Accm4400 Auditing And Assurance Answers Assessment Answers

Apply the different phases of the audit to practical scenarios, working in teams in some instances

Evaluate the different audit opinions that could be expressed following the completion of an audit as they apply to different audit scenarios, working in teams in some instances

In relation to corporate governance, research and justify your answer to the following questions-

(A) Do the above companies have any process relating to corporate governance? Under which section of the annual report would you expect to find information on it?

(B) Do the companies have an audit committee and does it have the correct composition?

(C) In your team’s opinion, are audit committees of benefit to the auditor, the company, the auditing profession and/or society as a whole?

Answer:

Inherent Risk

The different kinds of the non routine transactions are found that they are present in varied kinds of estimations which the management takes into consideration. The instance of the non-routine transactions for JB HiFi are seen to be causing detrimental effect by acquiring other enterprises inherent dangers which are caused by risks and chances during the process of business combinations.

Fair Value

The accounting estimations are assumed to be very difficult to be ascertained including various kinds of fair value considerations needs to be unveiled in case of accounting statements.

Audit Procedure And Risk

The solutions in case of such transactions is based on the use of various kinds of different information’s which are obtained beforehand which are found to be conducive in helping as well as a providing a guideline about the occurrence in case of any unforeseen or uncertain events which might happen. The auditors also need to investigate of the firm’s decision makers and also make estimation about the techniques and the way to which will be ultimately reducing error margin. The process of audit is conducted in such a way which will consequently reduce or eliminate the error margin (Chandler 2014). Again we can write down from the above said statement that the process of audit is conducted in such a way that it will gradually reduce the level of risks associated with the audit questions has further been observed to be stated in case of detection and controlling of the same.

Material Misstatement

The term materially misstated basically explains the risks and dangers which are associated with the audit and also expresses any kind of inappropriate audit opinion (Kinney 2015).

Inherent risk

The risks involved with the banks are mainly ascertained for these cases in which the counter party is found to be defaulted responsibility as the terms and conditions are applied in it. Some of the risk factors which are related to it are stated here as under

1) Low or poor credit store

2) Unsteady income

3) Collateral assets

4) Employment

Audit Procedure/Task

In order to prevent the occurrence of such risks and dangers the audit procedure is required as there is growing increase in the overall interest for the borrowers.

Common Wealth Bank

Liquidity Risks

There are sometimes lack of market ability so there might be risks arising from these marketability which occurs mainly in case of the day to day transactions which are done. Such cases the bank may run out cash and it is concerned as the major or main liquidity risk to the bank (Knechel and Salterio 2016).

Audit Procedure/Task

In order to prevent the occurrence of such risks and dangers the audit procedure is required as there is growing increase in the overall interest for the borrowers. The procedure of audit is needed to ensure that there is sufficient amount of cash balance deposited in the bank as a depository before handing over the excess cash. The process of audit also is inclusive of the potential securities which breaches beforehand so as to avoid or prevent the instances of human risks like IT/system risks and processes risks (Moroney and Trotman 2016).

Credit Risk

There are other risks which are associated with the bank like in case of the credit risk we can see that the risks involved with the banks are mainly ascertained in which the counter party has defaulted in meeting up the responsibilities in terms and conditions of the agreement (Simnett et al. 2016). Some of them have been stated here as under

1) Low or poor credit store

2) Unsteady income

3) Collateral assets

4) Employment

Operational Risks

These are mainly the risks which are associated with the potential losses because of human error, occurring mainly in case of potential human error resulting consequently in potential losses in the internal processes. This definition is considered to be legal attached with legal risks but is excluding any kind of strategic and reputation risk.

References list:

Chan, D.Y., Chiu, V. and Vasarhelyi, M.A. eds., 2018. Continuous Auditing: Theory and Application.

Chandler, R., 2014. Auditing and assurance. London School of Economics. London.

Kinney Jr, W.R., 2015. GAAS 1963-2012: The Global Foundation of Independent Audits and Research in Auditing.

Knechel, W.R. and Salterio, S.E., 2016. Auditing: Assurance and risk. Taylor & Francis.

Moroney, R. and Trotman, K.T., 2016. Differences in Auditors' Materiality Assessments When Auditing Financial Statements and Sustainability Reports. Contemporary Accounting Research, 33(2), pp.551-575.

Simnett, R., Carson, E. and Vanstraelen, A., 2016. International archival auditing and assurance research: Trends, methodological issues, and opportunities. Auditing: A Journal of Practice & Theory, 35(3), pp.1-32.