An audit failure occurs when an auditor erroneously issues an audit report to express that a companys financial statements are free from material misstatements when they have material errors or fraud (Arens et al, 2017). An audit failure is a very serious issue in financial reporting area. Most of audit failures occurred around the periods between 1990-2010. Audit failure decreases audit quality and have threatened the credibility of the audit function. You are required to work in a group of no more than three members to write a report addressing the following three requirements:

1. Undertake literature review and discuss the impact of audit failure in financial market.

2. Explore and find an example of an audit failure. Discuss what have led to it.

3. With reference to existing literature, discuss what can be done to avoid audit failure.

In your report, you must include an executive summary, introduction, main body, conclusion and recommendations. Both in-text reference and reference list are prepared in accordance with Harvard Style.