Auditing and Assurance

Running head: AUDITING AND ASSURANCE
Auditing and Assurance
Name of the Student:
Name of the University:
Author’s Note:

AUDITING AND ASSURANCE1
Table of Contents
Part A: AUDITING AND ASSURANCE.......................................................................................2
Preliminary Risk Assessment......................................................................................................2
Analytical Review.......................................................................................................................3
Planning Materiality....................................................................................................................5
Part B: Quality and Effectiveness of Independent Audit.................................................................6
Concerns on Quality and Effectiveness of Independent Audit....................................................6
Addressing of Audit Concerns by Regulators.............................................................................8
References........................................................................................................................................9

AUDITING AND ASSURANCE2
Part A: AUDITING AND ASSURANCE
The Financial Analysis for the Elmo Software Company has been done in order to
analyse the various aspect of the company in terms of the preliminary risk assessment for the
company and the materiality of the various information contained in the presented annual report.
The financial position of the company was also analysed for the stated period 2018, by
undertaking ratio analysis a quantitative assessment tool that has been selected in order to
analyse the financial performance, financial position and business risk associated with the
company (William Jr, Glover & Prawitt, 2016). Planning Materiality in the context of the
presented financial statement of the company was done in order to check and review the
materiality of the financial statement of the company.
Preliminary Risk Assessment
A Preliminary Risk Assessment is an assessment of the level of the qualitative and
quantitative risk that are involved in the particular situation involving a potential hazard. The
control risk states that there are chances of having a misstatement in the balances of accounts or
in the classes of various transactions that are done. The Auditors of the company has recognized
some of the key Audit matters for the company where the accounting policy followed by the
company where recognition of the revenue from the services rendered by the company has been
some of the key issues highlighted (Knechel & Salterio, 2016). ELMO Software is one of the
leading company operating in the Australia thereby providing integrated cloud HR, Payroll and
Rostering/time & attendance solution offering various exclusive featured software such as one
vendor, one dashboard and one-user experience software’s. Assumptions and Judgements used in

AUDITING AND ASSURANCE3
the valuation of the intangible assets of the company and impairment of the goodwill of the
company has been some of the key Audit procedures that have been applied.
The main aim of conducting a preliminary risk assessment in the context of Audit for
Elmo Software Company is to analyse and introspect whether the internal functions and control
systems of the organisations are capable of detecting any kind of material misstatement. If the
information contained in the annual report of the company is material enough it would be
helping the investors of the company take important financial decision thereby representing a
true and a fair view presentation about the company (Bradbury, Raftery & Scott, 2018).
Analytical Review
The analytical review of the Elmo Software Company has been primarily done in order to
review the financial position, financial performance and associated business risk for the
company.
Financial Performance: The financial performance of the company can be well reviewed with
the help of the profitability ratio analysis that has been done for the company for the year 2018
(Asic.gov.au, 2019).
Return on Assets: The return on asset for the company for the year 2018 has been around -
3.01% and the same has been considerably due to the higher cost of operating expenses for the
company in the form of increasing employment and general & administrative expenses for the
company (Farooq & De Villiers, 2017). On the other hand, the reported figures for the company
for the non-current assets have given a high weightage to Intangible Assets and Capitalised Costs
where management judgements and decisions have been applied for the purpose of valuation of
the assets. It is important for the Auditor of the company to undertake a key analysis of the