Auditing and Assurance in Australia - Analytical Review

Running head: AUDITING AND ASSURANCE IN AUSTRALIA
Auditing and assurance in Australia
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1AUDITING AND ASSURANCE IN AUSTRALIA
Table of Contents
Part A.........................................................................................................................................2
Reference....................................................................................................................................4
Appendix....................................................................................................................................5

2AUDITING AND ASSURANCE IN AUSTRALIA
Part A
Analytical
Review –
Area of
Concern
Identified
Justify Your Answer Assertion and Ledger
Account(s) Impacted Audit Procedure
Liquidity It is identified from the
calculation that the
liquidity ratios of the
company have been
reduced significantly in
the year 2017 as
compared to the year
2016. Current ratio of the
company has been
reduced from 20.34 to
8.18, quick ratio has been
reduced from 19.36 to
7.56 and the cash ratio
has been reduced from
0.29 to 0.02
(Annualreports.com
2019). Reductions of
these liquidity ratios are
indicating that the ability
of the company to meet
its short term obligation
with the available short
term assets is reducing.
Assertion
Existence
Valuation and
accuracy
Completeness
Impacts on accounts
(i) Current assets
including cash account
and receivables
accounts and (ii)
current liabilities like
payable accounts and
deposits and public
borrowing account
(AICPA 2018).
Existence –
Current assets and current
liabilities shall be checked with
the purchase and sales invoice.
Valuation and accuracy –
assets value and value of the
liabilities shall be confirmed
from the associated documents
like purchase and sales
vouchers, loan documents, Bank
accounts, debtor payment term
and creditors lending terms (da
Silva and Dantas 2018)
Completeness –
The auditor shall check that the
balance sheet recorded the asset
and liability items those taken
place during the current
financial period and transactions
from other period has not been
included in the current period.
Financial
leverage
ratio
From the financial
leverage aspect it can be
stated that the debt to
equity ratio is increased
by 10.01% in 2017 as
compared to previous
year and equity ratio is
reduced by 8.66%
(Annualreports.com
2019). It is indicating that
Existence
Valuation and
accuracy
Completeness
Impacts on accounts
Liabilities like payable
accounts and deposits
Existence –
Existence of fixed asset like
plant, equipment and property
shall be verified physically.
Loan and borrowings shall be
confirmed with the lending
institutions.
Valuation and accuracy –