Audit Assurance and Compliance : Assignment

AUDIT, ASSURANCE AND
COMPLIANCE

EXECUTIVE SUMMARY
This project report is summarises that auditing is a concept which
helps in investigating the accuracy of the financial statements of an
organisation. IHP limited is an organisation which is listed on Australian stock
exchange is chosen in order to better understand the topic of auditing. Audit
report and opinions provided by its subsidiary and external auditor Deloittee
Touche Tohmatsu analysed and interpreted in order to ascertain various
issues regarding the process of auditing.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Auditors' independence declaration............................................................................................1
Non auditing services and the nature of services........................................................................2
Auditors' remuneration................................................................................................................3
Key Audit matters.......................................................................................................................4
Audit committee and its structure, function and responsibilities................................................6
Audit opinion..............................................................................................................................7
Diversification of responsibilities of Director's or management's responsibilities from auditors
.....................................................................................................................................................7
Material subsequent events and their operations........................................................................9
Assessment of the effectiveness off material information reported by the auditor.....................9
Declaration on missing material information (If any)...............................................................10
Questions asked to auditors in general meeting........................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Audit assurance and compliance are the services aligned in terms of
managing the activities and plans of audit. Changing business environment
has enhanced the scope of audit reporting and accounting for internal
control and management (Bepari and Mollik, 2015). There is an evaluation of
annual report of IPH limited are considered subject to independent
declaration, Independent's auditor' remuneration, functions, roles and
composition of audit committee and key audit matters are defined in this
report. Roles and responsibilities of different type directors' and auditors' are
defined separately in this report. Material information that are presented
separately in annual report also evaluated in the end of this file.
MAIN BODY
Audit is inspection of financial reports that comprises balance sheet,
cash flow statement, income statement and statement of changes in equity
of a company by independent auditor. After analysing them they need to
give their opinion and finding key audit matters. Also examine whether
reports are based on Australian Accounting Standards and Corporations Act
2001.
Audit assurance of financial statements plays an important role in
gaining customer confidence because information provided in financial
statements is used by stakeholders such as investors, government, capital
markets etc.
Auditors' independence declaration
This is a type of declaration letter submitted to board members of
organisation by adhering guidelines of section of 307C of the corporation Act
2001. Independence declaration is given by the auditors of IPH limed to the
directors in terms of financial reports. Leading auditor remains the main
partner of the audit program and the financial reports of organisation. In this
declaration form it is complied by auditors that;
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 The have completed their independence requirement as per the
corporation act 2001 and in respect of audit.
 All the practical code regarding the professional conduct in relation to
audit also considered in declaration form.
The independence declaration form of IHP limited is signed by the
auditors;
a) Deloitte Touche Tohmatsu
b) Tara Hill (Partner and Charted accountants)
Non auditing services and the nature of services
Non auditing services are also taken by IPH limited in terms of
analysing and determining the financial statements of company for the year
ended 2017. Directors of company are agreed with the provisions and the
auditing services during the financial year (Brawley and et. al., 2015). It can
be a person of the firm, auditor, person, general standard of independence
for auditors, or on the behalf of auditors. The information is compatible
subject to common standards of independence for auditors and imposed by
the corporation act 2001. the services which regarding non auditing services
are mentioned under note 28. Non auditing services are considered as non
interest bearing, trade payable and the other accruals also considered in this
report.
The financial statements reading non-auditing services are cited
separately form the external audio's independence requirements according
to the corporation Act 2001 due to following reasons;
 Objectivity and Integrity of the organisation will not be impacted by the
assurance, approvals and review of non audit services
 the general principles are introduced in terms of auditing own work,
non any service misconduct the common principles and standards
related to the auditor's independence.
 The code of ethics for professional accounts also issued by reform the
APES (Accounting Professional and Ethical Standard Board) 110 code.
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Management decisions and decision making capacity for the
organisation. Economics and shared risk awards are conducted
properly.
There is no any former member or partner is associated with Deloittee
Touche Tohmastsu
Auditors' remuneration
Note 28 of annual report of IHP limed contains the description about
auditor's remuneration.
(Source: Remuneration of audit, 2017)
As per the audit remuneration report three main categories are consolidated
that defines the distribution of remuneration to audit and non-audit services.
Audit services that are provided by Deloittee Touche Tohmatsu (Australia)
was paid $270840 in total in 2017 and $448658 in 2016. It is seen that
39.63% less audit fees was paid to DTT (Australia) in 2017 comparison to last
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financial year. The major difference was recorded due to non payment of Tax
compliance services in 2017.
Audit fees was paid to DTT (Singapore) in terms of audit or review for
the financial statements and Tax compliance services. Total audit fees to
DTT (Singapore) was counted as $52627 for the year 2017 and $110973 for
2016. it is seen that 52.57% less audit fees was paid in 2017 comparison to
2016. Reason of the difference was also same of tax compliance services not
paid for the year 2017.
Audit services for unrelated firms were paid as $23175 for the year
2017 and $5142 for 2016. Total audit services subject to audit and other
services was counted as $86257 for the year 2017 and $5978 for 2016.
$80279 excess audit fees was paid in current year due to excess payment to
corporate and taxation services (Annual report of IHP limited, 2017).
Key Audit matters
Key Audit Matters are those which discloses significant auditor attention
required by ISA (International Standards on Auditing) in areas of financial
statements, important events and transactions.
Deloitte prepared Independent Auditor's Report on the basis of
consolidated statements of profit and loss, cash flow and changes in equity
for the members of IPH limited and its subsidiaries for the year ended 30
June 2017. Key audit matters are opinions in discourse of auditor's report
and are as follows:
 Accounting for acquisitions: Documents disclosed by company includes
business combinations and in that auditor assessed that management
of company need to ascertain fair value of purchases of acquisitions
and deferred amounts, customer contracts and relationships have to
be acknowledged separately from goodwill.
 Recoverability of Goodwill and intangible assets: As on 30 June 2017,
total goodwill and intangible assets of IPH limited was $212,926,000
according to information disclosed in Critical accounting judgements,
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estimates and assumptions (Dedman and Kausar, 2012). In
determining recoverable amount of goodwill and intangible assets,
auditor assumes long-term growth rates, discount rates, budgeted
EBITDA and growth rates. They identified key audit matters in two
CGU's (cash generating units) which are Pizzeys Patent & Trade Mark
Attorneys Pty Limited and Practice Insight Pty Limited.
Procedure of audit to the Key Audit Matter of accounting for
acquisition:
 Understanding process of acquisition, terms and conditions of purchase
contract, management's accounting treatment in deciding nature and
amount of deferred consideration.
 Reviewing competence, capability and objectivity of management's
report as well as examining director's involvement or any other extent.
 Analysing methodology adopted by management to calculate fair value
of purchase consideration.
 Assessing procedure of correct valuation of acquiring intangible assets,
customer relationship, amortisation rate, assessment of cash flow
assumptions, revenue growth rates, gross margin, rate of discount,
contributory asset charges, rationality of valuation outputs.
Procedure of audit to the key audit matter for Recoverability of
Goodwill and intangible assets:
 Evaluating key control measures adopted for recoverable amount
assessment, reliability of impairment model, using approved forecasts.
 Assessing independent calculation of discount rates, growth rates and
changes occurring in these.
 Evaluating management sensitivity analysis, operational strategies
used in forecasts for Practice Insight.
 Checking accuracy of variances through comparing budgeted and
actual results.
 Assessing sufficiency of disclosure 'Recoverability of Goodwill and
intangible assets'.
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Other Information:
Directors also have to give information which will include director's
report. For this Chairman's letter, Chief Executive Officer's Report, Board of
Directors, and shareholder's information need to made available before the
date of auditor's report and if auditors found any material misstatement in
these or in financial report then they will take action on management.
Audit committee and its structure, function and responsibilities
It is a board of different members and formed by the directors of the
company. Main role audit committee is to hire independent auditors who
may handle the responsibility to examine the annual reports of the company.
There is an audit committee in IPH Ltd too. There are four members in audit
committee all of them are non executive directors of the company. All of
them are independent and member for whole year. The members are
Richard Grellman Am who is a chairman, Robin Law, Sally Pitkin and John
Atkin. All of them are chairman of the company.
Roles and responsibilities of Audit committee:
 Audit committee of IPH Ltd is liable to select eligible auditors for the
company.
 It is responsible to present total audit report to the directors of the
company.
 Audit committee has to check the audit report first and than submit it
to the directors of the board of the company.
 Audit committee of the company has to check that the organisation is
following accounting standards set by Australian Government and
Corporation act 2001.
 It is liable to analyse the performance and financial position of the
company.
Audit opinion
It refers to the declaration of an auditor which has been made, when
auditor has completed the examination process of financial reports of a
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company (Homb and et. al., 2014). Auditors of IPH Ltd have audited the
annual reports of the company and its subsidiaries and also analysed the
financial status of the company on 30 June 2017. All the companies are
directed to follow Australian accounting standards and corporations acts.
Duty of an auditors is to check that company is following both the points or
not. Auditors of IPH Limited have gives following opinions on the annual
reports of the company.
 Organisation is providing actual, transparent and fair aspect of
financial position and performance of the company on 30 June 2017.
 Auditors have also analysed that company is complying with the
Australian Accounting Standards 2001 and corporate regulations act
2001.
The auditors have conducted the auditing process according to
Australian Accounting Standards 2001 (Bepari and Mollik, 2015). The main
responsibility of auditor's is to analyse properly all the informations that are
recorded in financial reports by managers of IPH Ltd. The auditors have also
declared independence under corporation act 2001. Auditors believe that the
report which has been presented by them can provide appropriate
information of business.
Diversification of responsibilities of Director's or management's
responsibilities from auditors
Responsibilities of the Directors for the financial report:
Directors are responsible for preparation of financial report according
to Australian Accounting Standards and Corporations Act 2001. Financial
reports should depict true and fair view of financial position, free from
material misstatement. Accounting standards of going concern, disclosing of
matters are properly followed or not.
Responsibilities of the directors for the financial report -
The directors have the responsibility of preparation of the financial
year report in true and fair view and this report prepared accordance with
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Australian accounting standards and the corporation act 2001. It is necessary
that financial report gives in true and fair view and free from material
misstatement whether due to fraud and error.
When prepare the financial report, the directors are responsible for
assessing the ability and group continue as a going concern, as applicable,
disclosing, matters related to going concern and this going concern method
using on the basis of accounting. The directors' responsibility also include
effective system of risk management and maintain of accounting records in
adequate way (Brawley and et. al., 2015). Some responsibility are following
as -
 properly apply accounting policies.
 present information, including accounting policies, reliable and under
stable and comparable information.
 Make an assessment of the company's ability to as a going concern.
Responsibilities of the auditors for the financial report -
Auditors responsibility have for the financial report that reasonable
assurance for the report that report as a free from material misstatement
whether due to fraud or error. Reasonable assurance is a high assurance but
auditors not giving guarantee that for prepare of the report he can using
Australian auditing standards and this standards always detect a material
misstatement when it exists. To issue an auditor's report that includes our
opinion. They taking economic decision on the basis of financial report and
expected to influence according the situation.
As part of an audit in accordance with the Australian auditing standards
 Evaluate the presentation, structure and content of the financial report
and in this report including the disclosure, and the financial report
represent the transaction for achieving fair presentation.
 In the financial report identify the risk of material misstatement,
because of fraud or error in accounting, reform and accesses audit
procedures responsive to those risks, and basis of our opinion obtain
audit evidence that sufficient (Homb and et. al., 2014). in financial
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report as fraud may involve collusion, forgery, international omission,
misrepresentation, or the override of internal control.
 Evaluate the accounting policies and use the reasonableness of
accounting estimate.
 Use of the going concern basis of accounting and on the audit
evidence obtained. And there are material uncertainty exists related to
events or conditions. Future events or conditions reason of cease of
group to continuing as a going concern.
 In financial report due to error and fraud, design and perform audit
responsive to those risk. For our opinion audit evidence and
appropriate.
 For the financial report we are responsible for the direction,
supervision and performance, and solely responsible for audit opinion.
During our audit we can identify the planned scope, timing of the audit and
significant deficiencies in internal control.
Material subsequent events and their operations
A dividend declaration given under the head of matters subsequent to
the end of the financial year. 10% per share of the year ended 30 June 2016
in the form of dividend declared and 11.5% per share interim dividend was
declared for the year ended 30th June 2017. There is no any specific impact
fall upon the results of the material matter is given in terms of operations.
Assessment of the effectiveness off material information reported by the
auditor
All the key matters regarding valuation of assets and liabilities,
recoverability of goodwill and intangible assets, accounting and acquisition
are clearly highlighted in report (Dedman and Kausar, 2012).
Declaration on missing material information (If any)
There is no any material misstatement was produced by the auditors of
company. All the relevant aspects and key matters are given in audit reports.
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Questions asked to auditors in general meeting
There are type of frequent questions asked to auditors in General
meeting are summarised as follows;
Q1 Whether the management committee and department provide
adequate support to auditors?
Q2 Whether any modified opinion was produced by non auditing
services?
Q3 Did organisation comply the Australian Auditing standards and
corporate rules 2001 ?
Q4 How much share of profits will be proposed for auditors and
directors remuneration?
CONCLUSION
The report mainly clarify the concept of audit, assurance and
compliance in Australian context. Annual report of IHP limited is evaluated in
the basis of Auditing Standards and corporation Act 2001. The key audit
matters, Auditor's independence declaration presents clear reflections about
the financial information of organisation. By analysing the annual report of
organisation it is considered that type of material information summarised
regarding audit remuneration, roles and responsibilities of director's and
auditor's in this report.
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REFERENCES
Books and Journals:
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