Auditing Project

This presentation focuses on various aspects of auditing, including audit programs, risk assessment, materiality, sampling procedures, financial report assertions, and the importance of an audit program. It provides insights into the Zicom Group Limited and its audit procedures.

AUDITING
PROJECT

Table of content
• Introduction
• TASK 1
• TASK 2
• TASK 3
• TASK 4
• TASK 5
• TASK 6
• TASK 7
• TASK 8
• Conclusion
• References

Introduction
An audit program means a plan of audit that is documented and according to
which procedures of the auditor depends. Before starting audit procedure an
auditor will make a audit program on the basis of previous year(s) working
papers, size of entity, materiality of risk associated with the relevant industry
and accordingly decide the audit duration, number of audit staff and audit
procedures that have to be followed while doing audit.

TASK 1
• In this project, Zicom Group Limited which is dealing in leading specialist
equipment manufacturing and niche engineering service proving with core
expertise. In this project, we discuss about various risk, material account
balances and sampling procedures applied by the auditor while
performing its audit procedures.

TASK 2
Business risk refers to the possibility that an organisation will have lower
profits than anticipated profits or experience a loss rather than taking a profits.
There are various factors which are associated with it such as : volume of sale,
per unit price, competition, input cost and legal compliances. Zicom Group Ltd
is a leading manufacturer of marine deck machinery, fluid regulating and
material stations, precision engineered & automation equipment etc.

Continue..
• Audit risk : Audit risk arises when auditor of an organisation express inappropriate
audit option on financial statements that contain material misstatement.
• Inherent risk : In financial auditing inherent risk arises, especially while dealing
with complex transactions.
• Control risk : Control risk refers to that risk of inefficiency of organisation
controls to analyse material misstatements in financial statements of company.
• Detection risk : Detection risk is that risk which is arises when auditors fails to
detect a material misstatements in the financial statements.

TASK 3
Analytical procedures are one of many financial audit processes which help
an auditor understand the client's business and changes in the business, and
to identify potential risk areas to plan other audit procedures.

2015-16 2016-17 2017-18
Revenue 111 85 76
Cost of revenue 68 43 40
Gross Profit 43 42 36
Operating expenses:
Sales, general and administration expenses 25 27 32
Other operating expenses 20 26 17
Total Operating expense 48 53 49
Operating Income -5 -10 -13
Interest expense 0 0 0
Other income (expense) 4 5 2
Income before tax -2 -5 -11
Provision for income tax 1 -1 0
Other income 0 0 0
Net income from continuing operations -3 -4 -11
other 0 0 0
Net Income -2 -4 -11
Net Income available for common shareholders -2 -4 -11

2015-16 2016-17 2017-18
Assets:
Current Assets:
Cash:
Cash and cash equivalent 21 18 10
Short term investment
Total Cash 21 18 10
Receivable 13 15 19
Inventories 22 22 28
Prepaid expenses 1 3 0
Other current assets 14 4 7
Total Current Assets 71 61 64
Non Current Assets:
Property, plant and equipment:
Gross property, plant and equipment 57 55 57
Accumulated Depreciation -32 -33 -36
Net property, plant and equipment 25 22 21
Equity and other long term investments 7 9 9
Goodwill 0 7 7
Intangible assets 15 7 7
Deferred income taxes 2 3 3
Other long term assets 0 1 1
Total Non Current Assets 48 48 49
Total Assets 119 109 112
Liabilities And Stockholder's Equity
Current Liabilities:
Short term debt 7 9 18
Capital leases 1 0 0
Accounts Payable 18 15 18
Deferred income taxes 1 0 0
Other current liabilities 4 6 5
Total Current Liabilities 30 31 41
Non Current Liabilities:
Long term debt 2 1 1
Deferred tax liabilities 2 1 1
Total Non Current Liabilities 5 2 2
Total Liabilities 35 33 43
Stockholder's Equity:
Common stock 38 36 38
Other equity 0 0 -2
Retained earning 49 41 32
Accumulated other comprehensive income -3 -2 0
Total Stockholder's Equity 85 76 69
Total Liabilities And Stockholder's Equity 119 109 112

Profitability Ratio
Particulars 2015-16 2016-17 2017-18
Gross Profit ratio (%) 38.84 49.55 47.54
Operating profit ratio (%) -4.49 -12.14 -17.57
Net Profit ratio (%) -1.53 -6.37 -14.92

TASK 4
Materiality means those assets and liabilities whose increase or decrease can impact
the decision regarding financial statements for the users of financial statements and
accordingly the audit sample is made. In material, account balance refers to the size of
recorded account balance in the financial statement and it focuses towards physical
aspects of things. Materiality refers to the errors contained in balances and
transactions while preparing the financial statements of organisation. It is helpful for
the planning purpose.

TASK 5
Particulars Amount
Assets:
Turner, R., 2016 Property, plant and equipment 21301
Intangibles assets 14602
Deferred tax assets 3054
Inventories 28007
Cash and bank balances 9739
Liabilities:
Interest bearing liabilities 664
Long term provisions 414
Deferred tax liabilities 983
Trade and other payables 19122
Gross amount due to customers for contract work 1844

TASK 6
• For listing relevant financial report assertions for selected
material account balances firstly, understand the meaning
of this, which is as follows:
• Financial Report Assertions: It is also referred to as
management assertions, which are explicit or implicit
statements made by a company regarding financial
statements (Hill., 2013). It can be viewed as company's
official statements. When a Zicom Group Ltd's financial
statements are audited, the principal part an auditor
reviews are the reliability of the financial statement
assertions.

TASK 7

TASK 8
For understanding the sampling plan firstly, meaning of sampling should be
understandable which are as:
Sampling: Sampling is the process of selecting units from a population so
that by applying the sample we may fairly generalize our results back to the
population from which they were chosen.

CONCLUSION
From the above report, it has been concluded that making audit program is
important before starting an audit of company as it provides details about
information which should be gathered during the audit of organization.
Further, financial report assertions made by management plays a vital role in
ascertaining the requirement of an audit program.

REFERENCES
• Bodnar, G.H. and Hopwood, W.S., 2012. Accounting
information systems. Upper Saddle River: Pearson.
• Mkoba, E. and Marnewick, C., 2016, September. IT project
success: A conceptual framework for IT project auditing
assurance. In Proceedings of the Annual Conference of the
South African Institute of Computer Scientists and
Information Technologists (p. 26). ACM.

Thank you