Auditing Assurance and Risk

Running head: AUDITING
Auditing
Name of the Student:
Name of the University:
Authors Note:

AUDITING1
Executive summary:
In the following report, a detailed analysis of the company is undertaken to determine
whether the same should be accepted as audit client or not. For this purpose various financial
indicators such as financial ratios and non-financial indicators like the business risk involved
in the company is considered objectively.

AUDITING2
Table of Contents
Introduction:...............................................................................................................................3
Overview of the company and the industry in which it operates...............................................3
Specific reporting requirements for the mining companies.......................................................4
Significant business risks for Allegiance and the way these can lead to material misstatement
in the financial statement of the company..................................................................................6
Identification and discussion of the areas/accounts of concern that are considered risky.........7
Ratio Calculation........................................................................................................................9
Commentary on Financial performance...................................................................................10
Liquidity-..............................................................................................................................10
Profitability Ratio.................................................................................................................12
Return on equity...................................................................................................................13
Overall financial position of the company...........................................................................14
Conclusion and decision whether to undertake Audit..............................................................15
Reference and Bibliography.....................................................................................................16

AUDITING3
Introduction:
In the present report, an effort has been made to deeply analyse various aspects of the
company. The main objective of analysing these aspects is the determination of whether the
auditing firm should accept the company as one of its client. Several factors are needed to be
considered before accepting an audit engagement. For instance the various laws and
regulation that are applicable on the client, the various business risks that the company is
currently facing and the extent of probability of material misstatement present in the financial
statement of the company (Leung et al., 2014). After the results of this in depth analysis are
derived, a conclusion will be drawn regarding the acceptability of the company as its audit
client.
Overview of the company and the industry in which it operates
The primary focus of the operations conducted by the company is on acquisition and
exploration of the metallurgical coal tenements. The flagship project of the company at
present is the Tekla metallurgical coal project. The project is located in the North West of the
British Columbia. The company is also presently holding interests in several other projects
like in Back Creek project, which is situated, in Surat Basin of Central Queensland in
Australia, the Kilian project that is located in the Bowen Basin of central Queensland in
Australia (Hay et al., 2017). The company was first incorporated in the year 2011. The
company runs its operation with Sydney, Australia as its base.
In terms of the industry overview, the company is operating in the field of exploration
and acquisition of the metallurgical coal tenements. The black coal is the key element of steel
making and energy generation industry and thus enjoys heavy demand. It is a matter of fact
that coal is found all over the world but, Australia is Amon g the lowest cost producer of coal
and thus has been able to establish itself as a major exporter of coal. The reserves available in