Auditor Reporting in Fortune Asia Group Ltd

This report elaborates on the aspect of auditor reporting in Fortune Asia Group Ltd. It discusses the independence of the auditor’s report, non-audit services, and the auditor’s remuneration. It also delves into the roles, makeup, and functions of the audit committee. The report concludes by giving out a summary of findings obtained based on the auditor’s report as elaborated in the financial annual report of the organisation.

NAME:
INSTITUTION;

Executive Summary
This report will aim at elaborating on the aspect of auditor reporting in Fortune Asia Group
Ltd. The report will try to discuss the independence of the auditor’s report, the non audit
services performed by the auditor and the auditor’s remuneration. The report will also delve
into the roles makeup, and functions of the audit committee. The report will conclude by
giving out a summary of findings obtained based on the auditor’s report as elaborated in the
financial annual report of the organisation

Table of Contents
Introduction............................................................................................................................3
The compliance of Fortune Asia Group Ltd with the independent requirements.................3
The difference between the management’s responsibilities and the auditor’s
responsibilities........................................................................................................................3
Non-audit services..................................................................................................................4
Audit committee.....................................................................................................................4
Auditors Remuneration..........................................................................................................5
Auditors opinion.....................................................................................................................6
Missing material information or underreported information...............................................6
Conclusion..............................................................................................................................7
References..............................................................................................................................8

Introduction
It has been observed that every organization our days require an auditor in order to analyze
the financial statements of the form because of the vulnerable and risky nature that is faced
by them in relation to the accounts. An effective corporate governance structure should also
be present and a Company shows that the evaluation of material risks can be made which
will further help to enhance the reputation of the organization. This report consists of a
detailed analysis of Fortune Asia Group Ltd and the role that has been played by the auditor
in order to give a better understanding of the accounts of the firm. Fortune Asia Group Ltd is
a very renowned company in Australia and is also listed on the Australian Stock Exchange.
The information that has been provided by the company was true and fair in nature which
has helped to assess the company's performance in an elaborated manner.
The compliance of Fortune Asia Group Ltd with the independent requirements
It is of major importance that ASX listed companies adhere to proper accounting practices
and standards. The major objective that was to be achieved by the organization and auditor
was to make sure that the financial statements of the organization are free from any kind of
material misstatements. Any fraud or error that has taken place in the financial accounts of
the organization should be detected by the auditor and stated in his audit report. It is not
always possible that the auditor will find each and every liability present in the accounts of
the organization with the help of ASX auditing standards. The misstatements can take place
individually or in a group because of which the independent decision making of the users of
the accounts can be hampered.
The difference between the management’s responsibilities and the auditor’s
responsibilities
The major responsibilities carried out by the organization management with regards to
auditing process is to look after the cost aspect of the auditing process, and to provide a
suitable environment for the auditor to carry out his activities without any interference. The
auditor is needed to provide a transparent, unbiased and professional report of the financial
condition of the company and also the fairness of the statements that have been provided
in order to provide them to the public so that they can use it to make further investing
decisions. The task of accounting and management body is to look after the positivity of all
the policies and portfolios that have been adopted by the organisation in order to conduct

smooth business where are you did the job of auditors to find any type of Indians that is
present in the accounts of the organisation that may cause the uses of the documents to
make unethical decisions. If all these objectives are carried out in a proper way, a very
elaborated and ethical financial report will be conveyed to the shareholders and investors. It
is the sole duty of the auditor to make sure that all information provided in the financial
statements of the organization is true and faithful in nature. The management should
always try and maintain all the assets and liabilities of the organization in the best possible
manner. Therefore, it is very important to maintain the transparency of the records and also
to represent the financial report in a positive manner that is the responsibility of both the
auditor and management staff of the organization. The two parties have to play their roles
to ensure that reliable financial statements are provided for to the relevant users. After all,
it is from these records and information given that the organisation will expect their
stakeholders both internal and external to use to make key decisions going forward.
Non-audit services
The non-audit services that have been provided by the auditor have not loan against any
principles of the code of ethics of professional accountants. Thus the non audit services
didn't involve any kind of review of auditor’s own work, decision-making function of the
company or acting in the management, or acting as an advocate to the company for
removal of risk or earning rewards. It was also observed during this financial year that one
of the related companies auditors try to provide them with additional audit services. The
number of fees that is payable to the auditor for the non-audit services provided by him to
the organization has been clearly mentioned in the note 11 of the financial statements of
the organization. Also, clear analysis of all the risk and fraudulent factors have been made
by the management of the organization so that it can be ensured that no unethical means
have been used by the auditor while performing the non-audit services for the organization.
Audit committee
An audit committee is considered as an essential committee in a board of any reputable
organisation. It has the key mandate of ensuring that financial reporting standards and
disclosure are properly adhered to (Badolato and Donelson, 2014). In most countries not
only Australia, a company cannot be listed in the stock exchange market if it does not have a
qualified functioning auditing committee in place.

By the virtue of the company being listed on the Australian stocks Exchange, it is assumed
that Fortune Asia Group Ltd has a functioning auditing committee. It is also indicated in the
financial report that there is actually an existing audit and risk management committee. By
the virtue of the existence of the committee, it can be seen that there is an auditing
committee chatter, which governs and dictates the membership and roles of the auditing
committee. However, there was limited information with regards to the auditing committee
chatter used by the organisation. From the composition of the committee in Fortune Asia
Group Ltd it can be noted the members of the auditing committee are non-executive board
members which further signifies independence from the main company board.
Auditors Remuneration
Auditor’s remuneration is defined as the amount payable to the auditor for carrying out his
services and any other non auditing services provided assigned by the organisation (Asien,
2015). Normally the remuneration is set by the general meeting or the board of directors.
Description Year
2016 2017
$000 $000
Audit services 32,185 31,509
Tax compliance and advisory services 4,883 1,845
37,068 33,354
From the financial report, it can be noted that the total auditing fees incurred by the
organisation rose by over 11% as compared to a similar financial period in the previous year.
The audit services fees rose by 2%. The biggest chunk of the increase arose from the Tax
compliance and advisory services which rose by over $3000.
The efficiency of the material information that is disclosed by the auditors
It was clearly observed after the analysis of the financial report of Fortune Asia Group Ltd
that no material information that was disclosed by the auditors was having any loopholes
present in them. But, it should also be noted that proper transparency was not maintained
in the material information that was provided by the auditors which show the
ineffectiveness of the information provided. The main reason behind this can be the fact
that more attention was exerted only on selected topics which made the more fundamental

and important topics to become inefficient in nature. The major information that was
depicted in the auditing report was not at all useful for the analysis of financial information
by the investors and the shareholders of the company which has made it hard for them to
conduct proper decision-making processes for the purpose of investment. The details about
attempted to describe the reasons behind the adoption of these major factors in the audit
report to the users in order to make it relevant. This was the positive aspect that was shown
by the auditors in order to clear the doubts of the users of the financial data. It should also
be clearly noted by the organization that any kind of investments that have been made by
the organization should be recorded efficiently in the organization's financial detail so that
the liabilities and assets can be recorded in a better position. Hence it can be concluded that
the presentation of footnotes will not be assessed in proper decision making on the part of
users. These footnotes will only provide with inessential information that may cause
hindrances in the future for the users of the information because of which it is very
important for the auditors to present a detailed analysis that can be used by the
shareholders and investors of the organization to make significant and important decisions
in relation to the investment strategies.
Auditors opinion
An auditors opinion can be described as; a qualified, unbiased and independent outlook
made by the auditor with regards to the financial reporting of an organisation, and how that
particular organisation has conformed with the set accounting practices and standards
(Gajevszky, 2014).
It can be noted that from the auditor’s notes in the financial statements of Fortune Asia
Group Ltd, the opinion given in this regard was an unqualified opinion. This means that the
organisation met the accounting standards as prescribed by the Australian Accounting
Standards and the Corporations Regulations 2001
Missing material information or underreported information
It should be noted that the auditors have created footnotes and notes in order to help the
investors to make decisions based on them. But, not all the information that was conveyed
using these footnotes was useful in nature. Proper footnotes also were not issued in relation

to the financial statements of the organization which states it to be a negative indicator for
the auditing process.
The users who are not able to analyze the financial statements of the organization like
balance sheet, profit and loss account, cash flow statement, etc. use the footnotes in order
to analyze the business of the organization and then make investment decisions based on
them. Therefore, it was very important for the auditor to present a footnote in a proper
manner so that all the data that is required for the purpose of decision making is disclosed
and the data can be further used by the shareholders and the investors of the organization
in order to assess the business strategies. It has been observed in the auditing statement
that the organization have disclosed a lot of non-material information in the financial
statements which are not needed to be disclosed and may cause harm to the firm by
exploitation of data. However, this information has to make the auditing report of the
organization look more quantitative by depicting the conceptual framework of the
organization in accordance with relevance, materiality, reliability, etc. Hence, it is very
important for the organization to disclose all the information so that the proper decision-
making process can be carried out by the investors and shareholders.
Conclusion
It can be clearly analyzed by the annual report that the auditors were not effective in
disclosing all the information that was provided to them, which resulted in them to become
deviated from the ethical standards which were needed to be kept in mind by them at the
time of auditing. The organization's management and directors have also promised to fulfil
all the necessary rules and regulations that are needed to be conducted for the audit
procedures. It was observed that some information was disclosed by the non-audit services
provided by the same auditors who have conducted the sitting process. After the
assessment of the information, it can be understood that the internal control mechanism of
the organization is strong and can handle any future risk that may question the integrity of
the firm to safeguard itself in future. There are also some material information’s that have
been placed wrongly in the financial statements of the organization that will need attention
in short notice.

References
Asien, E.N., (2015). Firms' attributes determining auditors' remuneration: empirical evidence
from Nigeria. International Journal of Auditing Technology, 2(4), pp.297-315
Arens, A. A, Best, P. J, Shailer, G. E. P & Loebbecke, J. K. (2013) Assurance Services and
Ethics in Australia, 9th ed, Australia: Pearson.
Badolato, P.G., Donelson, D.C. and Ege, M., (2014). Audit committee financial expertise and
earnings management: The role of status. Journal of Accounting and Economics, 58(2-3),
pp.208-230.
Gajevszky, A., (2014). The Impact Of AuditorS Opinion On Earnings Management: Evidence
From Romania. Network Intelligence Studies, 2(1), p.3.
Geoffrey D. B., Joleen K., K. K.S., and David A. W. (2016). Attracting Applicants for In-House
and Outsourced Internal Audit Positions: Views from External Auditors. Accounting
Horizons. [online]. 30(1), p.143-156. DOI: https://doi.org/10.2308/acch-51309
Livne, G. (2015) Threats to Auditor Independence and Possible Remedies [online]. Available
from: http://www.financepractitioner.com/auditing-best-practice/threats-to-auditor-
independence-and-possible-remedies?full [Accessed 7 September 2018]
Mock, T. J., Bedard, J., Coram, P., Davis, S., Espahbodi, R. and Warne, R. (2013) The audit
reporting model: Current research synthesis and implications. Auditing: A Journal of
Practice and Theory. [online]. 32, pp. 323-351. DOI: https://doi.org/10.2308/ajpt-50294
Parker, L., Guthrie, J. and Linacre, S. (2011) The relati onship between academic
accounting research and professional practice. Accounting , Auditing &
Accountability Journal. [online]. 24(1), pp. 5-14. Available from:
http://media.accountingeducation.com/1304/Parkeraaaj24(1).pdf [Accessed 14
September 2018]
Roach, L. (2010) Auditor Liability: Liability Limitation Agreements. Pearson.

Wood, D A. (2011) The Effect of Using the Internal Audit Function as a Management Training
Ground on the External Auditor's Reliance Decision. The Accounting Review. [online] 86(6),
2131-2154. DOI: https://doi.org/10.2308/accr-10136