HVN Audit Analysis

Running Head: HVN AUDIT ANALYSIS 1
Harvey Norman Limited Company Audit Assessment
Name
Institution

HVN Audit Analysis 2
Background
Actually, this financial, analysis report is intended for the Harvey Norman Company which is
a reputable company in Australia. It’s a multi-national retail entity that provides furniture,
computers, and customer products linked to electrical gadgets and many more. The main
objectivity of the reports creation if assisting the company’s audit and evaluation of the
company’s materiality, which will be effective for auditors in assessing vital financial
accounts utilizing precise quantifiable materiality approximation techniques. Moreover, other
detailed data on the company’s disclosures highlighted in the annual financial reports have
been critically assessed taking into account the major issues based on the auditing
perspectives (ACCC. 2011). Consequently, there will be a concise review of the firm’s ratios
and its trend in variance where data from the last 4 years were computed. Hence,
consideration of accurate audit assertions and the audit procedures have also been included in
the report. Lastly, the report will specifically highlight on the balance sheets, and profit &
loss account statements, pointing out if there is an acute account which must be pointed out
(CARTWRIGHT, 2012).
Discussion and Analysis
Thus the company in our topic discussion is Harvey Norman limited operating in Australia.
Moreover, the company operates HVN including other branded stores within the Australian,
Singapore, New Zealand, Slovenia, Singapore, Ireland, and Croatia. Thus section
incorporated revenue acquired through the company’s franchise business. The company is
currently the largest retailer in provision of computer hardware, furniture and other products.
Consequently, the company takes hold of portfolio assets investments that entice rental
income based from the third parties and the franchise business. Additionally, HVN comprises
of 5420 employees and ranked as number 124 amid 2000 firms in Australia. Most of the
company’s income comes from the store-based retail business.

HVN Audit Analysis 3
Quantification of Materiality level
Generally, materiality for a business organization specifically entails something crucial and
essential which has the capability of influencing stakeholder’s decisions. Therefore for audit
evaluation, materiality is very crucial in achieving its objectives in a concise manner since
this is always the first step that should be considered during audit event planning. Moreover,
materiality aids auditor in comprehending the opportunity of an entity specifying the level,
and foreseeing the samples, vouching, and other additional assessments which are required to
be executed. It additionally aids in pointing out the crucial elements, thus cannot be handled
to unimportant. Therefore, with the objectives and intention of stating and computing
materiality, certain bases and benchmarks should be incorporated. Therefore according to
HVN’s materiality assessment, bases such as the gross profit, equity levels, total number of
assets, net profits and the percentage gross revenue will be considered. The below table
illustrate a computational analysis of Harvey Norman materiality estimate. Therefore, the
averagely range for HVN materiality level is 9968 to 19937.6. Such limit selected is an ideal
materiality limit since it aids in revealing vital accounts and verify that none of the accounts
are missing.
Criteria Employed Base Amount Level of materiality
0.5% to 1% of the gross revenue Gross revenue 1,993,760 9968.8 to 19937.6
1% to 2% of the total assets Total assets 1,317,618 131176.18 to 26352.36
1% to 2% of gross profits Gross profit 667,421 6674.21 to 13348.42
2% to 5% of shareholder’s equity Shareholder’s equity 2,927,932 58558.64 to 146396.6
5% to 10% of net profit Net profit 380,050 19002.5 to 38005
(Source: Annual report, 2018, Harvey Norman Limited)