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BUS306 Auditing Assignment

   

Added on  2020-05-04

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BUS306 – Auditing
BUS306 Auditing Assignment_1
TABLE OF CONTENTSIntroduction................................................................................................................................3Task 1.........................................................................................................................................3Audit issues to be considered by BUS306 Partners before determination of tendering forthe audit ofCloud 9 Pty Ltd....................................................................................................3Task 2.........................................................................................................................................5Audit issues to be considered while planning of Cloud 9 Pty Ltdby BUS306 Partners........5Task 3.........................................................................................................................................6Reasons due to which the partners at BUS306 are concerned that Cloud9 Pty might havecash flow issues......................................................................................................................6Task 4.........................................................................................................................................8Mitigating factors providing comfort to auditors that Cloud9 Pty will continue and operatewell in future..........................................................................................................................8Task 5.........................................................................................................................................9Assessment of existence of appropriate research effort, referencing and format in auditreport......................................................................................................................................9Conclusion................................................................................................................................10References................................................................................................................................11
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INTRODUCTIONAn audit can be defined as official inspection of an organisation conducted by an independentauditor or audit firm. The requirement of the audit can be statutory or voluntary which variesbusiness to business (Gaynor and et al., 2015). In accordance with audit provisions applicablein Australia; corporate entities are required to conduct on a compulsory basis. The presentstudy is based on the description of audit procedures of Cloud 9 Pty Ltd to be conducted byBUS306 Partners as per the given case scenario. Description will be supported by applicableAustralian audit standards and provisions. TASK 1Audit issues to be considered by BUS306 Partners before determination of tendering for theaudit of Cloud 9 Pty LtdInternational Federation of Accountants (IFAC) Code of Ethics meant for ProfessionalAccountants says that ‘before agreeing to the relationship of new client, a professionalauditor engaged in public practices is required to identify whether an agreement could createan impact on compliance regarding the basic principles’ (West and Andrew, 2017).Same iscited under APES110 Code of Ethics for Professional Accounting and supported by Section210. Possible threats to professional conduct or integrity might be produced from, such asquestionable issues linked with the client like its owner, managerial activities etc. For theacceptance of audit of a new client, the company must examine the possible client (its owner,managerial activities) to determine if or if not there is the existence of any question regardingthe potential client’s integrity, that creates offensive risk. Toy, Alan and David (2015) statedthat this action of examination is generally conducted as knowing the client or customer duediligence, that can be performed so as to act in accordance with regulations of anti-moneylaundering. In respect to the cited provisions of concerned standard following audit issues isrequired to be considered by BUS306 Partners before determination of tendering for the auditof Cloud 9 Pty Ltd:Reputation, background and history of Cloud 9 Pty Ltd: The auditor must collect all theinformation regarding the reputation of the client in order to ensure that the firm is not takingon risky clients (Andon and et al., 2015). Especially, the auditor is required to consider theintegrity of management.
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The divergence of interest:Ensuring that the client acceptance will not create any impact onthe conflict of interest for the existing clients. Along with his, client acceptance must also notcreate any impact on the conflict or threat to freedom, integrity and auditor’s objectives.Audit engagements: In case a company tends to replace its current auditor or to agree with anomination as the auditor’s replacement. Further, the company is required to acquire thepotential clients grant to interact with the existing accountant. In case the potential client isnot providing a grant, then the Code states that company has to decline the nomination or theaudit involvement. If the company gets the permission to interact with the existingaccountant, the company must give in written that, requesting all the information which willallow the company to make better decisions in accepting the nomination or audit involvement(Moroney and Trotman, 2016). ASA 210 of auditing standard requires that the accountantmust comply with the audit engagement with the company, which must be stated in writtenby the accountant and forwarded to the company. The accepted terms shall be stated in theletter of audit engagement or any other viable contractual form. The letter of auditengagement wherever reliable shall contain the arrangements to be made with the predecessorauditor, if any, in the case of an initial audit.Communication Cloud 9 Pty Ltd’s previous auditor: Before agreeing to any of the auditstatement, the auditor must communicate with the predecessor auditor in order to make surethat there is no reason behind not agreeing the audit or there are no fair/legal problems.Nonetheless, the new or planned auditor will ask for client’s permission beforecommunicating with predecessor auditor, and in case the client rejects it, the auditor shall betaken out from the appointment. Before giving a response to new auditors, the previousauditor will ask for client’s permission to give a response and in case the client does notpermit; the new auditor must reject the nomination. Communication done with predecessorauditor is a compulsory necessity, and it has to be completed in a formal manner (Yoon andet al., 2015).Audit engagement shall not be accepted if there is the presence of such situations:Restrictions on analytical procedures and workings to done for the purpose ofcollecting evidenceFinancial reporting structure is invalid
BUS306 Auditing Assignment_4

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