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ACC707 Auditing & Assurance of Coca - Cola : Report

   

Added on  2020-05-28

11 Pages3924 Words105 Views
Running head: Auditing & AssuranceAuditing & Assurance
ACC707 Auditing & Assurance of Coca - Cola : Report_1
Auditing & Assurance 1Executive SummaryThe Auditing Standards guide the auditors regarding the application of the audit steps andprocesses to accomplish the auditing goals. They are the benchmarks against which the resultsof audit are analyzed. The auditing guidelines assist the auditors to evaluate the authenticity ofthe financial reports. The Australian Auditing Standards Board (AASB) state the necessities and the accountabilitiesof the auditor while undertaking the audit of the financial statements. Some of the guidelinesprescribed by AASB in this regard are ASA315, ASA 570 and ASA 701. According to ASA315, it is the accountability of the auditor to recognize and evaluate the substantial risk ofmismanagement in the financial reports. To fulfill this objective, they should comprehend theenvironment of the entity and its internal control. Another Australian Auditing Standard ASA 570 pertains to the accountability of the auditors toanalyze whether the entity would be able to sustain in the future as a successful concern .It isevaluated in the context of ASA 315, whether the entity would be able to manage the risk andsurvive as a successful concern. The newly introduced Auditing Standard ASA 701 implies the communication of the key auditmatters in the independent auditor’s report by the auditors. The purpose is to provide theinformation with greater transparency to the stakeholders of the entity. So, in this report, the financial statements of Coca – Cola Amatil are analyzed against the givenauditing principles by Ernst & Young. The conclusions of their evaluation are also stated hereby.
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Auditing & Assurance 2Table of ContentsExecutive Summary.....................................................................................................................................1Introduction to Australian Auditing Standards............................................................................................3About the Company.....................................................................................................................................3Introduction of the auditors.........................................................................................................................3Evaluation of the risk associated with Substantial Mismanagement............................................................3Auditor’s Assessment regarding the areas associated with the risk of substantial mismanagement as perASA570...................................................................................................................................................5The impact on the audit of important transactions which occurred during the period..................................6Events affecting the company’s capability to remain as a successful entity................................................6Recommendations/ Conclusion...................................................................................................................7References...................................................................................................................................................8
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Auditing & Assurance 3Introduction to Australian Auditing StandardsASA 315, ASA 570 and ASA 701 are some of the auditing standards introduced by the AUASBto enable the auditors to recognize and evaluate the probable risks of material mismanagementoccurring in the organization. ASA 315 deals with the ‘Identification and Assessing the Risks ofMaterial Mismanagement through Understanding the Entity and Its Environment.’ It bestows theresponsibility of risk assessing and identification of substantial mismanagement to the auditorsby comprehending the entity, its environment and its internal control measures. ASA 570 deals with the accountability of the auditors regarding the evaluated risks as per section315.The auditors have to report the risks regarding the operation of the entity as a successfulconcern in the future and their analysis in the Independent Auditor’s Report. ASA 701 states that the auditor should communicate the key audit matters relevant to theidentification of risk as per section 315 and 570 in the auditor’s report. It guides the auditorsregarding the content covered and its format in the auditor’s report (Auditing and AssuranceStandards Board, 2016).In this report, the auditing standards would be applied to the financial report of Coca-ColaAmatil and the conclusions would be stated by Ernst & Young. About the Company Coca-Cola Amatil is a public limited company with its headquarters at New South Wales,Australia. It is one of the largest providers of the non-alcoholic beverages in the Asia-Pacificregion. It is amongst the five main Coca-Cola bottlers. It supplies its products in six countries-Australia, New Zealand, Papua New Guinea, Indonesia, Samua and Fiji. Its revenue was AS $5.12 Billion and profit was AS$ 79.9 Million in 2014(Coca- Cola Amatil, 2018).Introduction of the auditorsThe audit of Coca-Cola Amatil for the years 2015 and 2016 was conducted by E& Y. It is amultinational profession services firm, the headquarters of which are situated in London,England. It is amongst the largest professional consultancy firms in the world and one of the ‘BigFour’ accounting firms. It has 2, 31,000 employees in 150countries worldwide. It is the providerof consultancy services including tax, assurance, legal and financial audit to the companies (E &Y, 2018).Evaluation of the risk associated with Substantial MismanagementAccording to ASA 315, it is the accountability of the auditors to identify and assess the risks ofsubstantial mismanagement in the financial reports of the organization, through analyzing itsinternal environment and control (Auditing and Assurance Standards Board, 2013). The relevantmatters in this regard are:
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