Business Risks of Woodside Petroleum

Running head: CORPORATE AUDITING
Corporate Auditing
Name of the Student:
Name of the University:
Author’s Note

CORPORATE AUDITING
1
Table of Contents
Part 1................................................................................................................................................2
Difference in role of Auditor, Those Charged with Governance and Management....................2
Misconception Regarding the Role of an Auditor.......................................................................3
Reasons for Suspecting Errors in Revenue recognition principles..............................................4
Fraud Cases..................................................................................................................................5
Part 2................................................................................................................................................6
Business Risks of Woodside Petroleum Ltd................................................................................6
Analytical Procedures..................................................................................................................8
Inherent Risks of the Business.....................................................................................................8
Key Accounts and Assertions......................................................................................................9
Inherent risks Evaluation...........................................................................................................11
Planning Materiality..................................................................................................................11
Reference.......................................................................................................................................13
Appendix........................................................................................................................................15

CORPORATE AUDITING
2
Part 1
To, Mrs. Williams
Audit Manager
Subject: Update Regarding the Risks of Audit and Role of Auditor
Respected Madam
I would like to update you with the risks which we are facing while conducting the
audit of the business and also regarding the facts which indicate that there might be fraudulent
activities in the operations of the business. Th provisions which are stated in ASA 240 makes it
clear that there is a difference in the responsibilities of the auditor and those charged with
governance and the management of the entity itself. All such parties have different role to play
which can ultimately lead to prevention and detection of frauds in a business.
Difference in role of Auditor, Those Charged with Governance and Management
The primary role of an auditor as stated by ASA 240 is to ensure that the financial
statements which is prepared by the management of the company is showing true and fair view
of the financial position of the business. The auditor provides reliance to the stakeholders by
assuring them whether the financial statements are appropriately presented or not and thus
guiding them to take appropriate decisions relating to the business (Auasb.gov.au. 2019).
However, if the auditor notices that there is a material misstatement resulting from fraud in a
business, then the same cannot be ignored even though it is not the primary responsibility of the
auditor. The provisions of ASA 200 make it clear that the auditor needs to consider the
implications of risks which are resulting from frauds especially management frauds (Griffiths
2016). The provisions of ASA 315 states that the auditor shall identify and assess the risks of

CORPORATE AUDITING
3
material misstatement due to fraud at the financial report level. Hence. risk of not detecting the
material misstatement resulting from fraud is higher than the risk of not detecting due to error.
Furthermore, the auditor also needs to maintain an independent approach while conducting the
audit for the business and ensure that the judgement of the auditor is not clouded by anything.
The role of the management and those charge with governance is to ensure that the
financial statements are free from errors or is free from any fraudulent activities. The
management and those charged with governance also needs to realize that it is not the role of the
auditor to prepare or maintain the financial statements and rather it is their role (Chou 2015). In
addition to this, the management and those charged with governance also needs to understand
that the auditor is not an employee of the business and therefore independence of the auditor
while conducting audit for the business is crucial.
Misconception Regarding the Role of an Auditor
The auditor is an individual who conducts independent examination of the financial
statements in order to ensure whether the financial statements are free from material
misstatement or not. In a business or society, there is a misconception that the auditor is
appointed for the purpose of detecting frauds which might be taking place in the operations of
the business. However, this is not the case. The auditor is not responsible for detection of frauds
in the business and would only be concerned regarding the presence of any misstatement or
errors in the financial statement of the business. However, ASA 315 provides that if while
conducting audit procedures, the auditor suspects presence of fraud than he needs to apply more
audit procedures and assertions so that the presence of fraud can either be confirmed or denied.
The auditing standards which are implemented in the business environment needs to be followed
by the auditor while performing auditing procedures for a business. Another major