Audit and Ethics Report 2022

Running head: AUDIT AND ETHICS
Audit and Ethics
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AUDIT AND ETHICS1
Table of Contents
Section 1..........................................................................................................................................2
Materiality Level.........................................................................................................................2
Section 2..........................................................................................................................................3
Preliminary Analytical Review....................................................................................................3
Section 3..........................................................................................................................................6
Cash Flow Statement Analysis....................................................................................................6
Auditor Report.............................................................................................................................8
References......................................................................................................................................10

AUDIT AND ETHICS2
Section 1
Materiality Level
The auditing process involves effective investigation of the financial statements of the
business in order to estimate whether the financial statements are showing true and fair view of
the financial position of the business (Eilifsen & Messier Jr, 2014). It is on the basis of the audit
report which is issued by the auditor of the business, that investors make decisions whether the
financial statements are appropriate or not and whether they are worth making investments or
not. The auditor has the responsibility of checking each element which is covered in the financial
statement and check whether the same are appropriate or misrepresented. One of the components
which is considered while estimating whether the item is fairly represented in the books of
accounts is the materiality of the item. The determination of the materiality estimate depends on
the judgement of the auditor and the nature of the business which is being audited (Ruhnke &
Schmidt, 2014). The assessment would be considering the materiality estimates for the business
of National Australian Bank (NAB) and also ensure that the financial statements are showing
appropriate view of the financial position of the business or not.
In simple terms, materiality may be defined as the significance which the item has in the
annual report and how the misrepresentation of the same can impact the financial position of the
business. In case to recognise an item as material, various parameters may be considered and
some of the same are complex nature of the items, repetitiveness of the item, numerical size of
the item. The planning materiality of the business and the percentage which is considered to
compute the same are considered at the planning stage of the audit (Legoria, Melendrez &
Reynolds, 2013). In order to estimate the planning materiality of a business a percentage is

AUDIT AND ETHICS3
considered which would be applied to a base to compute the planning materiality of the business.
In order to consider the base for the computation process, the total asset figure is considered for
estimating the planning materiality of the business (Vîlsănoiu & Buzenche, 2014). The total asset
figure which is represented in the financial statement of the company for the year 2018 is shown
to be $ 806,510 million. The percentage which is considered for ascertaining the planning
materiality of the business is considered to be 2%. It is to be noted that on the basis of the
planning materiality of the business, the performance materiality of different items would be
estimated. The performance materiality is the benchmark showing whether the item is material or
not. The computation of materiality for the business is shown below in details:
Planning Materiality=Total Assets of the Company × Percentage estimated
¿ $ 806,510 million ×2 %
¿ $ 16,130.2million
Therefore, the above figure shows the planning materiality of the business which is
estimated by the auditor and the same would be considered by the auditor of the business for
estimating the performance materiality of the business.
Section 2
Preliminary Analytical Review
The Preliminary Article Review can be well done in order to assess the changes observed
in the financial performance of the company. Ratio analysis will be sued as the primary tool for
the purpose of evaluating the key changes observed in the financials of the company. The key
ratio that has been evaluated for the company includes the Liquidity Ratio, Profitability Ratio