Auditing and Ethics in Australia: ST Barbara Limited (SBM)

5/2/2019
Student’s name
UNIVERSITY NAME
Auditing and
ethics in
Australia
ST Barbara Limited (SBM)

Table of Contents
Executive Summary................................................................................................... 2
Background of company............................................................................................. 3
Discussion and Analysis............................................................................................. 3
Section 1: Determination of Materiality...................................................................3
Review of the draft notes and disclosures...............................................................3
Section 2: Preliminary Analytical Review through Ratio Analysis............................4
Analysis of Ratios and Assertions and Audit procedures.........................................5
Section 3: Cash flow analysis..................................................................................5
Audit Report analysis.............................................................................................. 7
Conclusion.................................................................................................................. 8
References................................................................................................................. 9

Executive Summary
A report has been prepared on the company ST Barbara Limited, which is based out
of Australia and listed company on ASX. The report gives a brief outlook on the
company and its business. In the report, the concept of materiality has been
discussed and the quantitative estimate materiality to be considered has been
suggested. Several issues have been shown which do needs attention, these were
identified from the notes on accounts. The ratio analysis of the company shows
some of the major assertion which do needs to be verified and checked by applying
different audit procedures. The third part of the assignment is on cash flow
statement and the audit report published by the auditors of company. Based on the
same, the conclusion has been given as to whether the company is a going concern
or not. The objective of this assignment is to give a fair view in case the audit has
been conducted as per the minimum required standards or not.

Background of company
The company discussed about here is St Barbara Limited, it is listed on ASX. The
company deals in production and exploration of the gold and has a history of 50
years. Initially the company focused only on the mineral exploration and asset
production in Western Australia however late in 2005, the company made an
acquisition of Southern Cross, Leonora and South Laverton gold assets from Sons of
Gwalia Limited. The company further made an acquisition of Allied Gold Mining plc
at Papua New Guinea and Gold Ridge in the Solomon Islands. All this has
contributed to the growth of the company over the years in terms of revenue and
profitability (Andiola, Lambert, & Lynch, 2018).
Discussion and Analysis
Section 1: Determination of Materiality
Materiality is defined as the range or a particular amount above which everything is
considered to be important and therefore material. It is one of the very basic steps
in planning of the audit and helps the auditor in paving the path for the overall audit
procedures. The concept of materiality is important simply because of the fact that
in case it is inappropriately determined, it may give hamper the quality of audit and
that the material misstatement may not be caught at times (Axelsen, Green, &
Ridley, 2017).
(Amt in $'000)
ST Barbara Limited
Quantitative estimate of materiality
Criterion Base
Amoun
t
Materiality
level/range
0.5% to 1% of gross revenue
Gross
Revenue
679,2
04 3396.02 to 6792.04
1% to 2% of the total assets Total Assets
821,1
44
8211.44 to
16422.88
1% to 2% of the gross profit Gross Profit
403,5
09 4035.09 to 8070.18
2% - 5% of the shareholders's
equity Equity
665,8
70 6658.7 to 13317.4
5% to 10% of the net profit Net profit
226,9
98 11349.9 to 22699.8
The quantitative estimate of the materiality for the company in hand has been
shown above. There are various ways in which the same can be determined and
have been used in the past. Some of them are percentages of gross sales, gross
profit, net profit, total assets or even equity. Using these limits, materiality has been
calculated above, however the same should be in 11.35 Mn and 22.70 Mn as
determined as a percentage of net profit as it seems to be the most convenient (Fay
& Negangard, 2017).