Monday, August 24, 2020

ASIO warns universities about China spying, but nothing said about Zhu Misnhen's Top Education Institute, its iFlytek tie-up: Is fear of embarrassing NSW's most senior judicial officers standing in the way of protecting national security

by Ganesh Sahathevan



ASIO issues alert to unis over China links
Australia’s spy agency has warned universities about the risk to 
including the Thousand Talents Plan.

 The Australian says ASIO warned universities about Chinese infiltration, in particular with regards the Thousand Talents Plan. Meanwhile, however, ASIO seems to have said or done anything about Zhu Minshen's Top Institute Of Education's work here in Australia with iFlytek,which been blacklisted in the US, has strong Communist Party China links, and seems to have successfully penetrated a number of Australian Government departments. 


The security implications are obvious, and hence ASIO's inaction raises the question: Is fear of embarrassing NSW's most senior judicial officers standing in the way of protecting national security?


As reported on this blog last year:
Zhu Minshen's law school approvals involved the NSW Supreme Court administration but Chief Justice Bathurst and AG Speakman ultimately responsible- approvals & renewals granted despite Dastiyari scandal, Zhu's defiance of AFP directives



TO BE READ WITH



Sunday, July 19, 2020

UK acts to prevent Huawei infiltration of universities while Australia ignores the Zhu Minshen-IFlytek/Huawei-Top Group nexus: Culture of secrecy, cover-ups at the the regulator NSW Legal Profession Admission Board complicating matters

by Ganesh Sahathevan



While the UK Government works to prevent Huawei from infiltrating its university system (see story below), Australia continues to do nothing about the matter of Huawei & iFlytek's entry into Australia's academic networks via CPC linked Zhu Minshen and his Top Group:


iFlytek & Huawei formed a strategic partnership in 2018, collaborated since 2010: NSW LPAB , Law Council Australia still silent about their approval of Zhu Minshen's Law School & his business with iFlytek given the Uyghur persecution

Australia will spend $250 Billion to deter China, but will not stop IFlytek-Huawei from infiltrating government departments; akin to buying China made Long March rockets to defend Australia



It does look as if the responsible regulator, the NSW Legal Profession Admission Board is the problem. Chaired by the Chief Justice Of NSW Tom Bathurst, the NSW LPAB has a culture of secrecy and cover-ups grounded in a sense of judicial immunity. That sense of immunity has not however prevented an investigation of its failures in Malaysia:  

Malaysia will investigate NSW AG and LPAB oversight of the College Of Law: College's Malaysian business removes protective mantle; likely to further expose LPAB Annual report exclusions

TO BE READ WITH 

Scrutiny over Huawei university ties increases after ban

Yojana Sharma  16 July 2020
The British government’s decision this week to ban Chinese technology giant Huawei from its national telecommunications infrastructure has prompted renewed scrutiny over Huawei’s links with universities in the United Kingdom and renewed calls for transparency in university dealings with the Chinese company.

The UK government announced on 14 July that the purchase of new Huawei equipment for high speed 5G networks will be banned at the end of 2020, and all Huawei equipment will be removed from UK 5G networks by 2027 following a review by the government’s National Cyber Security Centre. The United States and Australia have also banned Huawei from public contracts.

The United States has been lobbying its allies to exclude Huawei equipment on security grounds, arguing that the Chinese government can use Huawei as leverage to disrupt vital communications networks in foreign countries. Huawei has consistently denied it assists the Chinese government efforts to spy on mobile communications.

The decision was preceded by considerable debate on China’s influence, including on universities.

US lobbying extended to attempts to block local planning permission for a new £1 billion (US$1.3 billion) Huawei research hub on the outskirts of Cambridge, approved last month. Keith Krach, US under-secretary of state for economic growth, energy and the environment, said in advance of permission being granted that Huawei was “after the people and technology. They want to co-opt the researchers and talent from one of the most prestigious universities.”

Permission was granted on 24 June at a local district committee hearing, which, unusually for this type of local issue, was attended by ambassadors from a number of European countries who wanted to observe the proceedings.

Huawei announced on 26 June that the hub would specialise in fibre optics communications technology. Huawei Vice President Victor Zhang said in a statement that it was not linked to recent US sanctions on Huawei. “Huawei began developing plans for this site more than three years ago, in 2017, so well before the subject of Huawei and 5G was raised in the UK.”

College group demands transparency

With considerable Huawei investment in Cambridge, a major technology hub, student groups in Cambridge have stepped up demands for more transparency in university dealings with Huawei, and China in general, particularly because of ethical concerns over the national security law imposed on Hong Kong by Beijing and human rights abuses in Xinjiang.

Earlier this month the student union at Jesus College, Cambridge University raised “grave concerns” about the college’s ties to Beijing in a letter to the college head or ‘Master’, Sonita Alleyne.

The student union had called for a college commitment to accept no further funding or donations from Huawei and demanded an investigation into the college’s China Centre. The college accepted £155,000 in September 2019 from Huawei for a ‘two-year research cooperation’ under the centre, which resulted in a white paper on global telecommunications reform. Students said the white paper portrayed Huawei in a favourable light.

The paper attracted attention beyond the university, including from MPs on the UK’s Foreign Affairs Select Committee, which said the report from a prestigious university amounted to “reputation laundering” by Huawei.

Matthew Henderson, of the Henry Jackson Society, a foreign policy think tank in London which focuses on open democracy, commented at the time: “It is deeply disturbing that Huawei has been able to buy itself a publication endorsed by Cambridge University.”

The China Centre’s website said its team “organises seminars and workshops, hosting speakers with a wide array of views”.

According to participants, the Huawei-funded report was based on a conference held at the centre and included representatives of Facebook Europe, Google, Vodaphone, Alibaba and international bodies such as the International Telecommunication Union, the OECD, the UN trade and development agency UNCTAD, as well as prominent figures such as former Australian prime minister, Kevin Rudd.

“We think the China Centre occupies an important role in [Jesus] College, and we are keen to work constructively with College to reform the Centre so that it better represents the values of financial transparency, academic freedom and political independence,” the student union letter said and called on Alleyne to commit to the centre hosting events on Chinese human rights abuses as well as the situation in Hong Kong.

College response

Alleyne said in an email to the college community, including alumni, that the college was beginning a review of some of its ‘historic collaborations’. “This includes our connections with China, some of which date back many years,” she said in the email dated 9 July and seen by University World News.

It includes the Jesus College China Centre as well as a separate UK-China Global Issues Dialogue Centre run by the college, which also receives Huawei funding.

Alleyne said the current two-year agreement between the Dialogue Centre and Huawei included a clause “enshrining academic freedom and free speech written into the research collaboration agreement. The Dialogue Centre owns all research results; Huawei cannot veto research findings, the publication of views or conclusions.

“We are cognisant of the rapidly changing situation in China, particularly in relation to human rights. At this crucial time, it is important that we as an academic institution remain committed to dialogue and intellectual discourse between China and the West.”

Jesus College has also revealed under a request under the UK’s Freedom of Information Act submitted by The Times newspaper that it had received £200,000 in September 2018 from China’s State Council – equivalent to the cabinet and headed by Premier Li Keqiang – for the separate UK-China Global Issues Dialogue Centre set up by the college at that time in collaboration with Tsinghua University in Beijing, which has also been a focus of the student union’s concerns.

The United States has also particularly focused its lobbying on technology transfer to China through Huawei tie-ups with universities.

Huawei Board Director William Xu said in a December blogpost: “We do get useful intellectual property out of some partnerships, but when this happens, the terms are clearly established. For instance, in all the collaborations between Huawei and European research institutes since 2018, only a small portion of resulting IP rights (IPRs) were exclusively granted to Huawei, while most resulting IPRs were exclusively granted to our partners or granted to both parties.”

He noted that even before Huawei arrived on the scene, “universities had a long experience of collaborating with industry. Huawei is one of countless companies engaged in partnerships with universities worldwide. We follow well-established and extremely common practices whenever we initiate collaborations with universities. Even the institutions – primarily US ones – that suspended their relationship with our company are well aware of this; their decision to stop working with us was not the result of Huawei doing anything improper.”

He added: “Although our ultimate focus remains commercial, our interest in basic sciences in many areas now converges with universities’ efforts to expand the boundaries of human knowledge. In the coming years, it is only natural that collaboration between Huawei and universities will become increasingly routine.”

Huawei and other universities

Last year the UK’s University of Oxford said it would no longer accept funding from Huawei, but 17 British universities currently receive funding from the Chinese company. These include Surrey University’s 5G Innovation Centre, Imperial College London and the universities of Edinburgh, Southampton, Cardiff, Manchester and Bristol, with several of them declining to reveal the amount of funding.

The demand for greater transparency and opposition to some types of deals have highlighted some funding deals. In February the London School of Economics (LSE) approved a three-year project on the leadership in the development of 5G technology funded by Huawei.

The NGO openDemocracy said it had obtained access to internal documents that showed the university would receive £105,000 from Huawei for the research, although it is unclear whether it is now going ahead after some academics at the institution raised questions, with some of them concerned the institution had approached Huawei rather than the other way around.

The internal documents state that the LSE has been “chasing” philanthropic funding from China, which is already a source of funding for research. “China and East Asia, in general, will be an important philanthropic market for LSE,” it said.

In May Imperial College London announced a new five-year collaboration with Huawei, with the Chinese company funding a new £5 million technology hub at the university. Huawei will provide the 5G indoor wireless network and AI Cloud platform at one of Imperial’s new campuses.

Ian Walmsley, provost of Imperial College London, said: “Huawei’s expertise in wireless technology will help our researchers, students and partner enterprises to lead the next generation of digital innovations.”

“Imperial, like other UK universities, has received support from Huawei for high-quality and open research for several years, and we are continuing this work,” a spokesman at Imperial College London said. “Such funding continues to be subject to the college’s robust relationship review policies.”

But former Conservative party leader Iain Duncan Smith, a high-profile opponent of Huawei’s involvement in UK infrastructure, called the Imperial-Huawei deal “deeply worrying and dangerous”.

“This is a perfect example of how the Chinese strategy is to use their money to insert their influence in the world’s intellectual thought process,” he said.

In November last year the parliamentary Foreign Affairs Select Committee said in a report that countries including China were seeking to influence universities. Funding and investment agreements could, for example, include “explicit or implicit limits” on what subjects could be discussed, while institutions had also been pressured not to invite certain speakers, or not to disseminate certain papers, the report A Cautious Embrace: Defending democracy in an age of autocracies found.

“We heard alarming evidence about the extent of Chinese influence on the campuses of UK universities,” the committee said.

Need to manage risk

Kerry Brown, director of the Lau China Institute at King’s College London, said in a report released on 9 July by the UK-based think tank Higher Education Policy Institute: “All universities must think through, and rapidly adopt, a risk management strategy for any dealings with China. This should cover all areas of intellectual enquiry. It should spell out clearly and without naivety the risks, and opportunities, of doing work with China and on China. It should also offer some ideas on how to manage issues such as demands from Chinese partners.

“They need to be ready to say no to demands or issues from China that they feel violate their own values, but ensure they do this in a neutral and respectful way,” he said in the report on UK Universities and China.

In the same report, Rana Mitter, director of the University of Oxford China Centre, noted pressures from China for some universities to accept restrictions when they sign agreements.

“Voices from China’s establishment imply that they can easily take their students elsewhere,” he said.

However, he also noted: “The number of first-tier academic environments in the world is not that large. Chinese access to the higher education sector in the UK is welcome, but it is not a right, nor simply a consumer good to be accepted or rejected at will.”
Posted by at 8:22 PM 

Zhu Minshen's Law School Dean was a member of Law Council Australia's Legal Education Committee while a member of China's 1000 Talent Program

by Ganesh Sahathevan

Hon George Brandis

The Australian's revelations about China's 1000 Talents Program and its role in China's intelligence machinery adds to the questions about Law Council Australia's support for Zhu Minshen's Top Group law school.


As reported on this blog late last year the founding dean of Zhu's law school was Eugene Clark. 
The following is an extract from a China University Of Political Science & Law website: 
When acting as a specially-engaged professor under "1000 Experts Project" (also known as the Thousand Talents Program) in CUPL, (Eugene Clark) was also appointed as a member of the Legal Education Committee under Law Council of Australia, and visited the United States, Austria, Australia as well as other countries to attend high-end international conferences and deliver keynote speeches.
Why the law Council Of Australia recruited Clark and what he did while he was a member of its Legal Education Committee are questions that the LCA needs to answer. These questions are in addition to the questions about the LCA's support for Zhu's Sydney City School Of Law.

TO BE READ WITH 




Sunday, November 17, 2019


Zhu Minshen's Law School Dean was a member of Law Council Australia's Legal Education Committee while "specially engaged by China 's "1000 Experts Project"-Dan Tehan must demand answers,LCA,NSW LPAB do not enjoy immunity

by Ganesh Sahathevan

Hon George Brandis

From left to right
 :Prof Eugene Clark, Hon George Brandis, 
Dr Minshen Zhu



It has been previously shown on this blog that Top Group's market price collapse and China connections bring Zhu Minshen and his companies within the ambit of Minister for Education Dan Tehan's foreign influence laws.

It was also shown how NSW's Legal Profession Admission Board (LPAB) created the problem.


The LPAB has said in ts annual reports that it consulted with among others the Law Council Of Australia in deciding that Zhu Minshen's Top Group should be granted the first and only license to award LLB's issued to a private company that was not a public university.

It can now be shown that the Dean of the Law School at the relevant time, between 2012 and 2017, one Eugene Clark, was a member of the Law Council Australia's Legal Education Committee when "acting as a specially-engaged professor under "1000 Experts Project".

The 1000 Experts Project appears to be a  Party China soft power initiative aimed at influencing foreign governments and institutions, and at gathering intelligence. 

That Clark was a member of the Law Council Australia's Legal Education Committee at the time, in and around 2015, when the Law Council and the LPAB where evaluating Top Group's history making application raises many questions about the conduct of the LPAB and LCA, which the Minister For Education Dan Tehan must discover, and make public.The LPAB and its chairman enjoy no immunity from such inquiries even though the Chairman of the LPAB is the Chief Justice; these are two separate hats worn by the same person, they do not enjoy the same privileges. 
END 





SEE ALSO 






Thousand people plan introduction
Learn more>>
In December 2008, the central government decided to implement the “Thousand Talents Plan” for the introduction of overseas high-level talents, focusing on national development strategy goals, in five to 10 years, in national key innovation projects, key disciplines and key laboratories, central enterprises and finance. Institutions and various types of parks, mainly high-tech industrial development zones, have introduced and supported a group of overseas high-level talents to return to China (in China) to innovate and start businesses.
The overseas high-level talent introduction working group is responsible for the organization and leadership of the 1000-person plan and overall coordination. The working group is organized by the Central Organization Department, the Ministry of Human Resources and Social Security, the Ministry of Education, the Ministry of Science and Technology, the People's Bank of China, the State-owned Assets Supervision and Administration Commission, the Chinese Academy of Sciences, the Central United Front Work Department, the Ministry of Foreign Affairs, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, and the Ministry of Finance. The Overseas Chinese Affairs Office, the Chinese Academy of Engineering, the Natural Science Foundation, the Foreign Experts Bureau, the Central Committee of the Communist Youth League, and the China Association for Science and Technology.
Established a special office for the introduction of overseas high-level talents in the Talent Work Bureau of the Central Organization Department, as the daily office of the working group, responsible for the specific implementation of the plan for thousands of people.





News

Mr. Edward Eugene Clark Specially-Engaged as CUPL Guest Professor

On the afternoon of September 28, 2015, our university held a farewell party for Professor Edward Eugene Clark as the first specially-engaged professor under "the Recruitment Program of Global Experts (1000 Experts Project)." At the party, the university also appointed him as a guest professor. CUPL President Huang Jin attended this send-off party and presented the Letter of Appointment to Prof. Edward Eugene on behalf of CUPL.


Professor Edward Eugene Clark previously served as the Dean of five law schools in the United States, Australia and other countries respectively, and was the former Deputy Vice-Chancellor of University of Canberra (UC), Australia. He was the first recipient of “the Prime Minister’s Award for Australian University Teacher of the Year”. ProfessorE dward Clark is an eminent scholar with rich teaching and management experience, as well as fruitful scientific research achievements. In September 2012, as our first specially-engaged professor under the "1000 Experts Project", he embarked on his new career of teaching and researching in the CUPL College of Comparative Law for the following three years.
During his tenure in office at CUPL, Professor Eugene Clark continued his excellent work. He delivered lectures on interesting topics, including “The E-commerce Law”, “Internet Law, Policy and Practice”, which were widely welcomed by our undergraduates and graduate students.He published six monographs and seven treatises, while serving as the editor for four authoritative journals. And as a specially-engaged professor of CUPL, he was invited to be a columnist for a notable Chinese website (China.org.cn). The number of articles he published on that website exceeded 150, some of which were reprinted and quoted by Chinese and overseas media, and stimulated widespread discussions in related fields. When acting as a specially-engaged professor under "1000 Experts Project" in CUPL, he was also appointed as a member of the Legal Education Committee under Law Council of Australia, and visited the United States, Austria, Australia as well as other countries to attend high-end international conferences and deliver keynote speeches.











Copyright & 2012 China University of Political Science and Law
Xueyuan Lu Campus: 25 Xitucheng Lu, Haidian District, Beijing, China 100088
Changping Campus: 27 Fuxue Lu, Changping District, Beijing, China 102249

Sunday, August 23, 2020

Did Audit NSW's iCare audit include interviews with former iCare Head Of Compliance Chris McCann-if not why not, if yes, how did Audit NSW miss all that McCann has to tell?

by Ganesh Sahathevan


The ABC and SMH have revealed this morning: 


Former major crimes and homicide detective Chris McCann joined icare as the head of compliance investigating fraud and corruption in 2016.
"I think it's time to tell the truth and join the dots," Mr McCann told a joint investigation by The Age, The Sydney Morning Herald and the ABC's 7.30 program.
Mr McCann was the whistleblower who first discovered what was happening at icare.

Instead of being listened to, he was undermined, blocked and bullied.

He kept diary notes and paperwork that he showed to the joint investigation, detailing his specific concerns and the senior executives that he told.

Mr McCann told the joint investigation that if the company had followed his compliance and governance framework and internal policies, and management had taken his concerns about misconduct seriously, icare would have avoided its current mess.


A normal audit would have included some sort of correspondence with the Head Of Compliance; if not it would be very hard to conclude (as auditors must) that the books reflect a true and fair view of the audited entities financial position. 


It is not unlikely that  McCann had been interviewed but was less than forthcoming; he would after all have still been an i Care employee. However, McCann had created a  trail of electronic correspondence which, if sighted, should have raised concerns for the most junior auditor.

That electronic correspondence could have been easily discovered had Audit NSW paid attention to normal operational risks which have obvious implications for financial reporting.iCare is a good example of that link. 

McCann's revelations add to questions about Audit NSW's lack of curiosity in its work, even when relevant information is publicly available. 

TO BE READ WITH

Saturday, August 22, 2020


In April 2018 EY said iCare had “cashflow problems due to lower than expected premium collection” : How did Audit NSW not discover the same, and did Audit NSW ignore the EY report, and a significant audit red flag in iCare's 2018-2019 annual report?

by Ganesh Sahathevan





Adele FergusonInvestigative journalist and columnist reported recently in the AFR:



The AFR can reveal that in early 2018, Martin Hoffman, then secretary for the Department of Finance, Services and Innovation (DFSI) and a director of SIRA, engaged EY to undertake a health check into icare. Treasury was consulted as part of the process.
Poor governance and risk management.
— April 2018 EY Health Check of icare
The April 2018 EY report identified issues around icare’s profitability, insufficient premium rates, with the expected premium below the breakeven rate (partly due to under collection and partly due to issues with icare's new policy system) expense ratios, including service charges, which were high, relative to other jurisdictions, and operational issues in particular in the transition to the new IT system.
EY noted that icare withdrew $500 million cash more than budgeted during December 2017 and said the implication was icare had “cashflow problems due to lower than expected premium collection.”
In terms of governance, the EY report said icare failed to comply with DFSI protocols in regard to the build of its IT system, which it described as demonstrating “poor governance and risk management”.
It highlighted issues with icare’s decision to move from multiple insurance agents for handling claims management to a single agent EML, including under-resourcing and lack of claims management experience.
“All this points towards a poorly executed and implemented IT project that will begin impacting on the levels of claims management and customer service in the scheme,” EY said.
It was referring to the fact that icare hadn’t adhered to the standard Cabinet-endorsed ICT Assurance Framework – the government’s key oversight and governance process for major IT projects costing over $10 million.

Note from Ferguson's story above that in early 2018, Martin Hoffman, then secretary for the Department of Finance, Services and Innovation (DFSI) and a director of SIRA, engaged EY to undertake a health check into icare.

Hofman's "health check" appears to have coincided with a close to 10 fold rise in the grant from the Crown in the 2018-19 financial year, from $ 128,496,000 in the 2017-2018 financial year to 
$ 1,163,496,000 in the 2018-2019 financial year (see page 205 of the 2018-2019 iCare Annual Report).

The grant is provided pursuant to the Net Asset Holding Level Policy. NSW Treasury has defended its grant to iCare (or rather iCare managed funds) of $ 2 Billion in the 2018-2019 financial year , sighting:

• Lower than expected returns from investments resulting from the COVID-19 market downturn 
• Existing and anticipated historic abuse claims 
• COVID-19 presumptive legislation that creates a presumption in favour of workers who contract the disease 
• Shutdowns from COVID-19 resulting in payouts for business interruption.
 • Costs from the summer bushfires 
• Increases in medical costs and psychological claims in the workers compensation portfolio

These are not factors that were present in the pervious 2018-2019 financial year and  it does not explain the 10 fold jump in the 2018-2019 financial year. 


How NSW Audit and the Auditor General Margaret Crawford missed these fairly obvious warning signs is had to comprehend, but as this writer has noted, Ms Crawford and her department do seem to seem to have tendency to ignore information, especially that which is in the public domain regardless how relevant or prominent. That tendency has helped the NSW Government and its departments to create annual reports which are detached from reality.

TO BE READ WITH 



Sunday, August 16, 2020



Good audit practise requires even the NSW Auditor-General & officers to review publicly available information about their audit subjects: iCare and other NSW Audit deficiencies explained

by Ganesh Sahathevan





This writer has previously asked:
iCare NSW: How did Margaret Crawford's NSW Audit miss the obvious problems

The problems mentioned were all in the public domain for at least the past two years, but finally came to prominence last month as a result of an ABC 4 Corners expose.



Regardless of that expose and the resignation of its CEO in the course of a parliamentary inquiry iCare has in its defence turned to its NSW Audit report:

Referred to ICAC , iCare relies on statements by the NSW Auditor General Margaret Crawford to declare:"Our finances are in a healthy state"


The problem outlined above stems from the fact that Audit NSW ignored information in the public domain, a practise not uncommon within the NSW Public Service where even annual reports tabled in Parliament can be prepared to show exemplar performance regardless of what is reported by the media.


The practise has served the NSW Public service well, and has the added advantage of enabling public servants and politicians to maintain plausible deniability regardless of the circumstances.

Politics and auditing are however two different things, even for a public sector auditor like the NSW Audit Office and the Auditor General, Ms Margaret Crawford.Auditors are supposed to hold themselves to a higher standard(though it is noted that Ms Crawford is not an accountant, and not a member of any professional body of accountants and auditors.


The United States  Public Company Accounting Oversight Board (PCOAB)  provides guidance (which has been reproduced below) about the type of investigation of publicly available information auditors are meant to undertake when performing audits of public company audits. The concepts ought not be different for NSW public service entities. The case of iCare demonstrates what can happen when these basic concepts are ignored. 

The iCare audited is not exceptionalFor another example from NSW  of where statutory board annual reports bear no resemblance to the public perception of the entity see:

Her Excellency Gov Beazley has a duty to ensure her government's books accurately reflect Her Excellency's words, acts, legal rights and liabilities (especially when the claims are made by a stat body chaired by the Lt Gov, the CJ NSW Tom Bathurst)


TO BE READ WITH 

Public Company Accounting Oversight Board (PCOAB)











AS 2110: Identifying and Assessing Risks of Material Misstatement


Amendments to paragraphs .28 and .52 and new paragraphs .28A and .60A have been adopted by the PCAOB and ap

Obtaining an Understanding of the Company and Its Environment

Objective

.03        The objective of the auditor is to identify and appropriately assess the risks of material misstatement, thereby providing a basis for designing and implementing responses to the risks of material misstatement.

Performing Risk Assessment Procedures

.04        The auditor should perform risk assessment procedures that are sufficient to provide a reasonable basis for identifying and assessing the risks of material misstatement, whether due to error or fraud,3 and designing further audit procedures.4
.07        The auditor should obtain an understanding of the company and its environment ("understanding of the company") to understand the events, conditions, and company activities that might reasonably be expected to have a significant effect on the risks of material misstatement. Obtaining an understanding of the company includes understanding:
  1. Relevant industry, regulatory, and other external factors;
  2. The nature of the company;
  3. The company's selection and application of accounting principles, including related disclosures;
  4. The company's objectives and strategies and those related business risks that might reasonably be expected to result in risks of material misstatement; and
  5. The company's measurement and analysis of its financial performance.



11        As part of obtaining an understanding of the company as required by paragraph .07, the auditor should consider performing the following procedures and the extent to which the procedures should be performed:
  • Reading public information about the company relevant to the evaluation of the likelihood of material financial statement misstatements and, in an integrated audit, the effectiveness of the company's internal control over financial reporting, e.g., company-issued press releases, company-prepared presentation materials for analysts or investor groups, and analyst reports;
  • Observing or reading transcripts of earnings calls and, to the extent publicly available, other meetings with investors or rating agencies;