Going Concern & Financial Reporting Audit
Added on 2020-02-05
8 Pages2335 Words103 Views
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Audit and Assurance1
TABLE OF CONTENTSINTRODUCTION................................................................................................................................31. Critically evaluating the risk based approach to external audit in the context of Home Retail Group Plc ........................................................................................................................................32. Identifying the aspects which reflect that company was facing going concern problem during the period of 2013-2015...................................................................................................................43. Identifying the qualitative information which external auditor needs to consider during auditing ...........................................................................................................................................44. Discussing the factors which might influence the opinion of external auditor ..........................5CONCLUSION....................................................................................................................................6References............................................................................................................................................72
INTRODUCTIONAudit is the process of official investigation of financial statements which is conducted bythe external auditor. In this, by making systematic examination and verification of accountingrecords, auditor is able to present the fair view of company's financial position and performance.This project is based on Home Retail Group Plc which is one of the leading retailers who offershome and general products of different brands. This group comprises of three divisions namelyArgos, home-base and financial services. The present report will discuss various types of risk andaspects which are highly associated with the auditing aspect. 1. Critically evaluating the risk based approach to external audit in the context of Home Retail Group Plc Material misstatement is one of the main risks which are usually faced by the externalauditor during the investigation. This risk occurs when there is a difference between the actualfigure and the amount which is reported in the financial statements. In this, external auditor canpresent its solution only when they make thorough analysis of financial aspects (Louwers and et.al.,2013). For instance: When business organization is facing problem of ineffective control andfinancial management then, it prefers to make manipulation in the financial statements. Moreover,stakeholders such as investors, lenders, supplier etc. prefer to invest money in the firm whosefinancial position is sound (Wang and et.al., 2013). In this context, external auditor of Home RetailGroup Plc also faces issues in relation to the aspects of material misstatement which takes place inthe financial statements. Auditor witnesses several difficulties in presenting the fair and realistic view of thecompany's financial position in the case of material misstatement such as audit, control and inherentrisk. Thus, in order to cope up with such risk, several strategies had been employed by Home RetailGroup Plc. Primarily; retail group had developed process to delegate the authority which ensuressmooth functioning of the business operations and functions (Messier Jr, 2016). In addition to this,tactics are also developed by Home Retail Group Plc for the effectual management of risk such asinternal control, insurance and foreign currency hedging etc. (Arens and et.al., 2015). Along withthis, review of consolidate data or financial statements has also been made by the firm for providingthe information regarding the financial position and performance of the firm. 3
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