Audit Theory and Practice

Running head: AUDIT THEORY AND PRACTICE
Audit Theory and Practice
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Author’s Note

AUDIT THEORY AND PRACTICE
1
Executive Summary
The main purpose of the assessment is to conduct an audit for the two businesses which are
covered in the assessment. The companies which are considered are Computer Solutions Ltd and
Beautiful Hairs ltd for which appropriate audit procedures which are followed by the business.
The discussion would also be showing key assertions which can be identified for both the
companies and how the auditor confirms or denies the presence of the assertions by applying
substantive audit procedures for the business. In addition to this, the discussion would also be
covering the reporting requirements of ASA 701, communicating key audit matters and how the
key audit matters for the business should be represented in the auditor’s report.
Table of Contents

AUDIT THEORY AND PRACTICE
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Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Computer Solutions Ltd...............................................................................................................4
Key Assertions in Relations to Inventory....................................................................................4
Substantive audit procedure that could perform..........................................................................4
Auditing Standard 701, Communicating Key Audit Matter........................................................6
Beautiful Hair Ltd........................................................................................................................7
Key Assertions at risk with regards to Intellectual property.......................................................7
Substantive audit procedure that could perform..........................................................................8
ASA 701, Communicating Key Audit Matters............................................................................9
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................11

AUDIT THEORY AND PRACTICE
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Introduction
In today’s market, most of the companies are very much concerned about their image
among the public and the companies take all the necessary steps for the purpose of protecting
such an image in the market. The process of audit therefore can be considered to be important as
the same allows the business to verify whether the financial statements are showing true and fair
view of the business or not. The company which is considered for the assessment are computing
solutions ltd. and Shimmer pty ltd. Audit procedures can be defined as the process in which
independent examination of the books of accounts are conducted to verify whether the financial
statements are showing a correct presentation of the financial position of the business. The audit
process also provides assurance to the business as well as the shareholders that the business I
transparent in their reporting framework (Titera 2013). The management of such companies also
adhere to auditor’s review and try to improve their reporting framework so that the business is
consistent with the accounting regulations and standards. The assessment would be identifying
the key audit risks and the risks assertions for both the companies. The assessment would be
going into details which are stated under ASA 701. Further, the assessment would be dealing
with the concept of material misstatement in the inventory and intangible assets of the business.
The report would also be covering matters which needs to be communicated by the auditor and
this can provide a transparent view of the financial position of the business.
Discussion