Audit Procedures and Assertions for Key Risks

Auditing
Name of the Student:
Name of the University:
Author’s note:

MEMORANDUM
To: Mr. Jek Porkins
From:
CC:
Subject: Related to audit procedures and assertions with respect to key risks.
Date: 12th September 2019
Introduction
The memorandum is prepared with the objective to discuss with the audit senior of DHL
regarding what are the risk associated with its business as well as to have information about his
accounts affected through the fraud. It discusses about audit work and procedure as well as audit
risks with respect to switchover of new patient revenue system of St Neville. The memorandum
further discusses about several assertions related to risk all due to paying of sales team of Acuity
Vision (Whittington & Margheim, 2014). Further it tends to include implications for control of
environment of DHL including the discussion about several issues that the management of DHL
would consider. The memorandum has emphasized on accounts payable tests with respect to test
of control, assertions for each test , conclusion along with reasons and also involves additional
procedures related to audit that can be performed(Kiesow, Zarvic & Thomas,2014. Moreover,
the memorandum focuses to discuss on key assertions those are at risk with respect to overtime

payment for Pellegrino Shores and it also involves preventive internal as well as detective
internal control measures for addressing the risk ascertained as well as identified.
Due to the fraudness caused by Pellegrino Shores business risk may be diverse and the largest
risk will get to continue for the company of DHL. The business risk that would take place due to
fraudness would cause failure into the business of DHL (Griffiths, 2016). It would take place in
the form of high level of financial risk, issues for cash flow, increase in the cost of production,
loss of profit, decrease in customers as well issues which are legal. The business risk would
impact as per the effect of fraudness by Pellegrino Shores are as follows:
 Due to business risk there is an impact as top down approach to be used in audit along
with the financial statements.
 Business risk would impact into merge of inherit as well as control risk for audit.
 The residual risk arising due to inherent as well as control risk through the impact of
business risk need to get reduced through the action of audit.
 Business risk can impact into the form of analytical process for verifying assertions of
financial statements.
 Business risk might impact into business failure that might lead the auditor to consider
going concern concept of the business client.
 Due to business risk the impact will be due to the fraudness is the audit should make
business more understanding such that large databases containing information is fruitful
(Knechel& Salterio, 2016).
Such business risk would enable the auditor to express further opinion that would be
relevant to financial statements. There should be removal in material misstatements as
well as removal of omission in case of financial statements (Keune & Johnstone, 2015).

The auditor becomes concerned about this business risk occurring as it might impact into
the financial statements and hence complete understanding of business of DHL is needed
to be known by the auditor as well as its risks even. As an impact of this business risk
occurring auditor shall plan the strategy of audit related to the risks of business.
Additional audit work to be undertaken with respect to new political revenue system:
a.) Associated audit risks:
There are audit risks that are associated with newly political revenue system. The risks are
 Inherent risks: This kind of audit risk is associated in the form of procedures to detect the
issues (Ruhnke & Schmidt 2014). The audit work might be in the form of audit plan,
proper approach of audit and strategies of audit. There is an audit plan to conduct internal
audit. The audit approach is used in the form of risk analysis to control internal
operations.
 Detection risks: The auditor should identify and correct misstatements of financial
statements at the time of auditing (Keune, & Johnstone, 2015). As a matter of audit work
there should be proper detection of risk by clear understanding of company, proper
methods to be used for identification of risk of financial report of the business.
 Control risks: As the form of audit work there should be proper investigation as well as
accuracy of financial statements (Chen, 2016). Fraud should be detected and areas should
be identified related to control risks. Proper planning as well as strategy should be made
and internal control should be there for financial reporting.