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Audit, Assurance and Compliance Assignment - HI6026

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Holmes Institute Sydney

   

Audit, Assurance and Compliance (HI6026)

   

Added on  2020-03-02

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In this report HI6026 - we have discussed questions answers related to Audit Assurance and Compliance of  DIPL. 1. Application of analytical procedures to the financial report information of DIPL. 2. Identification of inherent risk factors that arise from nature of business operations of DIPL. 3. Identification and explanation of two key fraud risk factors relating to misstatements arising from fraudulent financial reporting.

Audit, Assurance and Compliance Assignment - HI6026

   

Holmes Institute Sydney

   

Audit, Assurance and Compliance (HI6026)

   Added on 2020-03-02

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Running head: AUDIT, ASSURANCE AND COMPLIANCE Audit, Assurance and ComplianceName of the StudentName of the UniversityAuthor’s Note
Audit, Assurance and Compliance Assignment - HI6026_1
1AUDIT, ASSURANCE AND COMPLIANCETable of ContentsAnswer to Question 1......................................................................................................................2Application of Analytical Process of Financial Information.......................................................2Impact of Analytical Methods on Audit Planning.......................................................................6Answer to Question 2......................................................................................................................6Answer to Question 3......................................................................................................................8Answer to (a)...............................................................................................................................8Answer to (b)...............................................................................................................................9References......................................................................................................................................11
Audit, Assurance and Compliance Assignment - HI6026_2
2AUDIT, ASSURANCE AND COMPLIANCEAnswer to Question 1Application of Analytical Process of Financial InformationDifferent kinds of analytical procedures are there for the analysis of the financialinformation. Ratio analysis is considered as one of those major mechanisms of analyticalprocedures (Healy & Palepu, 2012). In case of DIPL, ratio analysis is used for the analysis of thefinancial information of the company.Profitability Analysis: The profitability ratio analysis of DIPL:Ratio201320142015Gross Profit Ratio 17.55%16.13%15.20%Net Profit Ratio 6.90%6.08%6.84%Operating Profit Ratio 19.82%19.18%19.12%Return on Assets 18.25%14.41%11.37%Return on Equity 25.78%21.25%24.26%Table 1: Profitability Ratios of DIPL(Source: As created by Author)From the above analysis of the profitability ratios of DIPL, the following facts can beobserved:The gross profit ratio has decreased from 2013 to 2014 that is from 17.55% to 16.13%.Further decreases can be seen in 2015 that is 15.20%.The operating profit ratio of the company decreased from 2013 to 2014 that is from19.82 to 19.12%. In the year 2015, it has further decreased to 19.12%. There has been amassive decreases in the operating profit as the company did write back the allowance
Audit, Assurance and Compliance Assignment - HI6026_3
3AUDIT, ASSURANCE AND COMPLIANCEfor the inventory in an undesirably manner; in addition, there have been rise in thestorage fees.In case of the net profit of the company, it can be seen that the despite of a fall in the netprofit from 2013 to 2014, there has a rise in the net profit in the year 2015. The savingsin the tax expenses of the company leads to the increase n net profit in the year 2015. Inaddition, there was an increase in the interest expenditure in 2015 (Higgins, 2012).There was a decrease in return on equity from 2013 to 2014 that is from 25.78% to21.25%; after that, there was an increase in 2015 to 24.26%.Liquidity Analysis: The liquidity ratios are shown below:Ratio201320142015Current Ratio1.421.471.50Quick Ratio 0.830.940.85Table 2: Liquidity Ratios of DIPL(Source: As created by Author)From the above analysis, the following facts can be observed:Improvement in the liquidity position of the company can be seen in the year 2015 and itcan be judged with the help of current ratio. In the year 2013 and 2014, the current ratiosof DIPL are 1.42 and 1.47. In 2015, the ratio is 1.50. According to the quick ratio analysis of DIPL, in 2015, there have not been manyimprovements in the liquidity position of the company. In the year 2013, the quick rationof the company was 0.83 and it has been increased in 2014 that is 0.94. In 2015, thecurrent ratio further decreased to 0.85 (Bodie, Kane & Marcus, 2014).
Audit, Assurance and Compliance Assignment - HI6026_4

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