Auditing and Assurance

Running head: AUDITING AND ASSURANCE
Auditing and assurance
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AUDITING AND ASSURANCE
Table of Contents
Executive summary:.....................................................................................................3
Introduction:..................................................................................................................4
Australian accounting standards:..............................................................................4
Accounting theories:.................................................................................................5
Problem statement:.......................................................................................................6
Research objectives and aims:.....................................................................................6
Structure of study:.........................................................................................................7
Methodology:................................................................................................................7
Research approach:..................................................................................................8
Research design:......................................................................................................8
Process of data collection:........................................................................................9
Overview of the company:............................................................................................9
Findings:.....................................................................................................................10
Identification and assessment of material misstatement risk:................................12
Materiality in performing and planning the audit:....................................................14
Response of auditors towards the risk assessment:..................................................15
Accounting policies used in the financial statement of BGC limited:......................19
Forming an opinion and reporting on the financial report:......................................19
Auditor’s independence:.........................................................................................21
Going concern:...........................................................................................................22
Code of ethics for professional accountants:.............................................................23
Implication of findings:................................................................................................24
Conclusion and recommendations:............................................................................26

AUDITING AND ASSURANCE

AUDITING AND ASSURANCE
Executive summary:
The report is prepared to evaluate the true and fair status of one of the companies
listed on ASX (Australian stock exchange) by conducting a detailed investigation into
the financial statements presented ion the annual report. The report also presents
the critical evaluation of the independent auditors report with a particular emphasis
on the key audit matters as disclosed in the report. For the purpose of evaluation, the
company that has been chosen is one of the largest insurers of the world named
“QBE Insurance Group Limited”. The applicable auditing standards which has been
implemented by the group is analyzed using the risk based approach and in the
context of auditing theories, regulations, concepts and practices. Some of the facts
that have been investigated include ascertaining the risk of material misstatement,
going concern, corporate governance, materiality in performing and planning the
audit, code of ethics, forming an opinion on the financial report and auditors
response to risk assessment.

AUDITING AND ASSURANCE
Introduction:
The report is prepared to evaluate the status of true and fair representation of
the financial statement of the private company of Australia that is QBE Insurance
group limited. QBE Insurance group is the largest global insurer operating in
Australia and in major insurance market, the organization has numerous strongly
performing business along with having a diverse product mix and geography. The
opinion of the independent auditors is critically evaluated with special relevance on
the key audit matters (qbe.com.au, 2019) The facts of the case is analyzed using the
approach of risk based auditing, auditing standard and concepts of auditing. Auditing
standards are evaluated in the context of auditing theories. In addition to this, the
relationship of the auditing standard is discussed in the context of accounting
regulations, theories and identified standards. The impact of the auditing standard
and theories in evaluated with reference to the business risk, corporate governance,
and inherent risk, reporting obligations of shareholders, ethics and culture.
Australian accounting standards:
The Australian accounting standard provides application and establishes
requirements on the explanatory material on the auditor’s responsibilities when they
are engaged in conducting the audit of the financial statements of the reporting entity
along with any kind of historical financial information. They are the system of
principles and rules that prescribe the contents and format of the financial statement
of organization. The stakeholders of the organization are able to seamlessly assess
the financial health of the company if the reporting is consistent with the prescribed
accounting standard. Organizations complying to the international accounting
standard provides ease to the investors and other stakeholders to compare the
financial p[performance of the companies across regions as such standard offers a
standardized reporting system. The Australians securities and investment
commission is responsible for regulating the accounting standards with the system of
reporting being divided into two tiers. In the first tier, the methods of accounting are
prescribed that indicates that the methods should be in accordance with the IFRS
which has been issued by IASB. The manner in which the reporting should be done
by the company is provided by the outline of the accounting board and how the
accounting treatment of each of the transactions specific to the organizations should
be done. In the second tier, the presentation, recognition and measurement of the

AUDITING AND ASSURANCE
transactions are done which is related to the first transaction. All the entity that is
listed on the stock exchange of Australia is required to adopt the accounting
standard while preparation of the financial statements in accordance with the
Corporation Act, 2001. Such standard depicts the format and rules that should be
applied when treating the different account and how it should be included in the
financial reporting system. It enables the companies to provide a true and fair
representation of their financial statements and helps the users of the financial report
to make the assessment that whether the presentation of the facts and figures are
true and fair.
Accounting theories:
Accounting theory can be described as the braid set of principles that helps in
the valuation of the accounting practice and guiding the development of the
procedures and new practices in a general frame of reference. The rules of
accounting are rationalized using the guidance of the accounting theories that helps
the accountants in classifying, gathering, reporting and interpreting the financial data.
It can also be referred to as the process of measuring, identifying and
communicating the economic information that permits the informed decision and
judgments by the users of the financial statement (Brasel et al., 2016). There are
different types of accounting theories that comprised of inductive theory, descriptive
theory, evaluative theory, deductive theory, normative theory, communicative theory
and generally accepted theory.
Problem statement:
The paper addresses the assessment of risk of material misstatement and
identifying whether such risks have been assessed by the auditors. In addition to
this, the report also tends to evaluate the key audit matters and the opinion framed
by the independent auditor and whether there has been any modification of the
opinion about the financial statement of company. The contributory negligence and
the negligence of order in framing the opinion in the financial statements of the
company have been addressed. The true and fair presentation of the financial
information is assessed in accordance with the Australian accounting standard.
Current study has been undertaken to deal with all the related and applicable