Auditing and Assurance in Australia

Running head: AUDITING AND ASSURANCE IN AUSTRALIA
Auditing and Assurance in Australia
University Name
Student Name
Authors’ Note

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AUDITING AND ASSURANCE IN AUSTRALIA
Executive Summary
The current report presents analysis of overall efficacies of system and mechanisms of
internal control of one of the clients of audit of the firm Miller Yates Howarth (abbreviated as
MYH). The study at hand undertakes thorough appraisal of available facts as well as figures
on the business case study under consideration that in turn help in carrying out effectual audit
planning of the firm. Thorough evaluation of specific risks attached to specified accounts of
the firm TCW by employing key ratios. Essentially, this kind of assessment can help the
management in recognizing strengths as well as weaknesses of the company particularly in
the area of accounts payable along with purchases.

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AUDITING AND ASSURANCE IN AUSTRALIA
Table of Contents
Introduction................................................................................................................................2
Task 1A......................................................................................................................................3
Task 1B:.....................................................................................................................................9
Task 2A:...................................................................................................................................11
Task 2B:...................................................................................................................................14
Conclusion:..............................................................................................................................15
References................................................................................................................................17

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AUDITING AND ASSURANCE IN AUSTRALIA
Introduction
The report piece at hand has the intention to elucidate in detail diverse audit risks that
is encountered by the accounting firm Miller Yates Howarth while assessment of financial
assertions of one of its audit clients namely Trunkey Creek Wines Limited (simply referred to
as TCW). In essence, these kinds of risks mainly stem from varied fraud actions else wise due
to efforts by evaluators. Particularly, certain identified areas that are of discomfort for the
evaluators and need to be reviewed are essentially investments of the company, expenses
incurred particularly for marketing, varied property resources along with receivables account.
It is necessary for the evaluators to properly plan the process of engagement by deducing
information by assessment of notes present in permanent file and introducing a guidebook of
new systems of internal control. Analysis of risks associated to audit of firm’s accounts can
be carried out by enumeration of significant and relatable ratios. In consequence, this can
help in outlining varied stages that need to be undertaken for lessening of detected risks
(Brierley & Gwilliam, 2017). Moving further, the study at hand also talks about evaluation of
efficacies of internal control system and recognizing dimensions of eliminating risks.
Additionally, weaknesses and limitations of system of internal control associated to accounts
payable and specific accounts of purchase are hereby identified and analysed in this current
study.
Task 1A
The first section of the study has the intention to elucidate illustratively risks of audit
related to different accounts of the firm TCW by appraising important ratios. Essentially, it
can be hereby mentioned that financial statements can be assessed properly by means of
working out of relevant ratios and this in turn can help auditors in figuring out financial state
of the business concern (Gay & Simnett, 2005). In the current case as well, the accounts of

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AUDITING AND ASSURANCE IN AUSTRALIA
TCW are appraised by means of financial ratios related to accounts (that is to say, property
resources, expenditure for activities of marketing, accounts of investments as well as
receivables. Assessment of the specified accounts can help in assessment of risks related to
audit, particularly threats that might be faced by evaluators while assessing material
misstatements (overstatement or understatement) in firm’s accounts (Cannon & Bedard,
2016). Particularly, evaluators are assigned the liability of recognition of these misstatements
and threats and are delegated the responsibility of suggesting ways of mitigation of the risks
spotted (Bartlett et al., 2016). However, one of the built-in threats of audit risk is the intricacy
involved in detection of such risks owing to fraudulent actions. Essentially, the
implementation of effectual system of internal control can aid in the process of lessening
risks of audit stemming from fraudulent activities. For that reason, it is obligatory for
auditors to employ requisite skills, knowledge and maintain attitude of scepticism whilst
sketching the plan of audit (Chan & Vasarhelyi, 2018). In essence, analysis of firm’s various
accounts; risks of audit attached to specified accounts along with steps of audit for lessening
the identified risks are tabulated below:
Account Analysis Audit risk Audit steps to reduce
risk
Accounts receivables Accounts receivables
points out towards the
money that a business
enterprise needs to
gather since it had
delivered the clientele
goods as well as
Thorough evaluation of
the current case
replicates that the firm
TCW takes on
marketing operations
on terms of credit.
Thus, the system of
The current study
under reflection
presents the fact that
receivables of the
business (expressed as
days) are escalating
specifically for the

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AUDITING AND ASSURANCE IN AUSTRALIA
services ordered
(Fisher et al., 2016).
According to case
study provided here, it
can be stated that
accounts receivables
(for wine production)
is calculated to be 6.6,
whereas accounts
receivables of the
corporation for beef
production section is
recorded to be 36. In
general, invoices
outstanding in terms of
days are reflected by
the said numbers.
Evaluation of figures
of accounts receivables
ratio reflects that value
of accounts receivables
has decreased for wine,
indicating
enhancement in
efficiencies of
corporation in this area.
Conversely, this ratio is
said to have enhanced
credit involves risks
associated to payments
undertaken by
customers. There is
also saido be risks of
completeness (Groomer
& Murthy, 2018).
Basically, this too
involves validity risk.
In essence, risks
attached to
completeness points
out towards the fact
that the business
concern might not have
properly registered and
documented accounts
records appropriately
(Gay & Simnett, 2005).
section of beef
production of the
business concern. For
that reason, it is
obligatory for the
business to correctly
assess receivables
account frequently and
thereafter discuss the
results with the
executive of the
association. Moreover,
allowances made for
doubtful debt can be
appraised before any
kind of authorization of
executives operating in
the higher level of
firm’s management
(Hąbek & Wolniak,
2016).. Further, credit
policies of the client
company that is TCW
can be examined
properly.