This article discusses the importance, risks, and procedures involved in auditing and assurance. It includes a case study of JB HiFi and Common Wealth Bank. The article also mentions the study material available on Desklib, which includes solved assignments, essays, dissertations, and more.
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Running head: AUDITING AND ASSURANCE Auditing and Assurance Name of the Student Name of the University Authors Note Course ID
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1AUDITING AND ASSURANCE Table of Contents Part 1..........................................................................................................................................2 Answer to Part 1A and 1B.........................................................................................................2 JB HiFi...................................................................................................................................2 Common Wealth Bank...........................................................................................................3 References list:...........................................................................................................................5
2AUDITING AND ASSURANCE Part 1 Answer to Part 1A and 1B JB HiFi INHERENT RISK The different kinds of the non routine transactions are found that they are present in varied kinds of estimations which the management takes into consideration. The instance of the non-routine transactions for JB HiFi are seen to be causing detrimental effect by acquiring other enterprises inherent dangers which are caused by risks and chances during the process of business combinations. FAIR VALUE The accountingestimationsare assumed to be very difficult to be ascertained includingvarious kindsof fair valueconsiderationsneedsto be unveiled in case of accounting statements. AUDIT PROCEDURE AND RISK The solutions in case of such transactions is based on the use of various kinds of different information’s which are obtained beforehand which are found to be conducive in helping as well as a providing a guideline about the occurrence in case of any unforeseen or uncertain events which might happen. The auditors also need to investigate of the firm’s decision makers and also make estimation about the techniques and the way to which will be ultimately reducing error margin. The process ofaudit is conducted in such a way which will consequently reduce or eliminate the error margin (Chandler 2014). Again we can write down from the above said statement that the process of audit is conducted in such a way that it will
3AUDITING AND ASSURANCE gradually reduce the level of risks associated with the audit questions has further been observed to be stated in case of detection and controlling of the same. MATERIAL MISSTATEMENT The term materially misstated basically explains the risks and dangers which are associated with the audit and also expresses any kind of inappropriate audit opinion (Kinney 2015). Inherent risk The risks involved with the banks are mainly ascertained for these cases in which the counter party is found to be defaulted responsibility as the terms and conditions are applied in it. Some of the risk factors which are related to it are stated here as under 1)Low or poor credit store 2)Unsteady income 3)Collateral assets 4)Employment AUDIT PROCEDURE/TASK In order to prevent the occurrence of such risks and dangers the audit procedure is required as there is growing increase in the overall interest for the borrowers. Common Wealth Bank LIQUIDITY RISKS There are sometimes lack of market ability so there might be risks arising from these marketability which occurs mainly in case of the day to day transactions which are done.
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4AUDITING AND ASSURANCE Such cases the bank may run out cash and it is concerned as the major or main liquidity risk to the bank (Knechel and Salterio 2016). AUDIT PROCEDURE/TASK In order to prevent the occurrence of such risks and dangers the audit procedure is required as there is growing increase in the overall interest for the borrowers. The procedure of audit is needed to ensure that there is sufficient amount of cash balance deposited in the bank as a depository before handing over the excess cash. The process of audit also is inclusive of the potential securities which breaches beforehand so as to avoid or prevent the instances of human risks like IT/system risks and processes risks (Moroney and Trotman 2016). CREDIT RISK There are other risks which are associated with the bank like in case of the credit risk we can see that the risks involved with the banks are mainly ascertained in which the counter party has defaulted in meeting up the responsibilities in terms and conditions of the agreement (Simnettet al. 2016). Some of them have been stated here as under 1)Low or poor credit store 2)Unsteady income 3)Collateral assets 4)Employment OPERATIONAL RISKS These are mainly the risks which are associated with the potential losses because of human error, occurring mainly in case of potential human error resulting consequently in
5AUDITING AND ASSURANCE potential losses in the internal processes. This definition is considered to be legal attached with legal risks but is excluding any kind of strategic and reputation risk.
6AUDITING AND ASSURANCE References list: Chan, D.Y., Chiu, V. and Vasarhelyi, M.A. eds., 2018. Continuous Auditing: Theory and Application. Chandler, R., 2014. Auditing and assurance.London School of Economics. London. Kinney Jr, W.R., 2015. GAAS 1963-2012: The Global Foundation of Independent Audits and Research in Auditing. Knechel, W.R. and Salterio, S.E., 2016.Auditing: Assurance and risk. Taylor & Francis. Moroney, R. and Trotman, K.T., 2016. Differences in Auditors' Materiality Assessments When Auditing Financial Statements and Sustainability Reports.Contemporary Accounting Research,33(2), pp.551-575. Simnett, R., Carson, E. and Vanstraelen, A., 2016. International archival auditing and assurance research: Trends, methodological issues, and opportunities.Auditing: A Journal of Practice & Theory,35(3), pp.1-32.