Audit And Ethics Behavior Assignment

Running head: AUDIT AND ETHICS
Audit and Ethics
Name of the Student:
Name of the University:
Author’s Note

AUDIT AND ETHICS
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Table of Contents
Section 1..........................................................................................................................................2
Computation of Materiality.........................................................................................................2
Analysis of the Disclosures and Note to Accounts......................................................................3
Section 2..........................................................................................................................................4
Analytical Procedures on the Financial statements.....................................................................4
Section 3..........................................................................................................................................8
Review of Cash Flow Statement..................................................................................................8
Review of the Auditor Report......................................................................................................9
Reference.......................................................................................................................................11

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Section 1
Computation of Materiality
The assessment would be going through the different steps which are associated with
audit for a company. The steps which are required to be carried out by the auditor needs to be
planned ahead so that the auditor is well aware of the areas where focus should be so that quality
audit evidences can be collected. One of the important consideration which the auditor needs to
consider is the materiality of the items which are being considered for the purpose of analysis.
The concept of materiality is derived from importance of the item considering the items which
are of relevance which is presented in the annual report. The materiality concept is considered to
be important as the same has an impact on the decision of the senior officials. The entity which
would be the focus for this assessment is QBE insurance Group. In order to review the audit
evidences, the final report of the entity would be considered for the year 2018 (QBE Insurance
Group Ltd.., 2019). The analysis would also be including key financial ratios which might reveal
data regarding the performance.
The materiality concept is known to cover both the qualitative and quantitative aspects
which is related to reporting framework of a business. Qualitative aspects of reporting
incorporate key items which can have a significant impact on the reporting process of the entity.
The quantitative aspects of a business include items which are of material amount and
misstatement of the same would affect the reporting framework of the business (Legoria,
Melendrez & Reynolds, 2013). The emphasis which the auditor would be placing on materiality
would be decided at the time when the auditor formulates an audit plan for the business.

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In order to achieve the estimates of materiality for each of the items, planning materiality
needs to be computed by the auditor. This estimate is used as a basis to judge tolerable errors and
omission which is present in the financial report of the corporate. The analysis of planning
materiality is generally done considering largest and most material figure in the annual report
and the same is multiplied by an assumed percentage considering the auditing guidelines. In the
case of QBE Insurance Group, the figure of total asset is considered to be the base and the figure
for the same is shown to be US$ 39,582 as per the annual report of 2018. The assumed
percentage which is considered for the purpose of analysis is 2% in this case. The formula and
computation process are shown below:
Planning Materiality=Total Assets × Predetermined Percentage
¿ US $ 39,582 million ×2 %
¿ US$ 791.64 million
The planning materiality for the business of QBE Insurance Group is shown to be US$
761.64 million which would be assisting the auditor to compute performance materiality for the
business (Edgley, Jones & Atkins, 2015). The material misstatements can be identified
considering the materiality estimates which is considered by the auditor.
Analysis of the Disclosures and Note to Accounts
The notes to account for an annual report contains vital information which provides
support to the investors to understand the financial position of the business and also complex
treatments which is undertaken by the management. It is therefore imperative that the
information which is disclosed in the draft notes is accurate. The matters which are covered in
the financial reports for the company is shown below: