Audit Report on Alice Queen Limited

This audit report provides insights into the financial performance and position of Alice Queen Limited, an exploration company listed on the Australian Stock Exchange. The report covers investment and finance activities, financial reporting practices, and performance of analytic procedures on the financial statements. The report also discusses the materiality of various accounts, including inventory, receivables, plant and equipment, trade and other payables, cash and cash equivalents, investments, exploration and evaluation expenditure, pre-payments, and security deposits.

Running head: AUDIT
Audit
Name of the Student:
Name of the University:
Authors Note:

1
AUDIT
Table of Contents
Introduction:...............................................................................................................................2
Nature of the entity:...................................................................................................................2
Business operations:...............................................................................................................2
Investment and investment activities:....................................................................................3
Finance and the financing activities:......................................................................................4
Financial reporting practices:.................................................................................................5
Performance of Analytic procedures on the financial statement of the company:....................5
Ascertainment of the materiality of the accounts of the company:............................................7
Conclusion:..............................................................................................................................12
Reference..................................................................................................................................13

2
AUDIT
Introduction:
In the present report, an effort has been made towards developing an understanding of
the financial performance and the financial positon of the company. The understanding
regarding the financial positon and the performance of the company will be developed with
the help of the financial statements that have been prepared and presented by the company.
After the analysis of the financial statements of the company is carried out, the relevance of
the various matters that have been stated out in it in respect of the materiality in the audit
procedure to be conducted by the auditor will be ascertained (Australia and Australia 2015).
The factors that were being considered for categorising a particular account as material will
be discussed in detail. The material relevance of around 10 accounts will be computed and
the materiality in respect of each FO the accounts will be determined objectively.
The company that has been selected for conducting the following presentation is Alice
Queen Limited. The company has its listing on the Australian Stock Exchange. The company
is engaged in the business of exploration and has the majority interest in two projects that are
located in Torres Strait Queensland and Menorah copper (Redfern et al. 2014).
Nature of the entity:
Business operations:
The company is engaged in the activities that are concerned with the exploration and the
extraction of the various minerals by the company. Some FO the most significant business
projects that are presently held by the company and on which the activities have commenced
are continuing are as follows:
a) Horn Island:
For the present reporting period, the Group commenced its phase 2 Exploration
program that is situated in the Horn Island. In pursuance of that, the entity embarked

3
AUDIT
itself on an extensive geological mapping and sampling program that was conducted
in the Horn Island (Harish et al. 2015). The main purpose of these activates was to
determine the scope and the scale of the Horn Island Mineral Field and to
significantly firm up the target in respect of the further drilling that were to be
conducted by the company just outside the present area wherein the company is
conducting its exploration activities.
b) New South Wales(Looking Glass EL 8225):
In the month of October, the company announced that operations regarding the
drilling have been commenced in respect of its Looking Glass project on the Moong
Volcanic Belt of NSW (Gibberd et al. 2016). The drilling project of the company
involves the drilling of two deep diamond core holes that are being respectively
directed towards two different magnetic anomalies.
Investment and investment activities:
The constituents of the investing activities are as follows:
a) Payments that are being made by the company in respect of the exploration evaluation
expenditure: this item represents the amount that is paid by the company in respect of
the various exploration that are being conducted by the company these are considered
to be investing activities because the company has to incur all these for the purpose of
generation of revenue in the future (Campbell et al. 2015).
b) Property, plant and equipment:
This represents that amount that the company has to incur for the purpose of purchase
of property plant and equipment that are going to be used by the company for carrying
out its everyday activities.
c) Payments for the security deposits:

4
AUDIT
This amount is being incurred by the company in respect of the various payments that
are being made by the company in respect of the security deposits to different
suppliers of the company.
d) Cash and cash equivalent that have been acquired on acquisition:
This represents that amount that is present with the company as cash and cash
equivalents that has been received by the company from the various acquisitions that
have been made by the company.
Finance and the financing activities:
The finance activities are those activities that are concerned with the collection of the funds
required by the company for carrying out its commercial activities. The finance activities that
are conducted by the company are as follows:
a) Proceeds from the issue of the shares:
This represents the amount that has been arranged by the company from the issue of
the equity shares of the company to the equity shareholders of the company.
b) Payments for share issue costs:
This represents that amount that has been paid by the company in respect of the shares
that were being issued by it.
c) Proceeds from the borrowings:
This represents the amount that has been arranged by the company from the third
parties in the nature of loan, borrowed funds in respect of which the company will
have to pay regular interest, and needs to repay back the amount that had been
borrowed by the company (Clark et al. 2015).

5
AUDIT
Financial reporting practices:
The responsibility of the preparation and the presentation of the financial statement of
the company have been assigned to the directors of the company. The financial statements
that have been prepared by the entity for a specific period must be able to give out the true
and fair view of the financial positon and the financial performance of the entity. The
Australian Accounting standards and the conditions that are being specified in the corporation
act 2001 must be adhered by the management of the company in preparing the financial
statements because only then it will be possible for it to reflect the true and fair view of the
company’s financial statements (Jackson et al. 2015). Proper internal control system must be
put in place within the organisation for ensuring that the preparation of the financial
statements of the company is done without any sort of difficulty like unavailability of the
requisite information and the misstatement and errors that have been committed by the
employees of the company. The group’s ability to continue as a going concern must be
objectively analysed by the company.
Performance of Analytic procedures on the financial statement of the company:
For the purpose of
a) Net Profit margin:
Net Profit Margin
2017 2016 2015
Net Profit -1156172 -2238950 -245646
Sales 95622 7811 1185
Net Profit Margin -1209% -28664% -20730%
It can be seen that the net profit margin earned by the company is hugely negative.
The reason being that the company has not been able to generated positive profits for

6
AUDIT
any of the year. However, the sales of the company are increasing over the periods.
The huge negative figure is the result of the initial expenditure that is to be incurred
by the company for exploration of the resources.
b) Current ratio:
Current Ratio
2017 2016 2015
Current Assets 864130 1094896 68236
Current Liabilities 61648 601498 35877
Current Ratio 14.02 1.82 1.90
It can be seen that the current ratio of the company has increased significantly over
the period of last three years. The amount recorded in 2107 is excessively high and
denotes that the company is losing funds in respect of over investment in the working
capital of the company.
c) Return on Assets:
Return On Assets
2017 2016 2015
Net Profit -1156172 -2238950 -245646
Total Assets 4835975 3007825 260243
Return On Assets -0.24 -0.74 -0.94
The company has improved the return on assets as the negative returns generated by
the company have reduced over the years. This means that the company is revenue-
generating capability using its fixed assets.
d) Debt Equity ratio:
Debt Equity Ratio
2017 2016 2015
Total Liabilities 616482 601498 35877
Shareholders’ equity 7866109 5078811 657900

7
AUDIT
Debt Equity Ratio 0.08 0.12 0.05
It can be seen that the debt equity ratio of the company has improved significantly
over the period of three years as the value of the debt equity ratio has decreased. This
has resulted in the improvement of the solvency position of the company.
Ascertainment of the materiality of the accounts of the company:
a) Inventory:
This account has been considered to be among the significant one and be termed as
material because of the fact that there are significant chances that the amount that has
been recorded in the financial statement corresponding to this is incorrect and
misleading (). The auditor of the company also needs to verify the method that has
been adopted by the company for the purpose of valuation of the inventory of the
company. The decision has to be taken regarding the fact that whether the provisions
of the corporation act and the accounting standards were abided by the company.
b) Receivables:
The item has been considered to hold material importance in the financial statement
of the company due to the reason that it is the result of the primary revenue generating
activities of the company. The pool of asset that is created in respect of this item is
fully comprised of third parties that are not directly a part of the company. It is very
doubtful on their part to make the full payment to the company in respect of the items
that have been purchased by them from the company (Gormly et al. 2016). In addition
to this, the validity of the time that has been selected by the company for the
recognition of the amount corresponding to them has to be established too.

8
AUDIT
c) Plant and equipment:
The plant and equipment of the company has been considered as a material item for
the purpose of audit of the financial statements of the company because of the
significant amount that is involved for their acquisition. There are also several
considerations that are needed to be made in respect of their depreciation method and
their respective revaluation as per the condition prevalent in the market.
d) Trade and other payables:
This item is considered to be one of the material items for the purpose of audit of the
financial statement of the company because of the fact that it is one of the significant
transactions that is conducted by the company in its daily operations.
e) Cash and cash equivalents:
It is one of the most liquid assets that are held by the company. Due to its liquid
nature, it is the most susceptible one in terms of theft and misrepresentation by the
staff of the company.
f) Investments:
This item is considered to be a material one because of its unpredictable nature and
the subjectivity involved in the selection process of the management.
g) Exploration and evaluation expenditure:
This is considered to be one of the most significant and material item because the
company’s primary activity is concerned with the exploration of the minerals.
h) Borrowings:
It is considered to be a material item by the auditor because of the fact that the legal
obligations that are being made compulsorily applicable due to the borrowing of funds
that is conducted by the company like the payment of interest at a fixed rate

9
AUDIT
irrespective of the fact that whether the company has been able to generate net profits
or not.
i) Pre-payments:
These are considered to be material because the auditor of the company will have to
verify extensively that whether the amount that has been recorded by the company as
pre-payment is being written by the suppliers of the company as pre-received for the
same period of time and with the same amount. There is a high risk present in this
because of the fact that in case of lapse of proper communication and the relevant
supporting documents error can be observed (Campbell et al. 2015).
.
j) Security deposits:
This is considered to be material by the auditor of the company because of the fact
that the amount involved in the security deposits of the company is significant and in
case of improper communication and in case of huge change in the interest rates
prevalent in the market there can be huge difference in the earning that is going to
accrue towards the company.
Accounts 2017 2016 Financial report
assertions steps to be taken
Inventory
Account
12045 12942 The assertion that
is being made in
respect of
inventor is in
respect of the
valuation of the
given item and
the validity of the
method that has
been chosen by
the management
of the company in
respect of the
conducting its
The auditor needs to refer to
the guidelines that have been
issued by the Accounting
standards of the country and
the various information
disclosed by the company in
its respect will have to be
analysed.

10
AUDIT
valuation.
Receivables 56181 86546
The assertion to
be made in this
respect that the
company must
ensure that the
revenue
recognition policy
that has been
adopted by the
company is able
to objectively
identify the
pattern or the
process of the
revenue
generation by the
company.
A debtor-ageing schedule will
have to be obtained from the
management of the entity for
the purpose of determining
the amount that the company
is going to receive in the
future respectively from its
debtors.
Plant and
Equipment 27038 7127
The assertion that
is being made in
this case is the
physical existence
of the property,
plant and
equipment of the
company. in
addition to all that
the auditor of the
company will have
to verify the
method that has
been chosen for
depreciation of
the company
Physical verification will be
conducted to determine the
physical existence of the
company.
Trade and other
payables 614850 166371
The assertion in
this case is
regarding the
correctness of the
amount that has
been entered in
the financial
statement of the
company.
Third party confirmation has
to be obtained.
Cash and Cash
Equivalent 805316 992246
The assertion in
this respect is the
amount that is
recorded in
respect of the
physical cash
present with the
entity.
Bank reconciliation statement
in respect of the company has
to be maintained.

11
AUDIT
Investments 16000 15999
The assertion is
being made in
respect of the
measurement of
the investment
based on the
period for which it
is desired to be
held by the
company
An investment schedule will
have to be obtained from the
company.
Exploration and
expenditure 3875504 1856500
The assertion is
made in respect
of the
capitalisation of
the expenses
incurred in this
respect.
The statement of expenditure
and statement of revenue will
have to be prepared.
Borrowings 433771
The assertion is
made in respect
of the terms
mentioned in the
agreement in
respect of interest
to be paid
The interest schedule of the
company has to be obtained
from the management.
Pre-payments 2633 16104
The assertion is
made in respect
of maintenance of
proper records in
this respect
Reconciliation of the amount
recorded by the supplier and
the company has to be
conducted.
Security deposits 53303 33303
The assertion is
made for the
amount that is
being recorded in
the
The statement containing the
records of the security
deposits made by the
company must be maintained
by it.
Conclusion:
The materiality of the items that are being presented in the financial statement of the
company has to be ascertained for the purpose of determining the focus that has to be given
in respect of each of the items of the financial statement. The company in the present scenario
needs to increase its profitability immediately for ascertaining continued operations in the
future.

12
AUDIT
Reference
Australia, I. and Australia, D.I., 2015. RE: Australian Infrastructure Audit.
Campbell, I., Scott, N., Seneviratne, S., Kollias, J., Walters, D., Taylor, C. and Roder, D.,
2015. Breast cancer characteristics and survival differences between Maori, Pacific and other
New Zealand women included in the quality audit program of breast surgeons of Australia
and New Zealand. Asian Pac J Cancer Prev, 16(6), pp.2465-2472.
Clark, H., Orme, L., Super, L., Gillam, L., Stern, K., Agresta, A., Moore, P., Downie, P.,
Grover, S. and Jayasinghe, Y., 2015. Addressing fertility in female paediatric and adolescent
patients receiving gonadotoxic therapy: audit of clinical practice at The Royal Children's
Hospital, Melbourne. Bjog: An International Journal of Obstetrics and Gynaecology, 122,
p.380.
Gibberd, A., Supramaniam, R., Dillon, A., Armstrong, B.K. and O’Connell, D.L., 2016. Lung
cancer treatment and mortality for Aboriginal people in New South Wales, Australia: results
from a population-based record linkage study and medical record audit. BMC cancer, 16(1),
p.289.
Gormly, K.L., Coscia, C., Wells, T., Tebbutt, N., Harvey, J.A., Wilson, K., Schmoll, H.J.,
Price, T., Price, T., Hruby, G. and Jeffery, M., 2016. Mri rectal cancer in Australia and New
Zealand: An audit from the Petacc‐6 trial. Journal of medical imaging and radiation
oncology, 60(5), pp.607-615.
Harish, V., Raymond, A.P., Issler, A.C., Lajevardi, S.S., Chang, L.Y., Maitz, P.K. and
Kennedy, P., 2015. Accuracy of burn size estimation in patients transferred to adult Burn
Units in Sydney, Australia: an audit of 698 patients. Burns, 41(1), pp.91-99.

13
AUDIT
Jackson, D., Atkin, K., Bettenay, F., Clark, J., Ditchfield, M.R., Grimm, J.E., Linke, R.,
Long, G., Onikul, E., Pereira, J. and Phillips, M., 2015. Paediatric CT dose: a multicentre
audit of subspecialty practice in Australia and New Zealand. European radiology, 25(11),
pp.3109-3122.
Redfern, J., Hyun, K., Chew, D.P., Astley, C., Chow, C., Aliprandi-Costa, B., Howell, T.,
Carr, B., Lintern, K., Ranasinghe, I. and Nallaiah, K., 2014. Prescription of secondary
prevention medications, lifestyle advice, and referral to rehabilitation among acute coronary
syndrome inpatients: results from a large prospective audit in Australia and New
Zealand. Heart, pp.heartjnl-2013.