Areas of Concern in Auditing and Audit Planning Issues

This project report discusses the areas of concern highlighted by AGO in auditing and the issues to be considered in audit planning based on income statements. It focuses on Fiji Airports and Aigiris Ltd.

AUDITING

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Question 1 Identify three areas, that the AGO has highlighted as areas of concern....................3
Question 2 the issues to be considered in the audit planning from the information contained in
the income statements..................................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6
APPENDIX......................................................................................................................................7

INTRODUCTION
Financial audits are the method of reviewing the financial statements of an entity (or an
individual) to decide whether they are correct in accordance with all laws applied (including
agreed accounting standards), regulations and legislation (Groomer and Murthy, 2018). External
auditors arrive from outside to review and offer an impartial view on accounting and financial
reports. All public corporations shall have audited independently by statute for annual results.
The project report is based on two tasks in which first are about key areas of concerns of Airports
Fiji limited. While second task is regarding to issues of audit planning in Aigiris Ltd.
MAIN BODY
Question 1 Identify three areas, that the AGO has highlighted as areas of concern.
Brief of organization:
In compliance with the Public Enterprise Act of 1996, Fiji Airports is a fully-owned
public commercial corporation established on 12 April 1999. This runs 15 airports in the Fijian
islands, like airports in Nadi and Nausori and thirteen other regional airports on Fijian-scattered
islands. Fiji Airports also offers air traffic control (ATM) facilities to the territorial waters of
Tuvalu, New Caledonia, Kiribati and Vanuatu within Nadi Fligh Intelligence Area (Nadi FIR).
Firm’s competence to perform the audit:
In contrast with 2017, net profit grew in 2018 by 0.5 percent or $300,814. This was
largely attributed to a rise in revenue created mostly by 19% for international arrival and loading
and by 11% for regional airports, a 10% foreign passenger operation and 15% for check-in
charges.
Net investments in 2018 growing in contrast with 2017 by $185,342,915 or 84 percent. This was
due to the objective appraisal of structures, facilities, machinery and motor vehicles by a licensed
valuer and then raised the value of land, plant and equipment (Shen, Huang and Susilo, 2017).
Herein, underneath three main areas are mentioned which needs to be concern by AGO:

 For the year ended 31 December 2012, the Company revised its government grant
accounting policies to follow the circular released by the Ministry of Public Employers &
Tourism on 14 March 2013 with a summary of previous periods.
 This accounting was not subject to International Accounting Standards (IAS) 20. A
circular released by the Ministry of Public Entities & Hospitality in March 2016 stated
that all grants obtained after 9 March 2016 should be compensated for in compliance with
IAS 20 Accountability for government subsidies and disclosures.
 If the organization had complied with IAS 20, the result of the 2018 financial year will be
to raise its income by $568,502. They observed that the effect in 2018 increased by
$312,502 or 120%, up from $256,000 in 2017.
Question 2 the issues to be considered in the audit planning from the information contained in
the income statements.
The term auditing issues can be defined as those which occur due to prepared financial
statements by accountants of companies (Knechel and Salterio, 2016). Its responsibility of
auditors to find out these concerns so that accuracy can be possible in prepared financial
statements. Such as Aigiris Ltd is planning for auditing for year 2020 and for which they sent
draft of income statement for year 2020. On the basis of it, key issues are mentioned below:
 On the behalf of prepared income statement of above company, this can be found out that
there is decreasing in total sales in year 2020 as compared to year 2019. While director of
company is expecting that this year will be beneficial for them which does not seem
possible. Hence, this is an issue which is needed to be considering by auditing committee
when they will do auditing for year 2020 on the basis of prepared income statement.
 Another key concern which needs to be considered is that company has presented cost of
sales of (322187) while their revenue is lower compared to year 2019. This is showing
that accountant of above company might have done any mistake during preparation of
draft of income statement for year 2020. Though, there is an another possibility that cost

of raw material might have increased in year 2020 but auditing is not based on
assumptions thus, this issue also needs to be considered by auditing committee.
 On the basis of prepared income statement of company, this can be stated that under cost
of sales, there was increased value in year 2020 as compared to year 2019. While in the
aspect of selling and distribution expenses, it is clearly stated that this expenses is
decreased in year 2020 which seems weird. This is so because in the above part of
income statement, cost of sales is expected to be higher while in selling & distribution
expense its value was lower. This is indicating that accountants of above company might
have done any mistake in entering value of selling and distribution expenses. Hence, this
issue should also consider by above auditors when they will do auditing for year 2020 on
the basis of prepared income statement.
 Same as the above items of prepared income statement, the value of profit before tax is
also different with huge amount of variation. This can’t be possible because directors of
company have stated that year 2020 is good for them but there is higher difference in
total value of profits. Such as in year 2019, company’s profit was of 141918 which
decreased and presented of 61360 in year 2020’s drafted income statement.
So these are the main issues which need to be considered into account by auditing committee
who will do auditing of prepared financial statement of Aigiris Ltd, at the end of financial year
2020.
CONCLUSION
On the basis of above project report this can be concluded that auditing is key process
and it is essential for auditing committee to find out main issues before planning auditing. The
report concludes regards to main auditing concerns of Fiji Airports under prepared statements.
While end part of report conclude about auditing issues under prepared income statement of
Aigiris Ltd.

REFERENCES
Books and journal:
Groomer, S.M. and Murthy, U.S., 2018. Continuous auditing of database applications: An
embedded audit module approach. Continuous Auditing, pp.105-124.
Knechel, W.R. and Salterio, S.E., 2016. Auditing: Assurance and risk. Taylor & Francis.
Shen, J., Shen, J., Chen, X., Huang, X. and Susilo, W., 2017. An efficient public auditing
protocol with novel dynamic structure for cloud data. IEEE Transactions on Information
Forensics and Security, 12(10), pp.2402-2415.

APPENDIX