Auditing and Assurance Assignment Australia

Added on - 29 Apr 2020

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Auditing and Assurance in Australia
TABLE OF CONTENTSTask 1.........................................................................................................................................3Risk 1.....................................................................................................................................3Part A.................................................................................................................................3Part B..................................................................................................................................3Part C..................................................................................................................................3Risk 2.....................................................................................................................................3Part A.................................................................................................................................3Part B..................................................................................................................................4Part C..................................................................................................................................4Risk 3.....................................................................................................................................4Part A.................................................................................................................................4Part B..................................................................................................................................4Part C..................................................................................................................................4Task 2.........................................................................................................................................6References..................................................................................................................................7
INTRODUCTIONPresent study is based on the evaluation of operational affairs ofPearl Technology Ltd byapplying appropriate audit standards. Study is bifurcated into two parts; first part deals withthe description of risk associated and accounts affected with the cited situation. Further on thebasis of analysis in first part memorandum will prepared to describe risk assessment plan andrecommendations for audit.TASK 1Risk 1Part AIn the given case situation; new costing system has been installed by the company as it ispopular and used by many other firms in the industry. However, same is not supported byproper checking system and training which will create a threat to accuracy and reliability ofinformation. This will enhance the control risk. It is because this situation will give rise to thepossibility of manipulation by management as there are no proper criteria for managing theinstalled techniques as none of the employees is properly trained.Part BThe impact of new costing system will be on costing systems and will affect purchaseaccount; overhead accounts and valuation of developed products and services. To managethis aspect; main focus will be on purchase account; expenses account; inventory account asthere will be a high possibility of errors while recording costs in financial records (Niemi andet al., 2017). Further installation of the new system will have a significant impact onoperating process thus will be assessed to ensure accounting transactions are properlyrecorded and valuation of new accounting system is done in a proper manner.Part CBy considering the given case-control risk appear to be high due to which detection risk hasto be lowered. By applying the provisions of ASA 570; auditor will communicate toregarding the cited issue and suggest them to organise training plan (Kamarudin and Ismail,2014). Further; they will understand the current system to identify risk. In accordance withthe ASA 240, they will also assess operational activities to determine whether there is fraudor not.
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