Assignment: Audit, Assurance and Compliance
Added on 2020-03-07
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Running head: AUDIT, ASSURANCE AND COMPLIANCEAudit, Assurance and ComplianceName of the Student:Name of the University:Author Note:
2AUDIT, ASSURANCE AND COMPLIANCETable of ContentsQuestion 1........................................................................................................................................3Explain analytical procedure in accordance to financial report information for Double InkPrinters limited.................................................................................................................................3Analyzing the results that influences decisions while auditing for Double Ink Printers limited....4Question 2........................................................................................................................................5Classification of inherent risk from the nature of business operations of Double Ink Printerslimited..............................................................................................................................................5Question 3........................................................................................................................................8Classifying the fraud risk that arise from fraudulent activities and related to materialmisstatement of the company..........................................................................................................8Impact of the identified risk factors at the time of conducting audit...............................................9Reference List................................................................................................................................10Appendix........................................................................................................................................12
3AUDIT, ASSURANCE AND COMPLIANCEQuestion 1Explain analytical procedure in accordance to financial report information for Double InkPrinters limitedAuditors need to carry out the audit function of particular company after using analyticalprocedures that contains financial information as presented in the financial report of Double InkPrinters limited (Wong & Millington, 2014). Auditor need to first plan the audit function oforganization by following the guidelines and standards so that there is no discrepancy ofinformation, avoid any mistakes, errors or any misrepresentation of figures. The information willbe collected by the auditor from the financial declaration and applies analytical procedures for agiven company. Accountants of any Business Corporation need to undertake strategic, tacticaldecisions and these decisions are done after audit is done. It is only after then when accountantscan easily interpret the information and present it by using analytical approach in the financialdeclarations. Business Organization can make use of common sizing approach where they can preparethe declarations and make the comparison with the financial statement (William, Glover &Prawitt, 2016). The other tool to measure the financial performance of a company is ratioanalysis and this tool can measure four broad aspects such as liquidity, solvency, profitability aswell as efficiency. Ratio analysis can be termed as one type of analytical procedure that is usedby Business Corporation that helps at the time of conducting audit function. On the other hand,the common size approach assist auditor for getting access to financial information and there ispositive relationship between financial data and non-financial data. It is the responsibility of the
4AUDIT, ASSURANCE AND COMPLIANCEauditor to understand the line of items that are mentioned in the financial report for evaluatingactivities. In addition, the auditors should have complete detailed information of their client.Analytical procedure should be used by the auditor for audit planning like benchmarking. Thereare various other factor variances that are present in the financial declaration that are deductedand any deductions identified in the benchmarking process. Analyzing the results that influences decisions while auditing for Double Ink PrinterslimitedCalculation of financial ratios (Please refer to Appendix)Analytical approach can be used by the auditor for analyzing the results that getinfluenced by audit planning function (Srivastava, Rao & Mock, 2013). In addition, ratioanalysis is a tool that renders information and depicts the financial position of BusinessCorporation. The case study on the company DIPL shows profitability ratio, liquidity ratio andsolvency ratio that need to be found out by the auditor. The profitability ratio of DIPL for threeconsecutive years are 0.068 (2013), 0.060 (2014) and 0.068 (2015). The current ratio of DIPL forthree consecutive years are 1.42 (2013), 1.46 (2014) and 1.50 (2015). Furthermore, theprofitability ratio is one of the ratios that assist auditor while making comparison between netincome earned and net sales (William, Glover & Prawitt, 2016). It becomes essential to evaluate the financial health of DIPL and this is possible byidentifying favorable and unfavorable changes through use of ratio analysis as a point ofreference. Furthermore, the solvency ratio of DIPL for three consecutive years are 0.41 (2013),0.47 (2014) and 1.13 (2015). Auditor need to compare the ratios for three consecutive years and
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