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Auditing and ethical table of contents

   

Added on  2020-10-05

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AUDITING AND ETHIC

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1SECTION 1......................................................................................................................................11.1 Level of materiality with its quantitative estimate................................................................11.2 Representing different notes and disclosures with significance of audit..............................2SECTION 2......................................................................................................................................32.1 Trend and changes in ratio with audit risk............................................................................3SECTION 3......................................................................................................................................63.1 Reviewing statement of cash flows.......................................................................................63.2 Reviewing audit report by stating its expressed opinion......................................................8CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9

INTRODUCTIONThe main objective of code of ethics of any institute is for promoting an ethical culturewith context of profession of internal auditing. There are various principles which are relevantfor perspective of profession and internal auditing practice. There are different rules of conductwhich helps in describing behaviour norms with context of internal auditors. The present reportis giving brief review for developing critical analysis skills linked to materiality with applicationof audit, its procedures, analytical review and framing an opinion. It also helps in determininglevel of materiality which is used by audit group for Speedcast International Limited of year2017. It had also discussed about various drafts and disclosures in its annual report related tocontingency and its significance. In the same series, it had also presented preliminary analyticalreview with its information of balance sheet and profit and loss statement. It had also discussedabout its business risks and audit procedure which had been undertaken. It had also articulatedstatement of cash flow and recommendation to follow audit procedure.SECTION 11.1 Level of materiality with its quantitative estimateThe framework of financial reporting elaborates concept of materiality with reference topresentation and preparation of financial report. Materiality could be explained as misstatementsalong with omissions are termed to be material if they are influencing economic decisions withrespect to user on basis of financial report. The materiality is determined when audit is plannedwithout need of establishing amount below uncorrected misstatements Hoque, & Pearson,(2018). It could be on individual or aggregate basis for evaluation of immaterial. There arevarious circumstances linked to misstatements which might give impact to auditor for evaluatingits level below materiality. The procedure of audit could not be designed practically forextracting misstatements which might be material solely due to its nature. The assessment andidentification of risk of material misstatement includes application of professional judgement fordetermining classes of transactions, disclosures and account balances. It consists of qualitativedisclosures and misstatements which might be material. While there is possibility that materialmisstatement exists in qualitative disclosures and auditor should be capable to determine somerelevant factors like:The circumstances of business entity for given duration.The framework of applicable financial reporting which consists of various charges.1

Qualitative disclosure which is very important for users of financial reports due to entity'snature.Speedcast International Limited had undertaken materiality for the objective of auditwhich was around $3000000 which signifies approx. 2.5% of EBITDA of group as it does notconsider acquisition linked to expenses and revenue. EBITDA was adjusted for items of revenueand expense which was associated with different acquisitions along with cost of transaction,restructuring and integration for removing impact of item to recur from every year. They haveutilised 2.5% threshold on basis of professional judgement within particular range of thresholdswhich is acceptable. In the same series, they have applied threshold along with differentqualitative considerations for identifying scope of audit with its nature, extent and timing ofprocedure for evaluating impact of misstatement on its financial report.1.2 Representing different notes and disclosures with significance of auditAuditing is referred as very important function of business which includes appropriateevaluation of evidence and documentation of various transactions and economic activities oforganisation. The audit system helps in evaluating internal control of organization with itsapplication linked to organization for adhering its goals Laing & Hoy, (2018).Generally, auditors have requirement by management for stating acknowledgingstatement which is disclosed as contingent liabilities. It is referred as possibility of a particularliability which had been raised with respect to future event. Liability is known as contingent ifevent is occurred or not. The common source for contingent liabilities are identified asoutstanding lawsuits and warranties about product.In the present scenario, all contingent liabilities are disclosed by management to itsauditors. Generally, it does not happen in continuous series, as auditors must be capable toperform its extended search procedure after primary inquiry. The internal revenue service reportscould be reviewed by auditor for purpose of unsettling income and tax liabilities. Auditors mustlay special emphasis on content of legal expense account with reference to accounting system.Further, supporting documentation with context of transactions of legal expense might becapable for revealing contingent liabilities.In the same series, for identifying correct treatment of accounting there is requirement ofevaluation of materiality by auditors with reference to contingent liabilities Hutabarat, (2018). If2

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