Summarise the main points the charter including the structure
Answer:
Beach Energy Limited is a public company which is listed on ASX and operates in the energy sector dealing mainly with oil and gas, exploration as well as production. The head office of the company is located in Adelaide, South Australia (Moeller 2009, pp. 36). The company supplies its products mainly to the gas market in the east coast of Australia. The FY 2017 annual report of the company has been analyzed and reviewed (Beach Energy Ltd 2017, pp. 54-118). A summary of the research findings has been given in the various sections below.
it is considered that such business engagement between Beach and the auditor would be necessary and beneficial, due to the experience and expertise required in particular cases. The position of the non-audit services provided has been considered by the board and it has been confirmed that they are compatible with the general requirements of the independence of the auditor, as set out by the Corporations Act of 2001 (Knechel and Salterio 2016, pp. 46). By providing the non-audit services to the company, the independence of the auditor was not compromised at all (Beach Energy Ltd 2017, pp. 118). The non-audit services offered by the auditor to the audit client relate to legal matters such as:
IT services
The remuneration of the auditor for Beach Energy Limited has been summarized in the table below for the prior financial years.
As observed in the above analysis, the remuneration of the auditor for other non-audit services dropped significantly in the FY 2017 by a total of 77%. This decrease can be attributed to the lack of the need for Beach Energy Limited to acquire other non-audit professional services from the auditor, thus causing the fundamental reductions in the remuneration of the auditor (Beach Energy Ltd 2017, pp. 118).
| Key Matter of Audit | Procedure of audit Performed | How the Procedure is Classified |
|---|---|---|
The recoverable value of the assets of oil and gas of the group is based on the model of net present value. This matter is considered key in the audit due to the following: i. The oil and gas assets are much sensitive to small changes in the assumptions, for instance, prices of commodities, rates of exchange and rates of discount. |
iii. Confirming accuracy of the previous forecasts of the group with regard to forecasts of evaluation that were incorporated into the model. iv. Evaluation of the documents of the group, including board’s minutes regarding exploration and evaluation of assets. |
These audit procedures are classified under substantive tests of detail and analytical tests. |
i. Gaining an understanding of the obligation process of the group. ii. Checking and ascertainment of the approval on key inputs in calculating cost estimates. |
These audit procedures are classified as substantive tests of detail and tests of control with regard to board approvals. |
Reviewing the significant accounting policies of the organization as well as its principles of financial reporting
Reviewing the extent and scope of the general audit of the external auditor.
Directors’ and Management’s Responsibilities and Those of the Auditor
According to the FY2017 annual report, the management of Beach Energy Ltd had the following responsibilities regarding the financial reports (Elder, Beasley and Arens 2011, pp. 231).
Obtaining a reasonable and verifiable assurance regarding the whole financial report of the company and analyzing if it is free from material financial information misstatements.
Issuing an auditor’s report expressing their opinion with regard to the company’s financial reports (Cosserat and Rodda 2009, pp. 23).
Material Information Which Could Be Under-Reported or Missing
Although the independent auditor has given an unqualified opinion in the report of his audit, there are a few areas which have been under-reported. For instance, regarding business combinations, full details have not been adequately explained in the financial reports. The acquisition of 100% interests in the shares of Territory Oil and Gas by Beach Energy Ltd has not been explained adequately regarding the terms of the transaction, which according to the FY 2017 annual report, remain confidential and undisclosed (Arens, Elder and Beasley 2013, pp. 45). There is more that needs to be disclosed with regard to this acquisition since it is considered a key matter that may impact the financial decision made by intended users of the financial statement of the company.
References
Arens, A.A., Best, P., Shailer, G. and Fiedler, B., 2013. Auditing, Assurance Services and Ethics in Australia. Pearson Higher Education AU.
Cosserat, G.W. and Rodda, N., 2009. Modern auditing. Wiley.
Elder, R.J., Beasley, M.S. and Arens, A.A., 2011. Auditing and Assurance services. Pearson Higher Ed.
Louwers, T.J., Ramsay, R.J., Sinason, D.H., Strawser, J.R. and Thibodeau, J.C., 2015. Auditing & assurance services. McGraw-Hill Education.
Messier, W.F., Glover, S.M. and Prawitt, D.F., 2008. Auditing & assurance services: A systematic approach. Boston, MA: McGraw-Hill Irwin.