Auditing: Preliminary Risk Assessment and Analytical Procedures in Elmo Software Limited

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

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Table of Contents
Introduction................................................................................................................................4
Overview of Company...............................................................................................................4
Part A.........................................................................................................................................4
Preliminary Risk Assessment Procedure...............................................................................4
Analytical Procedure in Company.........................................................................................6
Planning Materiality...............................................................................................................8
Part B..........................................................................................................................................9
Audit Quality in Auditing Process.........................................................................................9
Reason to maintain Audit Quality........................................................................................10
Regulators in Auditing.........................................................................................................11
Conclusion................................................................................................................................12
Reference..................................................................................................................................13

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Introduction
An audit is an independent and regular examination of company books of account and
vouchers. The audit is carried to know whether the company is preparing financial statement
as per the accounting standard or not. The audit process can be carried by internally by
employee or head of particular department and externally by an outside firm or an
independent auditor1. The concept of an audit is to verify the accounts of the organisation and
ensure that the books of accounts are prepared reasonably and no misrepresentation or fraud
conducted. The report shows about Elmo Software Limited and shows the various aspects of
company financial report. It states the preliminary risk assessment in the organization and the
process which is carried in by the auditor in the company.
Overview of the Company
The report based upon Elmo Software Limited that is the one of the most growing HR
Tech Company in Australia and New Zealand. It provides innovative cloud HR, payroll and
time and attendance technology to more than 1000 organisations across APAC.
Part A
Preliminary Risk Assessment Procedure
Control risks are those risks which show about the misstatement in the balance of
account in company financial report. The material misstatement can affect overall decision of
1 DeFond, Mark, and Jieying Zhang. "A review of archival auditing research." Journal of
Accounting and Economics 58.2-3 (2014): 275-326.

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the financial user, and the management cannot rectify it in a period 2. The company internal
control system sometimes is incapable of detecting the misstatement in company business.
Internal Control System are those systems which make sure that the business is not
having any misstatement in their financial report. The system of internal control also aims to
ensure that the organization is effectively conducting its business activities.
The objective of carrying the audit process is to ensure that the company internal
control system is working correctly and able to detect material misstatement and ensure that
the financial reports is showing a true and fair view3. The responsibility of maintenance of
company internal control system lies with the management and commenting upon the system
lies with the auditor.
The process which auditor will follow in regards to preliminary risk assessment:
1. Preliminary assessment of control risk – The process through which the internal
control and accounting system effectiveness are evaluated regarding the detecting and
correcting the material misstatement. There is some degree of control risk that is
associated with accounting and internal control system due to some inherent
limitation in business.
2. Auditor after understanding the internal control and accounting system make the
preliminary assessment of control risk at the assertion level for each balance of the
2 Furnham, Adrian, and Barrie Gunter. Corporate Assessment (Routledge Revivals): Auditing
a Company's Personality. Routledge, 2015.
3 Griffiths, Phil. Risk-based auditing. Routledge, 2016.