Auditing and Assurance: A Case Study on JB Hi-Fi Limited

AUDITING AND ASSURANCE: A CASE STUDY ON JB HI-FI LIMITED

Executive Summary:
The current paper describes the operational environment of JB Hi-Fi Limited. At the outset of the
study, operational areas of the company have been identified, followed by the identification of its
four major competitors. Gradually, this paper moves into identifying laws concerning to the
business and its significant impact on the company’s operating model and overall sustainability.
Apart from Australia, the company has major existence in New Zealand as well. Therefore,
considering the international business platform and concerning laws, an assessment has been
conducted on how the international laws can affect its overall business scenario.
Later on, the study shifted its focus to evaluating the inherent risk factors of the company that are
impacting on the audit and its impact on material misstatements. Five key accounts have been
identified that could have a potential risk. Finally, based on the identified risk factors the study
recommends control mechanism so that potential risks can be mitigated.
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Table of Contents
1.0 Introduction:..............................................................................................................................5
2.0 Operational areas of JBH...........................................................................................................6
3.0 Primary competitors of JBH in Australia:.................................................................................7
4.0 Laws affecting JBH’s operations and its description................................................................8
4.1 Employment Law...................................................................................................................8
4.2 Consumer Laws (ACL)..........................................................................................................9
4.3 Competition Law....................................................................................................................9
4.4 Environmental sustainability law.........................................................................................10
5.0 Key inherent risk factors impacting on the audit of JBH........................................................11
5.1 Overview of inherent risk....................................................................................................11
5.2 Assessment of identified risks leading to potential material misstatements........................11
6.0 Evaluating accounts of significant risks..................................................................................14
6.1 Overview of accounts with significant risk..........................................................................14
6.2 Identification of the key assertion at risk for each account:................................................14
7.0 Placing the control:..................................................................................................................17
7.1 Overview of control environment........................................................................................17
7.2 Identification of the likelihood of potential reliance............................................................17
8.0 Conclusion:..............................................................................................................................18
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References:....................................................................................................................................19
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1.0 Introduction:
Analysis of financial reporting of a business has always been a crucial aspect of accounting and
auditing studies as the same involves consideration of lots of factors relating to both the business
as well as the audit subjects (Griffiths, 2017). The instant report briefly focuses on the case study
of JB Hi-Fi Limited, a retail home appliance company based in Australia and its financial reports
and auditing process. The subsequent sections of the paper throw light on the business aspects of
the given topic in brief with a concluding statement at the last.
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2.0 Operational areas of JBH:
JB Hi-Fi operates in Australian and International retail market of consumer goods. The company
is operating across 303 locations. The type of the organization is ‘Public’. The company is
headquartered at Chadstone Shopping Centre, Melbourne. The company is also publicly listed in
ASX and trades as ASX: JBH (Jbhifi.com.au, 2018). The operational areas are as follows:
 Electrical home appliances
 Hardware and electronics devices
 Telstra services
 Gaming
 Drones and robotics
The Australia wide store locations are as follows:
 New South Wales
 ACT
 Queensland
 Northern Territory
 South Australia
 Victoria
 Tasmania
 Western Australia
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