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Audit Assurance and Compliance Name of University: Author: Answer to Question 1

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Holmes Institute Sydney

   

Audit, Assurance and Compliance (HI6026)

   

Added on  2020-03-04

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HI6026 - Audit, Assurance and Compliance Doc Holmes Institute assignment the process of audit that involves the evaluation of financial information of the organization made by the study of plausible relationships between non-financial and financial data. The audit plan of DIPL can be developed through the adoption of analytical procedures of the financial declarations given. There can be variations in the identified relationships in the particular conditions and this involves business changes, accounting changes, any unusual transactions, material misstatements, and random fluctuations.

Audit Assurance and Compliance Name of University: Author: Answer to Question 1

   

Holmes Institute Sydney

   

Audit, Assurance and Compliance (HI6026)

   Added on 2020-03-04

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Running head: AUDIT ASSURANCE AND COMPLIANCEAudit Assurance and ComplianceName of Student:Name of University:Author’s Note:
Audit Assurance and Compliance Name of University: Author: Answer to Question 1_1
1AUDIT ASSURANCE AND COMPLIANCEAnswer to Question 1:Analytical procedures form an important part of the process of audit that involves theevaluation of financial information of the organization made by the study of plausiblerelationships between non-financial and financial data. The audit plan of DIPL can be developedthrough the adoption of analytical procedures of the financial declarations given. There can bevariations in the identified in the relationships in the particular conditions and this involvesbusiness changes, accounting changes, any unusual transactions, material misstatements andrandom fluctuations. Planning of audit will help the auditors in maintaining the cost at prescribedlevel and avoiding of any misinterpretation that can arise with the clients. The disseminationprocess that is involves in analysing the financial declarations provided by DIPL is depicted inthe analytical procedures. The financial and business analysts would be able to take crucialdecisions concerning the business by deciphering the financial information’s using theprocedures of analytics (Beasley 2015). The procedures adopted by the auditor in analysing the financial information is ratioanalysis and common size statements analysis. Common size helps in comparing the financialdeclarations made by organization at different any of time or it makes the comparison betweenthe financial declarations information provided by two organization at one point of time. Itemsthat are recorded using some basis are also analysed using this method. Auditors from theanalytical procedures obtain the observation of consistency of the records amount in the financialinformation. Expectations of auditors are developed for desired level of assurance from theanalytical procedures. The analysis of audit plan is done by the adoption of another analyticalprocedure that is benchmarking. Any variations or deviation from the expected value id depictedby framing the benchmarking of the actual financial declaration. Ratio analysis will help the
Audit Assurance and Compliance Name of University: Author: Answer to Question 1_2
2AUDIT ASSURANCE AND COMPLIANCEauditors in ascertaining the trend of performance of organization over period (Byrnes et al.2015). Impact of planning decisions of audit from the results obtained: Calculation of financial ratios:Particulars201320142015Profit margin0.0680.600.06Solvency ratio 0.620.440.21Current ratio1.421.461.50Results obtained by auditors from the dissemination of financial information using theanalytical approach might influence the planning decisions concerning audit. Analysis can bedone by observing the current ratio, profitability ratio and solvency ratio. The ratios of DIPL forthree consecutive years would depict their financial performance overtime.RatioExplanation impact on auditCurrent ratioCurrent ratio for year 2015,2014 and 2013 stood at 1.5,1.46 and 1.42 respectively.Using the ratio analysis toolhelps the auditors in assessingwhether the expenses oforganization are reasonableand whether the costs incurredare too high and themanagement of DIP hasnecessary resources and theytake necessary measures torestrain any unfavourablehappenings.Solvency ratioSolvency ratio of DIPL forfinance year 2013, 2014 and2015 stood at .62, 0.44 and0.21 respectively.The auditor would use factorof assessment in analysingwhether the organization isexperiencing sufficient cashflow for meeting the overall
Audit Assurance and Compliance Name of University: Author: Answer to Question 1_3
3AUDIT ASSURANCE AND COMPLIANCEand short-term obligationsfaced by organizations (Bakeret al. 2014).Profitability ratioProfitability ratio for the year2013 stood at 0.068, forfinancial year 2014 it stood at0.60 and 0.06 in year 2015respectively. Analysis of thisparticular ratio depicts thegrowth of net income asagainst net sales of DIPL.Relativepositionoforganization can be easilyascertained with theapplication of the tool of ratioanalysis and recognition of thefactors that has led to anyundesirablesituationsobtained. Answer to Question 2:Identification of inherent risk factors that arise from nature of business operations of DIPLThe various types of the risks assessed for the audit process has been comprised based onthe incidence associated to the material misstatements in the financial announcements of thespecific concerns. It can be however be discerned that the various types of the considerationsassociated to the systematic and the various types of the unsystematic risks to state about thevarious types of the risks for the financial declarations of the corporation. The various types ofthe other risks detected have been applicable to both financial and the non-financial factorswhich can be averted in a particular organisation thereby reflecting the true and the fair view ofthe various types of the financial declarations. Nevertheless, the evaluator may find it demandingfor the detection certain risks. The different types of the correlated risks have been included foromission along with the varied range of errors and not thinkable for a particular bookkeeper. Inthis aspect the inherent risk may arise due to the overall nature of the business organisation ofDIPL (Duncan, B. and Whittington 2014).
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