Auditing and Assurance Services

Running head: AUDITING AND ASSURANCE SERVICES
Auditing and Assurance Services
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1AUDITING AND ASSURANCE SERVICES
Executive Summary:
The current report would emphasise on the assertions used for the provided organisations
from the viewpoint of the auditor so that key audit matters could be ascertained. It has been
found that Advanced Computer Solutions Limited has two key assertions at risk, which are
valuation or accuracy and existence, while the major risk assertions for Green Machine
Limited comprise of valuation and classification. It has been analysed that the auditors are
needed to consider the risk assertions for planning the substantive audit procedures so that the
overall risks could be minimised. Adequate discussion has been made regarding the
obligations of the auditors for undertaking effective communication with the organisations
and accordingly, key audit matters are to be disclosed in the audit report section. Therefore,
the auditors are liable to comply with the guidelines mentioned in ASA 701, as it would assist
them in ascertaining the key audit matters.

2AUDITING AND ASSURANCE SERVICES
Table of Contents
Introduction:...............................................................................................................................3
Question 1: Advanced Computer Solutions Limited.................................................................3
(a) Two key assertions at risk in relation to inventory:..........................................................3
(b) Two substantive audit procedures:...................................................................................4
(c) ASA 701 Communicating Key Audit Matters:................................................................5
Question 2: Green Machine Limited..........................................................................................8
(a) Two key assertions at risk in relation to property, plant and equipment:.........................8
(b) Two substantive audit procedures:...................................................................................9
(c) ASA 701 Communicating Key Audit Matters:..............................................................10
Conclusion:..............................................................................................................................12
References:...............................................................................................................................13

3AUDITING AND ASSURANCE SERVICES
Introduction:
All auditors have certain obligations, which could be observed in investigating and
analysing the financial statements of the organisations so that it could be ensured that they do
not contain material misstatements because of frauds and errors. The stakeholders associated
with the organisations utilise the audit reports in order to check honesty and fairness in the
financial statements of the organisations (Bepari and Mollik 2015). Various auditing
assertions are used in relation to inventory, property, plant and equipment and others that
include valuation, cut off, accuracy, occurrence, completeness and existence (Chambers and
Odar 2015). The current report would emphasise on the assertions used for the provided
organisations from the viewpoint of the auditor so that key audit matters could be ascertained.
Question 1: Advanced Computer Solutions Limited
Based on the provided scenario, some issues are evident in inventory valuation of
Advanced Computer Solutions Limited, which could have unfavourable impact on the
decision-making process of the stakeholders. Thus, it is necessary to conduct appropriate
inventory valuation and for the concerned organisation, the key assertions at risk include the
following:
(a) Two key assertions at risk in relation to inventory:
Valuation/Accuracy:
In order to test this specific assertion, the auditors have experienced two significant
audit matters. They include the accuracy of the figures in relation to physical count of
inventory and ensure that accurate inventory amount has been included as cost of sales in the
income statement from the statement of financial position. Owing to all these reasons, it is
necessary to conduct inventory valuation by the auditors. As per the case information,