Auditing in ABC Learning

Running head: Auditing
Auditing
Name of the Student
Name of the University
Author Note

1Auditing
Executive Summary
The report show about how the auditing is been carried in the company financial statement of
the company. The assessment is been based upon the company ABC Learning and it show
different aspects of the company which is been required by the auditor. It also show the
internal control of company as how the company is able to manage the internal control while
carrying the business activities. Lastly it show about the different analysis of company
financial statement which help the user to know about company financial performance
properly and able to take necessary decision.

2Auditing
Table of Contents
Introduction................................................................................................................................4
Overview of the Company.........................................................................................................4
Company Developments............................................................................................................5
Overall Analytical Review.........................................................................................................5
Audit Scope and Approach........................................................................................................7
Audit Planning Process..............................................................................................................7
Scope of Work............................................................................................................................8
Control Environment Assessment..............................................................................................8
IT General Controls Assessment................................................................................................8
Responsibilities Related to Fraud...............................................................................................9
Internal Audit.............................................................................................................................9
Confirmation of Independence.................................................................................................10
Materiality................................................................................................................................10
Risk Assessment and Areas of Audit Focus............................................................................11
Audit Engagement and Reporting............................................................................................11
Outline of Fees.........................................................................................................................12
Team of Audit..........................................................................................................................12
Conclusion................................................................................................................................12
Reference..................................................................................................................................14
Appendix..................................................................................................................................17

3Auditing
Introduction
. Auditing is the process in which the auditor examines the financial book of business.
It check the different book which are been maintained by the organization in regards of the
process which is been carried in regards of business activities (Appelbaum, Kogan and
Vasarhelyi 2017). The process is carried so the auditor can know whether the financial report
is showing true and fair view or not. Financial user takes decision in regards of financial
report so it is necessary that the company make proper statement so that the user can able to
have proper information of business and able to take their decision upon the same.
Auditing is carried by an individual and independent who is not an employee of
company the is been know as Auditor (Carrington 2019). Auditor is the one who carry its
expertise upon the company by carrying different procedure upon the financial statement so
that it can able to check whether the business is able to have all the application of rules and
regulation which are there in the financial statement. It checks that the company have
followed all the standard in the preparation of the financial statement of business.
Overview of the Company
The assignment is based upon ABC Learning. ABC Learning is the one who deals in
early childhood education in Australia. The company was founded in 1988, at Ashgrove. The
company basically carry child care chains that provide child education in Australia. The
objective of business is to provide children education from six week to pre-school age. They
also provide some additional service as, they provide before and after school services and
also vacation care. The company also able to have training centre that train the child care
employee to overcome different problem they face in carrying business activities.

4Auditing
Company Developments
As per the company development is been concern it is seen that it able to have big
start in the business activities as it listed in Australian Stock Exchange (Chong 2013). As in
March 2006 it expanded its business as it takeover Kids Campus and also it merge with a big
company named Peppercorn Management Group. The growth increase of the company was
very high as a result it able to have 70000 in 2006 and also it able to have many more
additional service in the business activities.
Overall Analytical Review
Analysis of business is done by carrying different method. The method which is used
for the review of business is shown below:
Dupont Analysis – The process of analysis of how much the company is able to get on return
from the equity which is in regards of financial leverage, asset turnover and Net Profit
Margin.
As per the above analysis of Dupont is consider that it have been increasing in starting
than it went on decreasing and at the last it went on increase so this signify that the company
is able to proper return on equity at ending stage so this show that the shareholder will have
more profit in business.
Common Size Analysis - This analysis show about the items of balance sheet against each
item, it show that how much an individual item have increase or decrease in the financial
statement of business. The analysis is done in respect of both income statement and balance
sheet.
As per the analysis of balance sheet it can seen that the current asset so the company
is reducing so this denotes that the company is not able to have proper amount of finance
which is not good as it is not able to do full utilization of resources. Non-current asset has no

5Auditing
significant change so this show that the company is managing the asset properly which is
good sign that it able to earn proper amount of profit from the same. As per the liability side
is been concern it is good as keep on reducing in each year so this show that the company is
not having any high outstanding liability upon the financial statement.
The Income Statement show that there was an increase in net profit in first 4 years but
after that the profit keep on reducing so this denote company is not able to hold the market
properly which is a sign that it does not able to give competition to its competitors properly
so to overcome that management should carry some changes which help the business to
increase the profit of the company.
Trend Analysis - The process of checking the book by comparing different years so that the
user can able to know the financial position of the company and able to take necessary
decision upon the same.
As per the company trend analysis is been concern so by considering the balance
sheet of business as per the total current asset it has an increasing trend which signify that
company is financially strong so they able to increase their current asset so as there is an
increase in current asset so this show company is having proper working cycle which is a
good sign as it is able to have more rotation of cash. Non-current asset is concern it had
increase in first 4 year but later on it kept on decreasing so this show that the company was
not able to have proper finance in regards of the non-current asset of business. The liability
side of company shows that there is increasing trend which signify that the company had an
increase on overall liability which is not good as if the company is having high debt than it
will have to face many risk which will not be good as if it not able to get proper business it
will not able to manage the finance cost of debt.