Auditing Theory and Practice Case Study 2022

Running head: AUDITING THEORY AND PRACTICE
Auditing Theory and Practice
Name of the Student:
Name of the University:
Author’s Note
Table of Contents

AUDITING THEORY AND PRACTICE
1
Introduction......................................................................................................................................2
Requirement of Case A....................................................................................................................3
Part a............................................................................................................................................3
Part b............................................................................................................................................3
Requirement of Case 2.....................................................................................................................4
Part a............................................................................................................................................4
Part b............................................................................................................................................5
Requirement of Case 3.....................................................................................................................5
Part a............................................................................................................................................6
Part b............................................................................................................................................6
Part c............................................................................................................................................7
Conclusion.......................................................................................................................................7
Reference.........................................................................................................................................8

AUDITING THEORY AND PRACTICE
2
Introduction
The process of Audit is followed by a business in order to ensure that financial statements
are showing true and fair view of the financial position of the business. The process involves
independent examination of the financial statements in order to ensure that proper regulations are
maintained and appropriate accounting standards are followed while preparing the annual reports
of the business. The auditing process is mainly concerned with the accuracy of the financial
statements and appropriate presentation of the same. The report would be dealing with different
aspects which are related to auditing such as compliance with ethical standards, audit risks and
process of confirmation from the debtors of the business. The assessment consists of three case
studies which is related to different issue and the same would be discussed in the assessment.
The firs case study is related to determination of audit risks and materiality considerations in
relation to the audit of MaxSecurities. The second case study deals with the strength and
weaknesses which is associated with debtor confirmation regarding the balances which is shown
in the records. The third case is related to ethical issues which is faced by Meg and also the audit
opinion and recommendation which is provided to the business.
Requirement of Case A
Part a
The discussion which is carried out in this section would mainly be relating to the major
inherent risks which is faced in the audit of MaxSecurities and the same would be including the
industry risks and entity risks. The business of MaxSecurities is engaged in the business of
manufacturing of high-tech armour-plated personal carriers and the operations of the business are
considered to be highly specialised. As the operations of the business is specialised, therefore, it
is important that the management of the company maintains confidentiality relating to the
designs and intellectual property which is used by the business (Auasb.gov.au., 2019). This
further indicates that the accounting process of the business would also be a bit complex and
therefore it is imperative for the business to ensure that the information which is provided are
showing true and fair view. It is also important that appropriate accounting policies and practices
are followed in the business. The major risks which is faced by the business is related to presence
of material misstatement in the financial statements.