Auditing: Materiality, Scope, and Analysis of Company Financial Statement

Running head: AUDITING
AUDITING
Name of the Student
Name of the University
Author Note

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AUDITING
Table of Contents
Introduction................................................................................................................................4
Materiality and Scope of Audit..................................................................................................4
Disclosure in Company Reports.................................................................................................5
Analytical Procedure in Company.............................................................................................6
Current Ratio..........................................................................................................................6
Debt Ratio..............................................................................................................................7
Debt-Equity Ratio..................................................................................................................8
Analysis of Company Cash Flow Statement..............................................................................8
Review of Company Annual Report..........................................................................................9
Key Audit Matters......................................................................................................................9
Conclusion................................................................................................................................10
Reference..................................................................................................................................11

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AUDITING
Introduction
Auditing is process which is carried by Auditor to know the financial report error and
omission so it can carry its procedure so that it can see how the company can carry its
business operation quickly and effectively in the business (Coppage & Shastri 2014). The
company should able to follow all the rules and regulation so that it can carry all its business
operation easily. Auditor has to know the company details so it can see how the company can
manage its business activities, which help it to ascertain the amount of risk which is involved
in company business. The report shows the company name ASX Limited, which based on the
investment. The report shows the materiality concept and how the Auditor can carry its
process to ascertain the materiality in the financial statement, it also shows about the
company financial ratio show this show how company can carry all its operation easily in
their business. It also shows the analysis of company cash flow statement so that it can know
the inflow and outflow of cash in the business (DeFond & Zhang 2014). It also shows the
analysis of the annual report and what is the opinion which is given by the Auditor on the
company financial statement.
Materiality and Scope of Audit
Auditor has to plan the scope of the audit so it can know how it will able to analysis
the company financial statement quickly and effectively in business. Materiality refers to the
error and omission, which is done by the company in regards to their annual report. The
company should carry all the information correctly in its financial statement so it can give
proper information to the commercial user (Eilifsen & Messier Jr 2014). Auditor has to know
the materiality which is involved in the company so that it can carry all the audit process and
able to give a proper opinion upon the company reports.

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AUDITING
Auditor has to take the concept of materiality with proper importance so that it can
know the business risk, which is associated with the company financial statement. It has to
plan to the materiality so it can all the audit process in the business so while calculating the
materiality it should consider the sales, total asset and equity (Elder et al., 2013). This will
help the Auditor to know how to carry its audit process so that it can able to gain more
amount of audit evidence which will help them to give a proper report to the company. The
Auditor is taking the total asset as the base for the calculation of total planning materiality.
The total planning materiality calculated as
Planning Materiality=Total Asset∗5 %
¿ $ 12923
¿ 5 %
¿ $ 646.5
The above calculation shows the planning materiality, so the Auditor has to ascertain
the procedure of audit and able to carry its activity easily on the company financial statement,
this will also affect the overall auditor report as if there a high amount of materiality so this
will increase the overall risk in the business.
Disclosure in Company Reports
Management can give the proper amount of disclosure in the company business so
that it can show all the detail information which the company should provide to the financial
user so that it can take the proper decision of investment in the company. The company
should able to provide all the required information as per the standard so that it can able to
present appropriate information in the company (Furnham & Gunter 2015). The Auditor
should check that the company is able to give all the required information in the disclosure as