HI5026 Auditing and Assurance Services
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Holmes Institute Sydney
Auditing and Assurance Services (HI5026)
Added on 2020-03-01
HI5026 Auditing and Assurance Services
Holmes Institute Sydney
Auditing and Assurance Services (HI5026)
Added on 2020-03-01
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Running head: AUDIT, ASSURANCE AND COMPLIANCEAudit, Assurance and ComplianceName of the Student:Name of the University:Author’s Note:Course ID:
1AUDIT, ASSURANCE AND COMPLIANCETable of ContentsAnswer to Question 1:.....................................................................................................................2Answer to Question 2:.....................................................................................................................4Answer to Question 3:.....................................................................................................................7Answer to Part A:........................................................................................................................7Answer to Part B:.......................................................................................................................10References:....................................................................................................................................11
2AUDIT, ASSURANCE AND COMPLIANCEAnswer to Question 1:The analytical method pertaining to the financial information of DIPL could enable inpreparing the audit plan. Such plan could be adjudged as a specific guideline, which is requiredto be followed during the undertaking of audit. Specifically, this enables the assessor to maintainthe overall cost of audit at an effective level, which helps in minimising understanding with theclients (Zureigat 2015). The analytical approach to the financial announcements of DIPLindicates the procedure of information dissemination from the same. Such evaluation methodcould be conducted by using a group of mechanisms. However, with the help of analyticalmethod of evaluating financial announcements, various financial analysts as well as accountantscould decipher information for enabling in arriving at crucial business decisions (Barr-Pulliam etal. 2017).The common sizing analytical method enables in assessing the financial announcementsto a common point of reference. As a result, the financial statements could be contrasted inrelation to various timeframe or in relation to various entities. The assessors could consider thevarious item lines depicted in the financial report along with their method of reporting. Forinstance, the method of registering items like assets, liabilities and owner’s equity in the financialreporting of the organisation along with investigating digression from usual scenario (Bayer andCowell 2016). Benchmarking is considered as an analytical process and it could be used furtherfor the assessment of audit plan. The variance of the real financial declaration from the yardstickenables in recognising the deviation and it assists in evaluating the reason of the identifiedvariance. Along with this, ratio analysis could be adjudged as an effective analytical method,
3AUDIT, ASSURANCE AND COMPLIANCEwhich could be used for contrasting financial declarations coupled with the assessment of auditplan (Bepari and Mollik 2015).Explanation:The outcomes of the planning decisions related to audit planning is influenced primarilythrough the outcomes of analytical method to disseminate information from the financial reports.The following ratios have been taken into consideration:Particulars201320142015Solvency ratio0.620.440.21Profit margin0.0680.600.06Current ratio1.421.461.50The above table signifies that the current ratio of DIPL has increased over the years. Onthe other hand, the profit margin has been observed as fluctuating over the years. With the helpof this ratio, the net profit of an organisation could be compared with the overall revenuesgenerated (Bryce, Ali and Mather 2015). However, this could carry immense value to theassessor in obtaining an overview of whether the expenditures are greater or lower and whetherthe management of the organisation has the need to reduce budget and overall expenses of thesame. Any favourable or unfavourable change in the ratio could be utilised as a referential factorto assess the soundness of financial condition of DIPL. For example, the solvency ratiocomputed in the above table helps in depicting the favourable as well as unfavourable trends inthe overall financial position of the firm. In a similar fashion, the contrast of ratios over the yearswould provide an insight of clearing both short-term and long-term obligations of the business.Hence, the auditors could gain an insight of the relative position of DIPL over the years along
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