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Audit Program

   

Added on  2020-12-09

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Finance
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AUDITING PROJECT
Audit Program_1

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................1
TASK 3............................................................................................................................................2
TASK 4............................................................................................................................................6
TASK 5............................................................................................................................................7
TASK 6............................................................................................................................................7
TASK 7 ..........................................................................................................................................9
TASK 8..........................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERECNES..............................................................................................................................14
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INTRODUCTION
An audit program means a plan of audit that is documented and according to which
procedures of the auditor depends. Before starting audit procedure an auditor will make a audit
program on the basis of previous year(s) working papers, size of entity, materiality of risk
associated with the relevant industry and accordingly decide the audit duration, number of audit
staff and audit procedures that have to be followed while doing audit. Audit procedures are
depends upon the inherent risk, detection risk and control risk and accordingly materiality and
sampling are done. Analysis of financial statements is done with the help of profit and loss
account, balance sheet and ratio analysis and conclusion is framed about the financial position of
the company. Generally audit procedures are based upon materiality of transactions and
sampling is done according to audit risks.
TASK 1
In this project, Zicom Group Limited which is dealing in leading specialist equipment
manufacturing and niche engineering service proving with core expertise. In this project, we
discuss about various risk, material account balances and sampling procedures applied by the
auditor while performing its audit procedures.
TASK 2
Business risk refers to the possibility that an organisation will have lower profits than
anticipated profits or experience a loss rather than taking a profits. There are various factors
which are associated with it such as : volume of sale, per unit price, competition, input cost and
legal compliances. Zicom Group Ltd is a leading manufacturer of marine deck machinery, fluid
regulating and material stations, precision engineered & automation equipment etc. It belongs to
the manufacturing industry(Bodnar and Hopwood., 2012). There are various types of business
risks which are described as below :
Risk of material misstatement : Material misstatement risk can be arise due to the
errors in financial statements of a company. It can be occurs due to difference between the
reported figures and what is anticipated to be reported in order for the financial statements to be
fairly presented.
1
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Audit risk : Audit risk arises when auditor of an organisation express inappropriate audit
option on financial statements that contain material misstatement. Auditor of Zicom Group Ltd
properly follow audit procedure so this risk does not much high in the organisation.
Formula of Audit risk model : AR = ƒ[IR * CR * DR]
Inherent risk : In financial auditing inherent risk arises, especially while dealing with
complex transactions. This risk can be posed by an omission in a financial statement due to a risk
factor other than failure of control. In Zicom Group Ltd this risk is low because auditors of
organisation prepare its financial statements effectively which minimize the chances of errors in
financial transactions.
Control risk : Control risk refers to that risk of inefficiency of organisation controls to
analyse material misstatements in financial statements of company. Management and auditors of
Zicom Group Ltd able to identify and control risk in material misstatements so this risk is low in
organisation.
Detection risk : Detection risk is that risk which is arises when auditors fails to detect a
material misstatements in the financial statements. Auditors of Zicom Group Ltd always try to
follow audit procedures so that material misstatements can be deducted in financial statements.
So this risk does not much affect the assessment.
TASK 3
Analytical procedures using ratios:
Analytical procedures are one of many financial audit processes which help an auditor
understand the client's business and changes in the business, and to identify potential risk areas to
plan other audit procedures.
Income Statements of Zicom Group Ltd for the year ended 30.06.2017 and 30.06.2018
(AU $ in million)
2015-16 2016-17 2017-18
Revenue 111 85 76
Cost of revenue 68 43 40
Gross Profit 43 42 36
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