Evaluation of Auditing Services Provided by Azure Minerals Limited

The report evaluates the auditing services provided by Azure Minerals Limited, including compliance with independence requirements, non-audit services, remuneration of auditors, key audit matters, and the effectiveness of the audit committee. The financial report of Azure Minerals Limited has been analyzed in the concerned area of interest.

Running head: AUDITING THEORY AND PRACTICE
Auditing theory and practice
Name of the University
Name of the student
Authors note

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AUDITING THEORY AND PRACTICE
Executive summary:
The current paper illustrates the evaluation of the assurance services provided by the auditors of
one of the companies listed on the Australian stock exchange. For presentation of analysis of the
auditing services, the report incorporates discussion on the analysis of independent auditors
report, declaration of independent auditors, and remuneration of auditors, non audit services, and
evaluation of audit committee in terms of its composition, functions and responsibilities. In
addition to this, the key audit matters have been evaluated along with identifying the associated
procedures of conducting the audit. For the purpose of analysis, the financial report of Azure
minerals has been adequately analyzed in the concerned area of interest.

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Table of Contents
Introduction:....................................................................................................................................3
Discussion:.......................................................................................................................................3
1) Evaluation of the auditor’s assurance services:...........................................................................3
2) Evaluation of Compliance of auditors with independence requirements:...................................3
3) Nature of non audit services:.......................................................................................................3
4) Analysis of remuneration of auditors:.........................................................................................3
5) Evaluation of key audit matters:..................................................................................................3
6) Evaluation of audit committee:...................................................................................................4
7) Audit opinion expressed:.............................................................................................................4
8) Difference between the responsibilities of management and auditors:.......................................4
Conclusion:......................................................................................................................................4
Reference list:..................................................................................................................................4

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Introduction:
The report is prepared for analyzing the auditors section as reported in the annual report
of one of the companies listed on Australian stock exchange. Evaluation of the assurance
services of auditors have been done in the context of selected company that is Azure minerals
limited. Azure minerals are one of the leading mineral exploration company of Australia having
a proven mine building credentials and proven mineral discovery and operating at the
international level. The company is progressing towards the advanced stage of Oposura project
which is located in one of the premier mining districts of Mexico. The information regarding the
assurance services provided by the auditors have been extracted from the annual or financial
report of the company. Some of the areas relating to the section of auditors of Azure minerals
that have been evaluated include compliance of auditors with the independence requirements,
analysis of key audit matters, analysis of auditor’s remuneration, auditor’s opinion and assessing
the effectiveness of the material information ascertained by the auditor (Köhler et al. 2016). For
the purpose of analysis, information has been gained from the annual report of the company for
current as well as previous year.
Discussion:
1) Evaluation of the auditor’s assurance services:
The responsibility of auditors of listed company is to obtain the reasonable assurance of
the fact that the financial statement does not contain any material misstatement. Such assurance
provided by the auditor is a high level of assurance that the conduction of audit have been done
according to the requirement of Australian auditing standards and they would be able to detect
existence of material misstatements (Alzeban and Sawan 2015). However, such reasonable
assurance does not act as guarantee to ensure the users of financial statements. The assurance

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services of auditors of Azure minerals limited have been conducted in accordance with
Australian auditing standard. In addition to this, the audit evidence obtained by auditor is
appropriate and sufficient that forms a basis of opinion.
2) Evaluation of Compliance of auditors with independence requirements:
The evaluation of the compliance of the independence requirement by auditor is
evaluated by analyzing the statement about independence of auditors. It is declared by the
auditors in the annual report for the year ending 30th June, 2017 that there have been non
contraventions regarding the applicable code of in relation to then professional conduct of audit.
In addition to this, there have not been any contraventions regarding the requirement of
independence auditors according to the Corporation Act, 2001 (Khaneja et al. 2017).
3) Nature of non audit services:
It is the description of Azure minerals limited to decide on the employment of auditors on
assignments that is additional to the duties of statutory audit where the experience and expertise
of auditors within the group or company are important. The annual report sets out the details of
the amount paid for the non audit and audit services provided. The board of director of Azure
minerals limited has considered and has considered the advice according to what it has received
from the audit committee. They are satisfies that the non auditing services provision is
compatible with the general independence standard relating to the auditors that is set out in the
Corporations, Act 2001 (Austin and Herath 2014). It has been found that the independence
requirement of the Corporations Act, 2001 auditors has not been compromised. This is so
because the audit committee has reviewed all the non audit services that help in ensuring that the

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objectivity and impartiality of auditors is not affected. In addition to this, the general principle
concerning the independence of auditors that is set out in the “APES 110 code of ethics for
professional accounts” is not undermined by any of the non auditing services. The non audit
services provided by the auditors of Azure minerals limited include taxation services and audit
related services (Chou et al. 2014). Taxation services include the tax compliance services and
BDO corporate tax (WA) Pty Ltd and audit related services include attendance at annual general
meeting and BDO audit (WA) Pty Ltd.
Auditing fees for non audit services
(Source: Azureminerals.com.au 2018)

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4) Analysis of remuneration of auditors:
The table below depicts the total amount of remuneration that is paid to the auditors of
Azure minerals limited for providing the auditing services. In addition to this, the auditors
receives additional amount of fees for offering any non audit services. The total amount that is
receivable by the auditors of company for auditing services such as conducting review of the
entity’s financial report, tax compliance services and reviewing or auditing the financial report of
subsidiaries (Morawska and Staszkiewicz 2016). The total amount of remuneration paid to BDO
audit (WA) PTY Ltd is recorded at $ 37885 and $ 37622 for financial year 2017 and 2016
respectively (Azureminerals.com.au 2018).
Remuneration of auditors:
(Source: Azureminerals.com.au 2018)
5) Evaluation of key audit matters:
It is required by the listed company’s auditors to report on the key audit matters as they
are the most significant components of in the auditing of the financial report of company. The
audit matters recognized was addressed in the context of financial report auditing as a whole.

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Key audit matters Addressing of key audit matters
The key audit matter that has been recognized by
the auditor is recoverability of the expenditure
relating to the capitalized exploration.
It has been found from the notes to the financial
statement that the carrying value of capitalized
expenditure is recorded at $ 6131024 and $
6104133 for year ending 2017 and 2016
respectively.
Management according to the AASB 6 evaluation
and for exploration of mineral resources is required
to make significant judgment for recovering the
evaluation and exploration expenditure for
determining the existence of circumstances and
facts that recoverable amount is less than the
carrying value of assets (Abernathy et al. 2016).
It is due to this, such expenditure is considered as
audit matter.
The following presents the auditing procedures for
providing assurance over such key audit matter
which are listed below.
 Azure minerals make the assessment
about the tenure rights of the concerned
area of interest at the balance date along
with obtaining the schedule.
 It is required to take into account
whether such area of interest has
reached the stage that seeks reasonable
assessment of existence of reserves that
are economically recoverable.
 The status of ongoing programmes of
exploration is considered in respect of
area of interest by reviewing the
exploration budget of the group, holding
discussion with the management,
minutes of director and announcements
of ASX (Bédard et al. 2018).
 The adequacy of related disclosures in
the note eleven and three of the financial

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report is assessed.
 In addition to above, it was required to
make suggestion of impairment testing
by taking into account the existence of
circumstances and facts (Chiang 2016).
6) Evaluation of audit committee:
Structuring of the audit committee should be done in such a way that it consists of
majority of independent directors, non executive directors which should be chaired by an
independent chair and there should be at least three such members who are not the chair of the
board.
An audit committee charter has been adopted by the management of Azure minerals
limited and the composition, roles, responsibilities and functions of audit committee is described
by such charter. For the appointment, selection and rotation of external auditors is done by the
establishment of procedure. During the reporting period, two meetings should be held by audit
committee who has shown their attendance. This separate audit committee was established by the
board to review and monitor the financial report integrity (Bowlin et al. 2015).
Composition of audit committee:
The audit committee of Azure minerals has been established by the board that comprised
of two non executive independent directors that is Wolf Martinick and Peter Ingram. Since the
committee has only two members, it is said that the structuring of audit committee have not been

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AUDITING THEORY AND PRACTICE
done according to the recommendation 4.2 (Azureminerals.com.au 2018). However, it is
considered by the board that the composition of committee is appropriate.
Function of audit committee:
The primary function of audit committee is to assist board in relation to fulfillment of
responsibilities concerning the accounting and reporting practices. Other functions that are
performed by the audit committee are as follows:
 The audit quality of external and internal auditing of financial report is overseen,
coordinated and appraised by auditor committee.
 The independence and effectiveness of external and internal auditors are determined by
the audit committee.
 Audit committee is responsible for determining the adequacy of financial report and
conducting the reviewing of accounting control (Kamath et al. 2018).
Responsibilities of audit committee:
 It is the responsibility of the audit committee to review the performance of external
auditor on an annual basis and making recommendations on the same to the board
(Morawska and Staszkiewicz 2016).
 An independent review of the financial information should be conducted by auditors for
external reporting. For this purpose, they are required to form an opinion on the report of
director, annual financial statements and financial report that are produced externally
(Brennan and Kirwan 2015).

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 Audit committee is responsible for appointing, reviewing and assessing the arrangement
of internal audit and they should consider the internal audit findings and responses of
management.
 The integrity and effectiveness of the process of financial report is monitored by audit
committee.
7) Audit opinion expressed:
The financial report of the Azure minerals along with its subsidiaries have been
comprising of consolidated statement of profit and loss other comprehensive income,
consolidated statement of financial position, consolidated statement of changes in equity,
consolidated statement of cash flow, declaration of directors, summary of considerable
accounting policies and notes to financial statements as on 30th June, 2017 have been audited by
the independent auditor. The auditors of Azure mineral have formed the opinion about the
financial report that the report prepared complies with the Corporation Act, 2001 and gives a fair
and true view of the financial performance for the year ending 2017. In addition to this, financial
report also complies with accounting standards of Australia. The basis of opinion is that auditing
has been conducted according to the auditing standards of Australia and complies with the
ethical requirements of ethical standard board and accounting professional of APES 110 Code of
ethics. Auditors have fulfilled their responsibilities of meeting ethical requirement according to
the code (Auasb.gov.au 2018).

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8) Difference between the responsibilities of management and auditors:
The director of Azure minerals is responsible for preparation of financial report
according to the Corporation Act, 2001 and Australian accounting standards that gives a true and
view. Furthermore, they have the responsibility of designing the effective internal control system
that is considered essential for the preparation of financial statements that do not contain any
material misstatement resulting from fraud activities or errors and thereby giving a fair and true
presentation of the report. The assessment of the ability of Azure minerals to continue as a going
concern is the responsibility of directors. The accounting system of group incorporates the basis
of going concern unless the director does not intend to cease the operations and liquidate the
group (Shaukat et al. 2016).
The auditor’s responsibility differs from that of director or management of organization
in terms of obtaining reasonable assurance about the financial report that it does not contain any
material information and represents the fair and true view. Existence of material information that
misrepresents the financial statements tends to influence the users economic decision. The
remuneration report is prepared by the directors of company according to the section 300 A of
the corporation Act. Auditors on other hand have the responsibility of auditing the remuneration
report and forming the opinion in the same in accordance with the Auditing standard of Australia
(Sharma 2015).
Conclusion:
The section of conclusion depicts the assessment of the material information
effectiveness as reported by the auditor of Azure mineral limited. It has been found that there is
no material exposure of company to the credit risk relating to the trade receivables. The
information presented by the auditors is not materially inconsistent with the knowledge of audit

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AUDITING THEORY AND PRACTICE
and financial report. A considerable role is played by the auditors in providing assurance services
in relation to the financial statements of company for presentation of true and fair view of
financial information. The annual report illustrates the responsibility of directors and auditors in
relation to the financial report. Furthermore, it has been found by the auditor that there exists
materiality in the expenditure relating to the exploration of mineral resources.

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AUDITING THEORY AND PRACTICE
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