Auditing Assignment | Australian Auditing Standard

Running head: Auditing
Auditing

Auditing
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Executive Summary
As per Australian Auditing Standard ASA 315, it deals with the auditor’s
accountability to recognize and evaluate the risks of substantial misstatements in
the financial reports of the company. It is done through comprehending the
organization and its atmosphere, including its internal control. The aim of the
auditor is to recognize the threats of substantial mismanagement, occurred as a
result of deception or mistake.
The risk evaluation methods shall comprise of enquiring the managerial personnel,
whether they have any information which would help them in the evaluation of risk
of substantial misstatements. The others include analytical procedures and
examination. The business risk comprises of the risk resulting from certain
circumstances, which could affect the organization’s ability to achieve its goals.
In this report, Medibank Private Limited, the largest provider of health insurance in
Australia, would be assessed to recognize and evaluate the risk of substantial
mismanagement, by PricewaterhouseCoopers. Also, the audit procedures applied to
assert the risk and internal control methods to lessen it ,would be reflected upon.

Auditing
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Table of Contents
Executive Summary................................................................................................... 1
1. Report on the knowledge gained of this entity and its environment....................3
Introduction to the company................................................................................... 3
Regulatory Authority of the private health insurance sector in Australia................3
Applicable Financial Framework on Medibank Private Limited................................3
Nature of Company’s Operations, its governance structures and its investments. .3
Application of Accounting Policies in Medibank Private Limited..............................4
2. Entity’s Objectives and Assessment of related Business Risks............................5
Entity’s Objectives................................................................................................... 5
Assessment of related Business and Financial Risks...............................................5
3. Identification of Account Balances Subjected to Risk of Material Misstatement...7
Conclusion.................................................................................................................. 9
References............................................................................................................... 10

Auditing
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1. Report on the knowledge gained of this entity and its environment
Introduction to the company
Medibank Private Limited is the largest private health insurance provider in
Australia. It operates in the health insurance industry. It insures and sells its policies
under the brand names: Medibank and AHM. It has around 3.8 Million members and
covers 29.1% of the market share. It operates as a public listed company on ASX. It
also deals in assisting the health insurance business, thereby earning income from
its ‘Complimentary Services’. Resources are also retained to compensate its
regulatory reserves, which generates monetary benefits from its portfolio of
investment assets.
Regulatory Authority of the private health insurance sector in
Australia
The private health insurance sector is regulated by Australian Prudential Regulation
Authority (APRA) in Australia (APRA, 2018). The organizations operating in the
private health insurance sector in Australia have to comply with the ‘APRA rules’
and ‘Prudential Standards ’. Also it is mandatory for the private health insurers to
provide information under the Financial Sector (Collection of Data) Act, 2001 and its
reporting standard to APRA. The organizations have to submit certain forms and
follow directions of APRA in this regard (Kokobe & Gemechu, 2016).
Applicable Financial Framework on Medibank Private Limited
The applicable laws and legislations on the ‘Medibank Private Limited ‘are:
Auditing and Assurance Standards Board
1. Australian Accounting Standards Board
2. Australian Prudential Regulation Authority
3. Australian Securities and Investment Commission
4. Financial Reporting Council
5. Financial System Inquiry
6. Standard Business Reporting