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Auditing and Assurance - Allegiance Coal Limited

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Added on  2021-06-16

Auditing and Assurance - Allegiance Coal Limited

   Added on 2021-06-16

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Running head: AUDITING AND ASSURANCEAuditing and AssuranceName of the Student:Name of the University:Author’s Note:Course ID:
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1AUDITING AND ASSURANCETable of ContentsExecutive Summary:........................................................................................................................21. Overview of the operations and industry of Allegiance Coal Limited:.......................................32. Four specific reporting requirements for the Australian mining companies:..............................43. Four significant business risks for Allegiance Coal Limited:.....................................................64. Three areas/accounts of concern for Allegiance Coal Limited:..................................................85. Comment on the financial performance of Allegiance Coal Limited:........................................95.1 Liquidity:.............................................................................................................................105.2 Profitability:.........................................................................................................................125.3 Efficiency:............................................................................................................................125.4 Overall financial position:...................................................................................................136. Evaluating of whether the audit work of Allegiance Coal Limited would be undertaken:.......13References:....................................................................................................................................14
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2AUDITING AND ASSURANCEExecutive Summary:The current report aims to deal with evaluating the current standing of Allegiance CoalLimited in the mining industry of Australia. It has been evaluated that the revenue of this sectorhas declined over the past five years despite the rise in output. With the surge in globaldevelopment, most of the Australian mining organisations invested in new projects leading toincrease in capital investments and mining volumes. However, the rising supply has resulted insignificant price fall in for various division products in the past five years. Moreover, theorganisation is prone to certain business risks like cash optimisation, access to capital, access toenergy and joint venture agreements. Significant concerns are inherent in its annual report interms of liabilities, sales revenue and financial results of its subsidiary. Based on the financialanalysis, it has been assessed that Allegiance is struggling to sustain in the market due tonegative profit level and inability to raise funds through debt. Even though the audit work ofAllegiance Limited could be undertaken, the auditor needs to have a thorough review of all theaccounts, income and expenses for ensuring the validity of the financial information in theannual report.
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3AUDITING AND ASSURANCE1. Overview of the operations and industry of Allegiance Coal Limited:Operations of Allegiance Coal Limited:Allegiance Coal Limited is listed on the Australian Stock Exchange with a ticker symbolof AHQ. The organisation is involved in acquiring and exploring for metallurgical coaltenements. The primary investment focus of Allegiance includes advanced, near producingprojects or production in nations having sound records of investment and minimised level ofpolitical risk. The organisation considers the capital expenditure in its projects seriously forassuring that they sit at the back end of the cost curve (Allegiancecoal.com.au 2018). Finally, itis committed to the formation of effective working relationships with indigenous individuals,with whom the organisation is associated for the projects. Industry overview of the Australian mining industry:Due to the huge supply of hydrocarbon, mineral and non-mineral reserves, the miningcompanies in Australia extract, develop and sell these reserves. Since these resources are ofgreater quality, they help in maintaining global price competitiveness of the mining division. Thesector is reliant mainly on export and nearly 70% of the overall revenues have been earned in2017 from exports (Ibisworld.com.au 2018). This is due to the industrialisation of the globalnations like India and China driving demand for natural resources. However, the revenue of thissector has declined over the past five years despite the rise in output. With the surge in globaldevelopment, most of the Australian mining organisations invested in new projects leading toincrease in capital investments and mining volumes. However, the rising supply has resulted insignificant price fall in for various division products in the past five years. Hence, it could be
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