Audit and Assurance: Key Assertions and Substantive Procedures

Running head: AUDIT AND ASSURANCE
Audit and Assurance
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AUDIT AND ASSURANCE
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Executive Summary
The audit process requires an auditor to independently examine the financial statements of a
business for ascertaining if there are any risks of material misstatement. The discussion would be
covering the business of Computer solutions ltd and Beautiful Hairs ltd which are engaged in
separate activities. The discussion would be including key assertions which can be identified for
the material accounts which are at risks and also substantive procedures which can be taken by
the auditor for collecting necessary audit evidences for forming an opinion regarding the fairness
of the financial statements of the business. The assessment would also include a discussion on
ASA 701 and the responsibilities of the auditors associated with this standard in terms of
disclosures.

AUDIT AND ASSURANCE
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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Computer Solutions Ltd...............................................................................................................4
Key Assertions in Relations to Inventory....................................................................................4
Application of Substantive audit procedure................................................................................5
Auditing Standard 701, Communicating Key Audit Matter........................................................6
Beautiful Hair Ltd........................................................................................................................8
Key Assertions of Intellectual property.......................................................................................8
Application of Substantive audit procedure................................................................................8
ASA 701, Communicating Key Audit Matters............................................................................9
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................12

AUDIT AND ASSURANCE
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Introduction
The purpose of conducting an audit is to check the accurateness of the financial position
of the business in terms of the reporting framework which is used by the business. The reporting
framework is used by the business for the purpose generating financial report for the business
which effectively displays the financial performance of the business. The auditing process makes
it possible to analyze the financial reports prepared by the business and identify if there are any
material misstatements in the same. The company which is considered for analysis, are
Computer Solutions ltd and Beautiful hairs ltd. The discussion would be including the key audit
risks which is faced by both the companies and the assertions which are related to the same. The
audit procedures which is applied by the auditor would be discussed in details for the purpose of
confirming the presence of risk in the financial statements (Groomer and Murthy 2018). The
auditor would be applying substantive procedures for collecting initial audit evidences which
would be helping the auditor to effectively form an opinion on the annual reports which is
prepared by the management. The audit opinion is important from both the perspective of the
shareholders and management as they provide feedback to both regarding what improvements
are necessary in the business structure (Glover, Taylor and Wu 2016). The discussion would also
be covering aspects which needs to be reported under Auditing standard (ASA) 701,
communicating key audit matters. The key audit matters are included in the annual reports which
is prepared by the business so that there a level of transparency maintained in the operations and
reporting framework of the business.
Discussion