ACC707 Auditing and Assurance Services Assignment Help

Added on -2020-02-24

| ACC707| 12 pages| 3126 words| 72 views

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AUDITING ISSUES RESPONSIBLE FOR COLLAPSE OF ABC LEARNING CENTRE AND THE DEVELOPMENT OF NEW AUDITING STANDARD ASA701
EXECUTIVE SUMMARYThe reason behind presenting this report is to identify the auditing problems that led to the subside of ABC Learning Centre and problems that ensured the development of new auditing standard ASA701 Communicating Key Audit Matters in the Independent Auditor’s report. Additionally, we also discuss the key audit matters which were essential to be unveiled in the audit report of ABC Learning Centre during the period of its collapse. The report provides us with an insight of the usefulness of Auditing Standard ASA701 (ISA701) and gives details ofthe objective and scope of the said auditing standard. It also clearly provides what key audit matters are and why is it important to communicate the same in the auditor’s independent report and how by doing so shareholders are benefitted as they get an insight of the company’s financial position. 2
Table of ContentsINTRODUCTION.....................................................................................................................................4ABC LEARNING CENTRE-AUDITING ISSUES RESPOSIBLE FOR COLLAPSE OF THE COMPANY..................4AUDITING STANDARD ASA701 Communicating Key Audit Matters in the Independent Auditor’s Report and ITS USEFULLNESS...........................................................................................................................6KEY AUDIT MATTERS TO BE DISCLOSED IN THE AUDIT REPORT OF ABC LEARNING CENTRE...................7RECOMMENDATION...........................................................................................................................................9REFERENCES......................................................................................................................................................113
INTRODUCTIONABC LEARNING CENTRE –AUDITING ISSUES RESPONSIBLE FOR COLLAPSE OF THE COMPANYABC Learning Centre was an Australian child care company founded in the year 1988. It wasconsidered as the biggest child care corporation with around 800 centres in the year 2006 and proceeds more than $50 million in the fiscal year 2004-2005. Owners Eddy Groves and Le Neve started with this business expecting it to do well as during that time both the family members were working without any extra support from other family members. The business flourished with an added benefit from the government in the form of subsidies. Child care industry is bound to earn profits as the expenditure is less and there is hardly any restriction to start such business. The company started trading on the Australian Stock Exchange in the year 2001 and its shares did significantly well which was evident from the fact that its profits increased around 1100% from 2002 till 2006 with seven times rise in stock prices from the year 2002 till 2004(Sumsion, 2017). Because of such an exceptional performance, the company became more famous through news in the media and fascinated numerous stakeholders towards the company. Within 4 year of entering the share market, 20 % of child day care centres of Australia were possessed by ABC Learning Centre. The company acquired several companies such as Future One, Kids Kampus etc. Further, with the possession of Learning Care group, it rose to become the biggest listed childcare supplier globally employing 16,000 workers and rendering services to around 100,000 kids.4

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