Audit Theory and Assurance | Project Report

Running Head: AUDIT THEORY AND ASSURANCE
AUDIT THEORY AND ASSURANCE
Name of the Student
Name of the University
Author Note

AUDIT THEORY AND ASSURANCE1
Executive Summary
The main purpose of this report is to identify the engagement risk associated with
Arrium Limited Company. The study is evaluated by analysing the company’s annual report.
It has been found that suitable company as an audit client. The company has a financial
reporting control assurance for controlling their effectiveness. This is a program that supports
the clients for controlling the risk involved in audit process. The three type of risk involved in
this company is audit risk, client’s business risk and audit business risk. Audit risk is
considered as the high level of risk of business due to lack of proper internal control.

AUDIT THEORY AND ASSURANCE2
Introduction
The report will focus on the risk assessment of Arrium Limited for making client
retention decision. The paper will discuss on the type of engagement risk that is associated
with this company. The main objective of this report is to identify the engagement risk
associated with Arrium Limited Company.
Discussion
Back ground of the Company
Arrium Limited is a Mining and material manufacturing company that is established
in Australia. It is a type of public listed company and is traded in the Australian Stock
Exchange. The company is established in various locations of world like New Zealand,
Mexico, USA, Indonesia and many more. The main products of this company are iron ore
and steel products.
Engagement Risk
Engagement risk is the risk of Arrium Limited that is related to the audit engagement.
It is related to the reputation of the clients that can result into loss of their association. Arrium
limited is exposed to various types of engagement risk that can harm the reputation of the
clients. Some of this risk are:
 Audit Risk- Arrium Ltd has a risk of client’s effectiveness. The audit activities of the
company deals with the disclosure of the company’s financial report. The auditors
identifies the related misstatement while preparing the financial report. This means
that they identifies any type of fraud or error involved in the financial statements. The
auditor is considering the internal control for preparing the financial statement but
they are preparing this not for effective internal control of the company. This is one of