The Impact of Audit Committee

Running head: AUDITING THEORY AND PRACTISE
Auditing theory and practise
Name of the student
Name of the university
Authors note

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Table of Contents
Part 1..............................................................................................................................2
Answer to question 1..................................................................................................2
Part 2..............................................................................................................................8
Answer to question 2..................................................................................................8
References....................................................................................................................15
Appendices...................................................................................................................18

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Part 1
Answer to question 1
To Miss Williams
Subject: risks of material misstatements due to fraud
Respected madam
In the response to your query over material misstatement over the fraud of the audit
report based on the auditor and the government role, I personally believe that the as per the
auditing standards of ASA 240 the risk assessment of the potential investors are very much
significant to the case and the fraud detection is higher than the risk statement is not detected
from the error. Hence failure to the transaction could well be making certain auditor
misrepresentation. The auditor concealment may be difficult to detect when accompanied by
the solution. Hence in order to explain the management responsibility towards the
government and the auditor the differences can be recorded as follows-
Auditor
The management assignment related to the risk of material misstatement may be
misled due to fraud which includes the nature, expert and the frequency of such assessment
(Martinez, and Lessa, 2014).
The overall management process is related to the risks identification responding to the
frauds in the entity which includes the specific management have identified or have been
brought to the attention for which the risk stature is likely to exist.
The management communication if charged to the government for identifying the risk
of the fraud of the entity (Cullen et al., 2017).

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The overall management communication is related to the management exposure
towards the business practices and ethical behaviour.
The auditor of the company on the other hand will be making enquiries to the
management to see whether the knowledge base is actual, suspicious or alleged fraud which
could affect the management.
On the other hand in the case of the internal audit function the auditor he shall make
enquiries the management to determine whether the knowledge of any individual, suspected
or fraud is effecting the country or not.
Governance
As per the governance is concerned they are involved in engaging with the entity.
Hence it is important for the auditor to oversight the effective management risk process while
identifying and responding to the fraud of the risk entity and look to mitigate the same.
Unless all the charges are imposed to the management entity, the management must
look to determine the fraudulence which could affect the entity. Hence the basic difference
lies between the fraudulence identification and the possible risk factor which could affect the
scenario.
Misconception in the auditor role
The auditor misconception to the auditor roles and responsibilities happens to be a big
issue. Hence an auditor if conducting an audit as per the audit standard for obtaining some
reasonable assurance in the financial report is considered as the material misstatement
whether being caused by the error or fraud. Thus due to the audit limitation any risk related to
the material misstatement on the financial report to be detected though it is properly planned
and managed by the auditing standards of Australia .

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The inherent limitation are significant to the misstatement resulting the fraud. The
overall risks for not detecting the fraud is higher than the risk inherence. Hence the fraud may
be sophisticated and properly organised to conceal it. The collation may occur to the auditor
in pursuance of the evidence. Thus the detection of the fraud depends upon the skilfulness of
the auditor, the overall frequency and the manipulation to the process could fill with the
possible opportunities over seniority of the Individuals. Thus the auditor finds it difficult to
match the auditor perspectives as a whole. Therefore it becomes tough for the auditor to chalk
out the errors (Chan et al.,2016). As per the ASA 200 potential reporting source the overall
audit limitation is maintained properly. Hence the auditor misconception is been properly
realised with the amounts placed and utilised.
Furthermore if the audit is not properly maintained by the auditor then for that case
there is a overall misconception is made over the audit report. Thus the management is
frequently in a position to directly or indirectly manipulate those data and to present the same
to override the information and to control the procedure which have been designed to control
the similar frauds conducted by the employers (Huang et al.,2014).
On the other hand it can be said that by obtaining the assured risk matrices the auditor
is only responsible to generate and maintain the audit scientism throughout the whole process
of audit. Thus by considering the overall potential for the management effectiveness at the
time of detection of the fraudulence will not be properly effective. Thus the audit
requirements will be helpful to the auditor to identify and manage the best possible risks
status over the material misstatement and the designing procedures to mitigate those risks.
Risk factor related to the material misstatement of the entity
The material misstatement is an important factor as per ASA 240 standards. Hence it
is important for the company auditor to assess the best possible risk factors over the material

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misstatement. Thus there is a need of the proper audit evidence to manage the possible risk
exposure as well as to identify the suspected audit fraudulence factors. Hence there are many
reasons for the investor to recognise the basic risks related factors over revenue recognition
factors. These reasons are been described as below-
Professional scepticism
As per the ASA 200 standard the auditor needs to maintain the professional
scepticism throughout the overall audit report which would be important to recognise the
possibility that the material misstatement could be emerging. Now with the auditors past
experience toward the honesty and integrity of the entry management charged in the
governmental process.
Unless there is a chance of contradiction the auditor may look to accept the audit
report as genuine. Hence if the conditions are not valid and the auditor is suspicious over the
audit report, he could look to investigate bit more. Hence in the case of Woodside petroleum
limited the company audit standard are very much useful as per ASA 240 audit fraudulence.
Hence for this company the company auditor could go for further investigation if the said
report is not proper to him.
Discussion among engagement team
As per ASA 315 article there is a discussion needed from the management and
responsibility team which matters to be a part of the communication and discussion forum.
Hence this area shall place particular emphasis over the financial report of the concern.
Hence the major area to focus is on the material misstatement is stated on the fraudulence.
Hence the discussion might occur by setting the beliefs on the engagement with the team
members. Hence for the Woodside petroleum company the discussion team plays an