ACC 707 Auditing and Assurance Services: Fraud Detection Report

This report addresses fraud detection and accounting irregularities within the utility sector in Australia, focusing on key auditing matters and appropriate responses. It examines financial auditing's role in identifying internal frauds and accounting irregularities, referencing ASA 701 and ASA 501 auditing standards. The report analyzes risk factors related to financial statement misstatements, including those from misappropriation of benefits and fraudulent financial reporting, categorized by attitudes, opportunity, and pressures. Audit procedures, such as characterization, cut-off, and valuation testing, are discussed to ensure accurate financial statements. Key audit matters are highlighted to enhance the transparency and value of the auditor's report, emphasizing the importance of communication and management oversight. The report also delves into specific audit procedures for inventory, considering factors like returns, turnover rates, and valuation, with a focus on Computing Solutions Limited.

Accounting Concepts 1
Auditing

Accounting Concepts 2
Executive Summary
The main purpose of this report was to detect different forms of frauds and other accounting
irregularity. This report analyzed the key evaluating matters into the utility segment of Australia.
For this reason, key examining matter shaves surveyed in the report and the proper reaction has
additionally furnished that will manage these reviewing terms or matters. Financial auditing
helps to detect the different internal frauds and accounting irregularity. After a survey of key
inspecting norms ASA 701 and ASA 501, a report has concentrated on the examination of key
reviewing matters of organizations. It can be recommended that to make appropriate
correspondence of the error and fraud to the administration in order to make proper correction.

Accounting Concepts 3

Accounting Concepts 4
Introduction
The audit is the dependent and methodical examination of accounts, and dependent, statutory
records, archives and vouchers arranged by the association in the form of financial statement to
make the money and in addition non-budgetary exposures in reasonable and genuine view. This
session will be helpful to audit different risk factors for the organization. Inspectors can be
interior or outside as inside reviewers are the representatives of the association that perform
inward reviews though External examiners are autonomous firms and perform review program
keeping in mind the end goal to express their supposition, for example, authoritative monetary
explanations are free from material misstatement and there is no such misrepresentation or
blunder in their money-related statement.

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Question 1
(a)
The review capacity of an evaluator joins getting sufficient and appropriate confirmations of
review by applying substantive and consistent survey techniques and issuing an audit end in view
of audit demonstrates about whether the budgetary enunciations and cash related trades of the
component are legitimate and sensible in a way that they are free from fakes, goofs and material
misquotes and reflect honestly to goodness photograph of the money related position of the
component and perils related with it (Paino, et. al., 2012). The accompanying attestations are
given underneath:
Collaterals risk
Worldwide money related risks alludes to as the circumstance on the economy of the nation and
budgetary market which speaks to the ruin of the business sectors and retreat in the economy
because of the disappointment of money related exchanges and intemperate dangers in the
money related markets.
Residual liabilities
This hazard isn't reflected in a critical position sheet of monetary firms because of which the
financial specialists expected fewer dangers for the organization than they really were. In the
figuring arrangements, the hazard was very high as reflected in the money related explanations
of the firm which brought about its fall (Zaiceanu, et. al., 2015).
(b)
Audit procedure

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The audit procedure consists of multiple testing in order to prevent all issues and concerns
regarding computing solutions. In any case, the course of action of budgetary verbalizations
without fakes and oversights is the obligation of the organization of an association and not the
analyst. These phases of auditing can be taken after to check whether the customer truly
guarantees the larger part of his advantages. For instance, demand could be generated to check
whether the stock is extremely controlled by the customer, or if it is somewhat held tight transfer
from an untouchable. The audit procedure consists of the following points:
Characterization testing: Some of the Audit strategies are selected to pick whether trades were
assembled successfully in finance-related records. For instance, records of purchases for settled
assets can be kept an eye on to check whether they were adequately gathered inside the benefit
settled asset account (Paino, et. al., 2012).
Cut off testing: the methods and framework of auditing are selected to choose if trades are being
recorded inside the correct time span of itemizing. For instance, the log of transportation can be
surveyed to check whether delivers to the clients on the latest day will be tracked and recorded
inside the opportune time allotment (Kikhia, 2014).
Valuation testing: Valuation audit is used to choose if the valuations where liabilities and assets
are correct which are stored in the client’s book. For instance, one framework is check promote
assessing data to check whether the fulfilment estimations of alluring securities are correct
(Kikhia, 2014). (Pamukcu and Eroğlu, 2018).
(c)
ASA 701 can be named as an Auditing Standard that mirrors huge parts of the contrasting some
internationally acclaimed Standards regarding Auditing that are issued by the International
Auditing and Assurance Standards Board (IAASB) and conveyed by the International Federation

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of Accountants (IFAC), in the path delineated in the declaration on agreement with International
auditing standards. IFAC can also be termed as the proprietor of patent/copyright regarding the
international audit standards participated in the Standards of Auditing all through the world.
Sales turnover is helpful for calculating the time interval in which an intact inventory load is sold
completely. The more sales the organization does, the rates of sales turnover gets higher. Sales
turnover can be measured within monthly, annual or in quarterly time periods. If the turnover
rate is getting higher, the more proficiently the organization turns the expenses on buying goods
into profits. Every day the inventory gets idle within the warehouse, the capital investment will
not be changed into profits.
The greater a business builds up, the more basic it is to screen the cash related reason and
obligation. This is especially evident when financial specialists are prepared and obligation is a
demand. Executives need to ensure they are remaining up with the most recent with giving exact
reports the degree that they can, anyway there is anything but a suitable option for a free survey
of budgetary decrees to crosscheck execution (Knechel, et. al., 2012). Auditing Standard applies
to an audit of broadly useful money-related reports of recorded substances and conditions when
the inspector generally chooses to impart enter review matters in the evaluator's report. This
Auditing Standard likewise applies when the law requires the examiner or direction to convey
enter review matters in the evaluator's report. However, ASA 701 prevent from imparting key
audit matters when the inspector renounces a conclusion on the money related report, except if
such detailing is required by law or control (Vik and Walter, 2017).
Turnover rate on sales actually presents the value of actual sales which get provided to the
consumers at the specific period in computing solutions. It generally includes the revenue which
has been generated from the non-operating revenue, daily operations and etc. Including it, this

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term is mainly gets referred to as the net sales or sales which actually means to the revenues
excluding VAT.
For example-
If the sales of Jack are £66,000, over the course of the year, he is required to divide it by 12 in
case of calculating for the annual basis for determining the monthly turnover. After this it can
also get break down on daily basis or even weekly basis as well/
So it will get calculated as- 66000/12= 5500
It is the reason that the actual figure of turnover of sales in the account of P&L greatly represents
the total perfect amount of all those products & services they sold. It is not the actual amount of
money which has been received by them.
Turnover- Direct costs= Gross Profit/ Revenue.
The results of the gross profit should get used for covering various expenses of operating before
any net profit can get calculated. The calculation of net & gross profit of the association is so
useful for understanding the present financial state of the association. The sales turnover also
gets described by getting changed into the accounting currency of the organisation. It helps the
association in finding out the actual turnover of the year in an efficient manner.
Question 2
a)
Based on the reviewing benchmarks I will perform the review program in a powerful way so I
can achieve suitable audit evidence that gets incorporated into reports to make changes or
revelations identified with the financial statement. There are different issues get happened in the
financial statement that get grouped into two risk factors and the two risk factors are given
below:

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 Risk factors based on the mistakes from misappropriation of benefits
 Risk factors get got from fake budgetary reporting
Such mistakes are raised because of the fake budgetary announcing considered as the missing of
the amount or intentional error or exposures inside the arranged financial record with a specific
end goal to betray the clients of monetary explanations. Such issues are raised because of the
mistakes of misappropriation of advantages thought about the robbery of asset and different
factors. Each sort of misrepresentation risk factors is additionally delegated per the three
conditions, for example, dispositions, opportunity, pressures (Arens and Elder, 2012). The
effective reviews are really helpful for a financial statement. It is difficult to distinguish the
misrepresentation when the administrators and workers make the error accidentally and when
they attempt to cover the extortion. This sort of trouble does not make any improvements in the
duty in relation to the successful financial audit committee.
b)
Here I will follow some audit procedure that will be helpful to perform in response to each risk
and here I will provide my own opinion over the arrangement and provide monetary explanations
amid the review program. I will verify the exactness of the recorded exchanges and remark in
their report inside their review report. My principal obligation is to render a feeling over the
financial records to affirm that the money related records are reflecting accurately, reasonably,
incorporate all the material perspectives and get arranged by following the budgetary slandered.
It is the supervisor’s obligation to consider the materiality of occasions before choosing as it
winds up important to modify the arranged budgetary explanations. I will complete and sign the
relevant part of the audit program and Break down and synthesis every single balance. Sign and
date all the working records by the approved individual. Make an examination of every single

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huge misfortune and benefits. I will maintain the internal controls and I will implement,
configure so as to keep the material misquotes because of the misrepresentation or mistakes.
Select and apply important accounting strategies in the context of the directions. Plan and make
utilization of fitting assessed conditions. This makes problematic circumstance as they not ready
to depict whether the spoke to esteem demonstrates reasonable estimation of things appeared in
budgetary explanations. Supervisors are additionally capable of keeping in mind the end goal to
make guarantee the quality control of work and review work.
c)
Key Audit matters may similarly help the customers in understanding the substance and domains
of basic organization judgment in the inspected budgetary report (Sirois, et al., 2018). The
explanation behind conferring key survey matters is to enhance the open estimation of the
evaluator's report by giving more vital straightforwardness about the audit that was performed
The correspondence of key audit matters in the evaluator's report may in like manner give
anticipated that customers introduce would moreover attract with organization and those blamed
for organization about particular issues relating to the substance, the analyzed cash related report,
or the survey that was performed (Stuart,2012). Auditing Standard deals with the investigator's
obligation to bestow enter survey matters in the inspector's report. It is wanted to address both
the inspector's judgment concerning what to pass on in the evaluator's report and the edge and
substance of such correspondence.
Key survey matters are portrayed in the assessing standard ASA 701 Communicating Key Audit
has a great influence in the reports of Independent Auditor brought into sanctioning by the
Auditing and Assurance Standards Board (AUASB) to be matters with the key judgment, the
most criticalness in financial report auditing in the current time period. Matters of the Key audit

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are looked over the problems consulted with those responsible for the firm. Despite the fact that
business perils relate to the affiliation and its accomplices, survey risk relates especially to an
evaluator (Paino, et. al., 2012). Despite the way that survey risks and business perils are unique
in nature, typically the case that conspicuous verification of essential business threats incites the
acknowledgement of audit dangers as it will discover in the enlisting courses of action stock.
This commitment of the reviewer goes with the duty which requires compensation for disaster
due to the lack of regard to the assessor or takes which are not performed by a firm as per the
benchmarks.
In any case, the course of action of budgetary verbalizations without fakes and oversights is the
obligation of the organization of an association and not the analyst (Pamukcu and Eroğlu, 2018).
In any case, a monitor will in like manner ensure his flexibility while using his master judgment
and data and capacities in the midst of the essential initiative as for audit approach. The survey
work just incorporates general affirmation and not the confirmation that the fiscal enunciations
are free from botches and cheats according to satisfactory and appropriate audit demonstrate
obtained by him in the midst of the survey frameworks. Relationship of Chartered Certified
Accountants (ACCA) moreover assumes that if there ought to be an event of joint and a couple
of liabilities of inspectors the component or person who purports to persevere through the
incident has the benefit to sue each one of the get-togethers that have caused the material
mistakes.
Fair value is known as a theoretical calculation of calculating the future stock index by
considering the value of the current index. It is also known as the price which gets paid by the
purchaser who known’s the actual value of what she or he is purchasing. It is an estimate of

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various securities in the open market. The calculation of fair value typically includes the rates of
future growth, risk factors, and profit margins among other items.
Let’s assume organisation XYZ presently sales for the $30 per share, the association has also
introduced the new product line, hired some of the managers, and redesigned the packaging away
from the competitors. It is true that these kinds of changes will not directly appear in the
financial statements of the company, but they will surely improve the competitive advantage of
the company in the key or target markets. In this case, the investor’s might assume that the stock
of future cash flows will be quite higher by moving forward. Then, they can also take their actual
or estimated rate of growth & calculate their fair value of the stock with $ 60 per share or more
than $40 on what is presently selling for.
The approaches of fair value can also be distinguishing value investors form the investor's
growth in computing solutions. The investors of growth aggressively depend upon the estimates
of earning which could be too high, wrong or unreliable as well. The investors of value only
purchase their stock which gets sold at the discount rate of their fair value after this they finely
wait for the fair value of their investments to get realised. An investor requires the safety margin
that is the percentage similar to the amount of stock price below to its fair value. It determines
the stock price that is attractive to the investor.