AUDIT, ASSURANCE AND COMPLIANCE 13 Audit, ASSURANCE AND COMPLIANCE Audit, Assurance and Compliance

Running head: AUDIT, ASSURANCE AND COMPLIANCE
Audit, Assurance and Compliance
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1AUDIT, ASSURANCE AND COMPLIANCE
Table of Contents
Introduction:....................................................................................................................................2
Answer to Question 1:.....................................................................................................................2
Answer to Question 2:.....................................................................................................................6
Answer to Question 3:.....................................................................................................................9
Answer to Part A:........................................................................................................................9
Answer to Part B:.......................................................................................................................12
Conclusion:....................................................................................................................................13
References:....................................................................................................................................15

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Introduction:
The current assignment aims to evaluate the financial statements of Double Ink Printers
Limited (DIPL). The organisation is engaged in printing books, magazines and advertising stuffs
for publication, advertising and educational industries on a print-on-demand basis. In this
context, Birkey et al. (2016) advocated that print on demand signifies that the publishers could
print the right quantities ordered on the part of retail outlets, instead of advance estimations of
the requirements. The average turnaround time related to printing for DIPL is two days for small-
sized orders and five to ten days for large-sized orders.
Moreover, DIPL has diversified its earnings base by enabling the availability of the
publisher’s title as searchable e-books, which the readers could download directly from the
website of DIPL. Therefore, the organisation has approached Stewart and Cathy to carry out its
audit work, and the senior manager of the organisation would undertake the same. Thus, the
current assignment aims to apply analytical procedures to the information of financial report of
DIPL for the past three years. The second section of the assignment aims to identify and explain
two inherent risks that the organisation could encounter and their impact on the risk of material
misstatements in the financial report. The final segment of the assignment sheds light on
identifying and explaining two major fraud risk factors associated with misstatements arising
from fraudulent financial reporting related to the susceptibility of the organisation.
Answer to Question 1:
The analytical methods relating to the financial statement information of DIPL could help
in forming the overall audit plan. This plan of audit could be considered in the form of a

3AUDIT, ASSURANCE AND COMPLIANCE
particular standard to be adopted while carrying out the overall audit work. Especially, this
enables the assessor in maintaining the overall audit costs at an appropriate level along with
helping in eliminating misunderstanding with the clients (Burton et al. 2014). The analytical
method associated with the financial announcements of DIPL is the method of propagation of
information from its overall financial declarations. There are various mechanisms that help in
conducting the entire process of evaluation. Conversely, in order to seek information, financial
assessors and accountants could use the analytical procedure related to the financial statement
assessment (Byrnes et al. 2015).
There is relationship between common sizing and analytical method through which the
financial declarations could be dissected to a prevalent referential point. This would enable in
contrasting the financial reports in relation to various timeframes or in relation to various
organisations. It is necessary for the auditors to consider the diverse lines of items laid out in the
financial reports and the entire reporting method is verified. For example, there are various ways
through which items like net assets, net liabilities and owners’ equity could be registered in the
financial statements of the organisation and then investigation is made to digress from the normal
situation (Christensen et al. 2016). One of the most crucial analytical processes is benchmarking,
as the plan of audit could be dissected with the help of the same. The deviation of real financial
announcement from the yardstick plays a crucial role in realising the difference along with
helping in evaluating the reason of the identified variance for ascertaining the root cause.
In addition to this, another pertinent analytical procedure is ratio analysis through the
financial declarations could be differentiated and it is possible to analyse the plan of audit. With
the help of ratio analysis, the different aspects of operating and financial performance of the
organisation could be assessed like profitability, liquidity, efficiency and solvency (Cohen,