Scope and Materiality in Audit Report 2022

Running head: AUDITING
AUDITING
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction................................................................................................................................4
Overview of the Company.........................................................................................................4
Section No 1...............................................................................................................................4
Scope and Materiality in Audit..............................................................................................4
Review of Company Disclosure.............................................................................................6
Section No 2...............................................................................................................................6
Analytical Procedure in company business............................................................................6
Section 3...................................................................................................................................10
Analysis of Cash Flow Statement........................................................................................10
Review of Auditor report.....................................................................................................11
Conclusion................................................................................................................................11
Reference and Bibliography.....................................................................................................12

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Introduction
Audit process should be carried by the company so that it will able to have proper
accounting statement which will help them to gain proper amount of investors in the
company. Company should can have proper rules and regulation in regard of preparation of
financial statement so this will help them to gain more clarity to the financial user of the
company. Auditor is one who different audit procedure which will help them to get more
clarity about the company business so it able to gives its opinion properly about the company
so the user is able to know how the company is able to perform in the market. Auditor is able
to check the company internal control system properly so this will help the auditor to know
about the business risk which is there in the company and how the company is able to meet
the business risk properly and effectively. The report show about the company materiality in
the business as if the company is having more amount of materiality than this will affect the
overall business financial statement. It also show about the company financial aspects which
help them to know about the company performance in the business.
Overview of the Company
The report is based upon the company QUBE HOLDING LIMITED, which is an
Australian Company and carry its operation in Australia (Qube.com.au. 2019). The company
deals in logistics and infrastructure-based business, the company was founded in 2010. It had
its headquarter in Sydney, NSW.
Section No 1
Scope and Materiality in Audit
The part of the report show about the materiality in the business financial report, as
the company is able to have proper financial report so that the user is able to gain proper
knowledge about the financial statement in then business. Materiality is the error or omission

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which happen due to human nature and effect the company financial statement as there is
some kind of error in the financial statement than this will directly affect the true and fair
view of the company financial report (Qube.com.au. 2019). The auditor have to ascertain the
amount of materiality which is there in the company financial statement as this will help them
to gain proper information of company risk and it will able to carry the audit process as per
the need of the business risk in the financial statement.
Auditor should able to have proper assertion in company materiality as it let auditor to
know the different procedure in company business, so this should auditor priority to give
more importance about the materiality in the business. Company should give there
assumption about the company business risk as this help the auditor to ascertain the risk in
the business more easily and effectively. Auditor have to plan the total materiality so this will
help them to know the risk which is associated in the financial statement, auditor have to
ascertain the materiality by considering the financial report, as it can calculate the materiality
by keeping in base of the total asset, sales and equity in the business (Qube.com.au. 2019).
As per the business, the auditor is able to take the total asset for the basic of calculation of
planning materiality in the business. The planning materiality help the auditor to ascertain all
the company aspects more easily in the business. The planning materiality is shown below:
Planning Materiality=Total Asset∗5 %
¿ $ 4035
¿ 5 %
¿ $ 201.75
The above calculation of the planning materiality as this will help the auditor to make proper
assumption in regards of risk which is associated in company financial statement, so the
auditor should able to have proper amount of assumption in the assertion of risk in the

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business. This will help the company to have to have proper procedure in the company
financial statement.
Review of Company Disclosure
Company should able to have proper amount of disclosure in company business so
that the financial user is able to get proper amount of information about the company
business activities. Each company should have proper amount of disclosure that will help
them to gain more clarity of it business activities in the business (Qube.com.au. 2019). It
should follow all the disclosure rule which are there in the company business so that it will
help them to provide proper disclosure in the financial statement.
Auditor have to ascertain that the company can give proper amount of disclosure in
the business so this will help them to know the mis-statement in the company more easily and
effectively. Company should able to give all the assumption which they have taken in regards
of business activities so the auditor as well the user can know how much the company is able
to perform its activity in the business.
Some of the assertions in company business:
1. Auditor should analysis the judgement which the company has taken in regards of the
business activities, as if there is big difference in the company judgement that can
affect overall performance of the company
2. Auditor should vouch each expense so that it can know how the company is recording
their asset as well as it will help it to know the error which can be there in company
financial report.
3. Company has to different valuation techniques so this should be checked by the
auditor as whether the company is able to have proper valuation technique or not in
the business.

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4. Auditor should verify each kind of asset and liability so that it can know whether
there is some kind material misstatement in the business. It should personally verify
each asset of the company.
Section No 2
Analytical Procedure in company business
Auditor have to ascertain the financial statement properly so this will help them to
gain more amount of information in regards of company financial statement, to know more
about the company auditor is using the financial ratio aspects in the financial report. The ratio
help the user to know all the aspects which let them to know all the information related to
company financial report which let user take proper decision in regards of company financial
statement. The financial ratio is shown below:
Liquidity Ratio
This ratio help the company to know the liquidity in company business activities as it
show how the company can deal, with the payment of current liability in the business, so this
will help the user to know how much the company can have liquidity to pay its short-term in
their business activities (Qube.com.au. 2019). It can further be classified as Current and
Quick Ratio.
Current Ratio – Company should able to have proper amount of current asset so that it can
able to pay the short-term liability smoothly in business. This ratio show the relation of
current asset and current liability of the company.

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The above calculation show the current ratio of company as it is consider to be 2 as if the
company is having more than 2 than it can be consider as concern is having proper liquidity
in the business. as per the above it state that there is a huge reduction of current ratio so this
signify company is not having proper business in the company, it should have to change the
strategy so that the company will able to gain an increase in company business.
Quick Ratio – This ratio show more amount of liquidity in the business in the company
financial report so this help the user to have proper amount of information in regards of
liquidity in the business. This ratio omit the inventory as it cannot converted in to cash easily
in the business.
The above calculation show in regards of quick ratio as it is also consider ideal 2 so if
company manage to have 2 in their quick ratio than it is consider good by the business. The
company is having an decrease in the ratio which show that the organization is not having
proper liquidity in the business so company should able to change its strategies which will
help them to gain more advantage in the quick ratio.
Profitability Ratio
This ratio are the one which show the profitability aspects of the company so that the
user is able to know how much the company is able to earn from the business activities in the
market. It is classified as Net profit Margin.

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Net Profit Margin – This margin show the amount of money which the company can earn for
the shareholder of the company as if this ratio is more its signify that the company is having
proper amount of money to distribute in the owner of the company.
The above table show in regards of Net Profit Margin so as this can be seen that there is a
huge increase in the profit so this signify company can get more amount of business as well
as it show that the company is able to have reduction in overall business cost so this also
increase the company net profit as a whole.
Efficiency Ratio
This ratio show about the efficiency in company business as how the company is able
to utilize the asset to create more amount of revenue in the business. Company should able to
know that whether they are using the asset properly or not. It is classified as Average
Collection Period.
Average Collection Period – It show how the company can have proper credit policy in
regards of customers in the business as if the company can have proper amount of credit
policy this will help them to gain more amount of revenue in the business.
The above table show the policy of company that has an decrease in the collection period
which signify that the company is able to have control on the collection period so this will

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help them to have proper collection period in the business as well as it will let them to gain
more working capital in the business.
Leverage Ratio
This ratio show about the composition of the capital in the business as this will help
them to know how the company can fund its business activity. This ratio can be classified as
Debt Ratio and Debt-Equity Ratio.
Debt Ratio – This ratio show about the company ability to have their total asset as this show
the company is able to finance their asset in the business so that the company will able to
know the funding in regards of the asset.
The above table is related to Debt ratio so as per the above table it can see that there is an
increase in the ratio which is not a good sign as it show that the company is having an
increase in the debt which also will increase the finance cost in the business. Company should
able to have proper strategies so that it can stop the increase in debt in the business.
Debt-Equity Ratio – Company should have proper balance in the debt and equity in the
business as this will help them to carry all the business activity properly in the business.
The ratio show about the composition of fund in the company so as per the table the concern
has an increase, which denotes that the company is having an increase in the debt so this is
not good as the company is increasing the fund with the help of debt in the business.

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Section 3
Analysis of Cash Flow Statement
The organization cash flow show that the maximum amount of cash inflow is from the
cash from operating activities and the maximum outflow is from cash from investing
activities.
The primary cash receipt in the company is from Receipt from Customers and the
cash payment is towards payment to suppliers in the business.
The company cash flow is not having any non-cash item in the financing activities of
the company.
Company is having proper amount of cash flow so this signify that the company is not
having any problem which will let them to have an proper financial statement, the auditor
have to ascertain proper amount of procedure to know how the company can deal with the
financial report in the business (Qube.com.au. 2019).
Going Concern in Company Financial Statement
Going Concern principle should be followed by each company while carrying its
business activities. It state that the company is having infinite time period of business which
will give confidence to the company user, so they can invest in the company. Company is
able to apply this principle as it able to maintain proper finance in the business.
Some Points which can affect going concern assumption is:
 Company is having less amount of income in current year
 It is selling its fixed asset
 Increase the use of debt in the company business

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Review of Auditor report
The auditor of the company is PWC and as per the auditor company is able to perform
all the activities properly in the business so this help the company to gain more advantage in
the company business (Qube.com.au. 2019).
Auditor is able to have proper key audit matter so that it able to have proper
information in the key audit matter which will help the user to know more about the risk
associated in company business.
Conclusion
The report conclude about the audit process in the company and it able to show
whether the company is having true and fair view or not. The report conclude about the
materiality concept as how the auditor is able to assertion the materiality in the business. It
also conclude about the financial ratio and analysis of company cash flow which will help the
company to know how they are performing in the business.

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Reference and Bibliography
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