Auditing and Assurance

Running head: AUDITING AND ASSURANCE
Auditing and Assurance
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1AUDITING AND ASSURANCE
Executive Summary:
The report has been prepared with the intent for evaluating the financial statements of Harvey
Normal Holdings Limited from the perspective of the auditor. It has been found that Harvey
Norman is subject to a number of audit risks, which could result in significant material
misstatements. Therefore, appropriate audit procedures have been suggested for dealing with
them. Finally, it has been evaluated that the organisation has sound corporate governance process
and audit committee for meeting the information needs of the stakeholders.

2AUDITING AND ASSURANCE
Table of Contents
Introduction:....................................................................................................................................3
Part A:..............................................................................................................................................3
1. Analytical review of the financial statements of Harvey Norman Holdings Limited:............3
2. Relevant audit procedures:......................................................................................................6
Part B:..............................................................................................................................................8
1. Process relating to corporate governance:...............................................................................8
2. Audit committee:.....................................................................................................................9
3. Benefits of audit committees:..................................................................................................9
Conclusion:......................................................................................................................................9
References:....................................................................................................................................10
Appendix:......................................................................................................................................12

3AUDITING AND ASSURANCE
Introduction:
The current report would focus on evaluating the financial statements of Harvey Normal
Holdings Limited from the perspective of the auditor. Initially, the analytical review of the
financial statements of the organisation would be made by calculating a number of ratios that are
subject to material misstatements. In other words, this review would help in finding out the areas
of concern and accordingly, relevant audit procedures would be devised for offsetting the same.
The second section would evaluate the corporate governance process of Harvey Normal
Holdings Limited and composition of its audit committee. Finally, the report would shed light on
identifying whether the audit commitments are beneficial in the current era or not supported by
adequate justifications.
Part A:
1. Analytical review of the financial statements of Harvey Norman Holdings Limited:
In order to conduct the analytical review of the financial statements of the concerned
organisation, certain financial ratios are taken into consideration prone to audit risk (Refer to
Appendix for detailed calculations) and they are evaluated briefly as follows:
Current ratio:
This ratio is observed to increase in 2018 compared to 2017 that denotes rise in current
assets compared to current liabilities. It implies favourable working capital position for the
organisation (Byrnes et al. 2018). The increase in this ratio is prone to audit risk, since it might
have overstated its balance of current assets for representing better working capital management