Audit Reports Involve Increased Communication. Research Paper

People in the company were not attentive to the amount of loans that were delinquent, who should be allowed to borrow, and how many people were making deposits. Banks like these do not realize the amount of loss they can create without properly regulating anything.

Regulation and constant updates on company or, in this case, bank spending is crucial in understanding how much the financial institution has in reserve. What also must be taken into consideration is how much money is flowing out. HBO has most likely a lot of money going out in the form of large salaries or pensions as well as missed payments. If more communication took place to warn HBO of impending loss from missed payments or too high pay scales, perhaps they would have known just how much money would be needed when they gained losses.

Provisions are hard to determine and entail a lot of research and investigation.Staff has to know and expect how much money will be lost. This takes a lot of calculating and discussion with clients and staff in order to properly assess a situation. If banks do not take the time to solve these issues, it will lead to resentment and loft taxpayer bailouts.

Works Cited

Aldrick, Philip, and James Kirkup. "KPMG faces possible audit inquiry over HBOS failure - Telegraph." Telegraph.co.uk. The Telegraph, n.d. Web. 5 May 2013.

Brophy, Theresa. "The Loan Loss Reserve and the Loan Loss Provision: What Are They?"Value Line - the Most Trusted Name in Investment Research. Investment Education, 4 May 2011. Web. 5 May 2013.

Thomas, Helen. "HEARD on the STREET: Auditors Should Open the Books - WSJ.com."The Wall Street Journal - Breaking News, Business, Financial and Economic News, World News & Video - Wall Street Journal - Wsj.com. The Wall Street Journal, n.d. Web. 5 May….....