Auditing and Assurance Services in Australia

This assignment delves into the realm of Auditing and Assurance Services in Australia. Students are expected to analyze various scholarly articles and texts provided, drawing upon their understanding of the Australian context to synthesize a comprehensive response.

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

1AUDIT ASSURANCE AND COMPLIANCE
Table of Contents
Answer to Question 1:.....................................................................................................................2
Answer to Question 2:.....................................................................................................................3
Answer to Question 3:.....................................................................................................................4
References........................................................................................................................................7

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Answer to Question 1:
Application of analytical procedures to the financial report information of DIPL
The main types of the information provided in the report have been related to the
different types of the developments in the audit plan. The plan for the audit has been further seen
to be considered based on the audit cost at a reasonable level to consider the aversions which are
related to the clientele. The main analytical approach has been further seen to be considered
based on the different types the assumption which has been based on the various levels of the
report which has been considered based on the dissemination of the information in the financial
declarations (Kubuabola 2013).
The analytical considerations in the report have been considered with the downsizing of
the analysis with the reference point. This has been further considered for the financial statement
comparison for the various corporations. The main interpretations from the ratio have been
further able to signify on the different types of the consideration which has been related to the
audit planning (Ruhnke and Schmidt 2014).
Explanation of the way the results influence planning decisions for the audit
Particulars 2013 2014 2015
Current ratio 1.42 1.46 1.50
Profit margin 0.068 0.60 0.06
Solvency ratio 0.62 0.44 0.21
Table 1: Ratio Analysis

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(Source: as created by Author)
It has been further seen that the results has been considered as per the planning of the
audit planning and it has been seen to be important for maintaining the analytical approach for
the consideration of the financial statements. The main instance of the outcomes for the ratio has
been considered with the current ratio of the firms for DIPL. This has been seen to be 1.42 in
2013, 1.46 in 2014 and 1.5 in the year 2015. The main form of the profit ration has been
considered based on the 0.068 in 2013, 0.60 in 2014 and 0.06 in 2015. The important
consideration for the profit margin has been able to depict the income earned thorugh the net
sales from the DIPL (Ruhnke and Schmidt 2014). The assessor needs to under that the various
considerations which have been seen to be conducive for understanding the expenses which has
been seen to be bases on the concept of low or high in the management with the curtailment of
the time and budget. The unfavourable and favourable changes relating to the factors have been
considered based on soundness of the financial position and the audit assessment. In 2013 and
2015 the solvency ratio has been considered as 0.62 and 0.21 (Yasin and Nelson 2013).
Answer to Question 2:
Identification of inherent risk factors that arise from nature of business operations of DIPL
The main factors of the auditing have been shown with the several incidences with
material misstatements in the financial announcement of a certain concern. The unsystematic and
systematic risk has been further considered based on the financial declarations and financial
misstatements of the corporation (Geertse et al. 2015). The main risks has been further detected
based on the non financial and the financial factors. The evaluator may consider the detection of
the risk which is seen to be based on the financial declarations which has been stated with the

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accomplishment from the profit and the revenue generated with the sales. The present analysis
has been able to evaluate on the risks correlated to the omission and diverse errors in the
business operations (Lindeboom, van der Klaauw and Vriend 2016).
The accountants of the management and the total number of the transactions have been
further seen to be considered based on the omissions by the management. This has been directed
towards various types of the considerations revenue generated through the sales. The main
considerations have been further seen to be based on the essential planning along with the sales
activities (De George, Ferguson and Spear 2013).
Risk and way it might affect the risk of material misstatement in the financial report
The various types of the inherent risk and the way it can affect the material misstatement
has been stated below:
 Excessive pressure on employees and management
 Risks of errors or else incorrect misrepresentation
 Integrity of the entire management
 Unusual pressure on management
 Nature of entity business
Answer to Question 3:
A) Identification and explanation of two key fraud risk factors relating to
misstatements arising from fraudulent financial reporting
Asset Loss The main risk has been indicated with the considerable losses pertaining to the
fraud. The dissatisfaction among the workforce will induce the fraud

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involvement (Gay and Simnett 2015). The various expectations have led to
several types of the consideration which has been made as per the specified
performance based targets, leading to increased nature of fraud (Beasley et al.
2011).
Fraud incidence for
workforce
engagement
The main types of the fraud risk have been seen to be associated with the
various types of the operations of DIPL. Some of them have been seen with the
operations from the high pressure from the acquisition of novel accounting
system. The increased amount of pressure from the employees has been able to
carry installation process of the new IT systems which may be another reason
for the various types of the fraudulent activities. Based on the case study it has
been further determined that the process of IT implementation and improper
allocation of the transactions is recognised at the end of each year (Al-Rassas
2015).
Financial reporting
fraud
The fraud of financial reporting of the fraud has been further identified
with another risk factor. At the time of the excessive pressure it has been
seen with the specific announcement of the management to meet with the
certain goals for qualifying with the debt acquisition process. The high
risk of the financial announcements has been seen with improper
financial announcements. The total assets and the current assets of the
DIPL have increased considerably. The gross profit has been able to
show the loan amounting to 7.5 million and the loan agreement to
maintain the current ratio of 1.5. The debt equity ratio of the company
has been further discerned to be less than 1. The various requirements
have been further able to relate with the various considerations form the

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inappropriate reflection of the financial position (Mohd Yusof et al.
2014).
Unsuitable average
cost
On the basis of the evaluation of the raw material and inventory, the average
cost has been shown with the cost of paper which has been seen to be
considerably more than the average cost. The fraudulent risk considerations
have been further seen to be considered with the IT system, which has been able
to monitor the activities of the phases. The financial risk has been also based on
the evaluations of the different types of the financial statements monitored
simultaneously (Beattie, Fearnley and Hines 2013).

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References
Al-Rassas, A.H., 2015. Internal monitoring mechanisms and earnings quality: Empirical
evidence from Malaysia (Doctoral dissertation, Universiti Utara Malaysia).
Beasley, M., Buckless, F., Glover, S. M. & Prawitt, D. F. (2011), Auditing Cases: An Interactive
Learning Approach, 5th ed., Pearson Education Australia.
Beattie, V., Fearnley, S. and Hines, T. (2013) ‘Perceptions of factors affecting audit quality in
the post-SOX UK regulatory environment’, Accounting and Business Research, 43(1), pp. 56–
81. doi: 10.1080/00014788.2012.703079.
De George, E. T., Ferguson, C. B. and Spear, N. A. (2013) ‘How much does IFRS cost? IFRS
adoption and audit fees’, Accounting Review, 88(2), pp. 429–462. doi: 10.2308/accr-50317.
Gay, G.E. and Simnett, R., 2015. Auditing and assurance services in Australia. 6th ed.,
McGraw-Hill Book Company.
Geertse, T. D., Holland, R., Timmers, J. M. H., Paap, E., Pijnappel, R. M., Broeders, M. J. M.
and den Heeten, G. J. (2015) ‘Value of audits in breast cancer screening quality assurance
programmes’, European Radiology, 25(11), pp. 3338–3347. doi: 10.1007/s00330-015-3744-x.
Kemp, S. (2016), Auditing Assurance and Ethics Handbook 2016 Australia, John Wiley & Sons
Australia.
Kubuabola, S. (2013) External Quality Audit, External Quality Audit. doi: 10.1016/B978-1-
84334-676-0.50005-4.