Analysis of Accounting and Auditing: Doc
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Added on 2020-03-16
Analysis of Accounting and Auditing: Doc
Added on 2020-03-16
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ContentsPLANNING OF AUDIT...................................................................................................................................4ANALYTICAL REVIEW...............................................................................................................................4PRELIMINARY JUDGMENT OF MATERIALITY............................................................................................5CONSULTANCY FEES....................................................................................................................................5RATIONALE FOR SELECTION....................................................................................................................5ASSERTION AND EXPLANATION...............................................................................................................6RECOMMENDED AUDIT PROCEDURE......................................................................................................6BANK CHARGES...........................................................................................................................................6RATIONALE FOR SELECTION....................................................................................................................6ASSERTION AND EXPLANATION...............................................................................................................6RECOMMENDED AUDIT PROCEDURE......................................................................................................6INTEREST INCOME.......................................................................................................................................7RATIONALE FOR SELECTION....................................................................................................................7ASSERTION AND EXPLANATION...............................................................................................................7RECOMMENDED AUDIT PROCEDURE......................................................................................................7SALES...........................................................................................................................................................7RATIONALE FOR SELECTION....................................................................................................................7ASSERTION AND EXPLANATION...............................................................................................................8RECOMMENDED AUDIT PROCEDURE......................................................................................................8DEPRECIATION.............................................................................................................................................8RATIONALE FOR SELECTION....................................................................................................................8ASSERTION AND EXPLANATION...............................................................................................................8RECOMMENDED AUDIT PROCEDURE......................................................................................................8COST OF SALES............................................................................................................................................8RATIONALE FOR SELECTION....................................................................................................................8ASSERTION AND EXPLANATION...............................................................................................................9RECOMMENDED AUDIT PROCEDURE......................................................................................................9SUPERANNUATION......................................................................................................................................9RATIONALE FOR SELECTION....................................................................................................................9
ASSERTION AND EXPLANATION...............................................................................................................9RECOMMENDED AUDIT PROCEDURE......................................................................................................9REFERENCES................................................................................................................................................9APPENDIX..................................................................................................................................................11
PLANNING OF AUDITAudit planning is the first stage of the process of the audit. It is regarded as the main part of the wholeprocess of the audit. It is because the whole process of the audit depends upon the planning only andthat shall be done with the due care and professional responsibilities. The first basic aim of the auditplanning is to equip the auditors with the understanding as to how to conduct the audit, what things arerequired to be kept in mind and in the audit documentation while conducting the audit, which areas arerequired to be checked in detail and which items as stated in the financial statements has the highprobability of providing the distorted information to the users of the financial statements and etc. In thegiven case, company – Chamoisee Enterprises has been provided for analyzing. The second main aim ofthe audit planning is to conduct the preliminary analytical review procedures and substantive tests(Leung, Coram, Copper and Richardson, 2015). The aforesaid two tests are performed to have thedetailed analysis of the financial statements with regard to the accounting ratios and the trend analysisover the past two years. ANALYTICAL REVIEWThe analytical review is defined as having the analysis of the financial statements of the company in ananalytical manner. This analytical analysis consists of the two set of processes. First process is known asthe ratio analysis and the second process is known as the analysis through trend or movement in theitems of the financial statements for the last two or three years. The first process is the ratio analysisand it informs the nature of relationship between two or more items of the financial statements anddescribe as to why the figure of the ratio sometimes justifies that the auditor is required to undertakethe audit procedures which are in addition to the normal and defined audit procedures. Theseprocedures are normally undertaken to ensure that the items as stated in the financial statements of thecompany is accurate, complete and authentic (Abidin and Baabbad, 2015). The other process is the trend analysis. Trend describes the movement of the items of the financialstatements over the past two or three years. The trend may be positive one or negative one. In simplewords, the trend analysis may be upward or downward depending upon the results and thecircumstances. It helps the auditor in considering the reasons for having such an increasing ordecreasing trend during the planning of an audit and laid down the audit procedures which are requiredto be followed by the audit team (Glover, Prawitt and Drake, 2014). In this report of the company
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