.


2. Content and Scope (30%)

Adequate description of concepts and theories in the literature review. Demonstrates clear to proficient mastery of the subject matter and attempts to view it in a wider context.


3. Critical analysis and Discussion (30%)

Well supported in-depth analysis of implications to findings.

Accurately identifies potential issues and analyses and evaluates course of action(s) to avoid them. Recommendations are presented in a logical structure with an established focus.

4. Presentation and Structure (20%)

Includes clarity, use of grammar, correct spelling, adherence to referencing convention. Discussions supported by an appropriate number of academic references, as well as   references to technical literature such as ISA’s and other regulatory   references. All references are clearly indicated in the assignment.

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