Audit and Ethics

Running head: AUDIT AND ETHICS
AUDIT AND ETHICS
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Author’s Note

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AUDIT AND ETHICS
Table of Contents
Section 1....................................................................................................................................2
Materiality and Scope of Audit.............................................................................................2
Review of Draft notes and Disclosures.................................................................................4
Section 2....................................................................................................................................5
Application of Analytical Procedure.....................................................................................5
Section 3....................................................................................................................................8
Analysis of Cash Flow Statement..........................................................................................8
Review of Auditor’s Report......................................................................................................9
Reference.................................................................................................................................10

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AUDIT AND ETHICS
Section 1
Materiality and Scope of Audit
The main purpose of the assessment is to consider the business of Flight Centre Travel
Group which provides travelling services to the residents of the Australia. The annual report of
the company would be considered from the perspective of audit and analyzed whether the
financial statements are free from material misstatement or not. The assessment would be
recognizing the materiality aspect of items from the perspective of audit (Fctgl.com. 2019). The
concept of materiality is considered to be an integral part of the auditing process and the same is
based on the judgement of the auditor. The materiality of an item represented in the financial
statement helps an auditor to decide whether or not more audit procedure is to be applied to the
same for the purpose of collecting audit evidences. The company which is considered is Flight
Centre Travel Group for which different items which are presented in the annual report of the
business for 2018.
The concept of materiality is widely used during the course of audit considering the
financial information which is presented in the annual report of the business. The auditor needs
to assess whether the financial information which is included in the financial statements are
showing true and fair view or not. In order to provide appropriate opinion regarding the financial
statements, the auditor firstly needs to compute the planning materiality of the business (Jacoby
and Levy, 2016). The planning materiality is based on the judgement of the auditor and it is on
the basis of such estimate that performance materiality of different items is considered. In
relative terms, the computation of planning materiality in a business depends on estimates which
are of key nature such as sales, total assets, equity. It is to be noted that the computation of
planning materiality considers the item which has the highest value which is shown to be the

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AUDIT AND ETHICS
figure of total assets in the annual report of the company. The estimate of total assets of the
business for the year 2018 is shown to be /$ 3,405,219,000 on the basis of which planning
materiality is to be computed. The rate which is considered for the purpose of estimating the he
computation of planning materiality of the business is shown in the equation which is presented
below:
Planning Materiality=Total Asset∗5 %
¿ $ 3.405.219 .000
¿ 5 %
¿ $ 170,260,950
The above computation shows that the planning materiality of the business is $
170,260,950 on the basis of which performance materiality of the items presented in the annual
reports are considered (Müller-Burmeister & Velte, 2016). The estimate which is computed
above can be used by the auditor of the company to take important decision regarding which
items aret o be considered as materially misstated.
Review of Draft notes and Disclosures
The draft motes and disclosures are included in the notes to account section of the annual
report of the business. The notes to account need to be considered by the auditor because the
notes to account section of the financial statement contains certain treatments which may have
significance to the business from the point of materiality. The significant items which are
included in the notes to accounting section are given below in details:
Dividends