The Financial Report and Information of DIPL

Running head: AUDIT
Audit
Name of Student:
Name of University:
Author’s Note:

1AUDIT
Answer 1:
Application of different Analytical techniques to the financial report and information of
DIPL:
Analytical techniques to the report information of financial nature of the DIPL have a
chance of developing the Audit plan. During the time of audit undertaking, the audit plan can be
considered to be a specific guideline that should be followed. More specifically it can be said
that the assessor is assisted in the maintenance of costs of the audits which can be said to be quite
reasonable. This also helps in the avoidance of any sort of problems or misunderstanding with
the clients. The technique or the procedure of the dissemination of the firms’ financial
declaration information is nothing but the analytical approach to the financial statements or
declaration of the DIPL firm. The evaluation process is assisted by a number of mechanisms or
procedures as well as their utility. This also facilitates in the entire procedure as well as its
operations. Use of the analytical approach for analysis of declarations of a financial nature has
certain benefits. Several accountants can decipher valuable information to assist them in arriving
at major business decisions. Financial analysts are also favoured by this.
Analysis of financial declarations of a common reference point is assisted by the
analytical approach of common sizing. It also helps in the comparison of the financial statements
in terms of several time periods or also in terms of different corporations. Various lines of items
mentioned in the financial report as well as their reporting style can be considered by the
assessors. As an example it can be stated that, the nature of item registering, the items being the
net assets as well as the net liabilities should be considered along with the equity of the owners in
the firm’s financial reporting as well as the digression from the normal needs to be examined.

2AUDIT
The analytical method that needs to be utilised for analysis of the plan of audit can be
benchmarking. This can be done as benchmarking is regarded as an analytical procedure. The
variance of the real financial declaration obtained from the benchmark assists in understanding
the deviation as well as helps to analysis the cause of the detected variance for determining the
root cause.
Additionally, ratio analysis can also be considered as an analytical approach of
appropriate nature which helps in comparison of financial declarations as well as assessment of
audit plan.
Explanation of how the results influence the audit planning decisions:
The planning decision results for the plan of audit are necessarily influenced by the
analytical approach results which are adopted for the dissemination of the information from the
statements of financial nature. As an example it can be stated that, the ratio analysis outcomes
like the current ratio of the DIPL firm is calculated to be 1.42 in 2013, 1.46 in 2014 and 1.5 in
2015. Again it can be said that the profit margin that is the profitability ratio is enumerated to be
0.068 in 2013, 0.60 in 2014 and 0.06 in 2015. This particular profit ratio can help reveal the state
or condition of the firm-earned net income as well as the net sales of the DIPL firm. It can be
said that this helps the assessor know if the expenses are high or low and also determine whether
the firm management have the requirement of curtailing budget as also the expenses of the firm
(Johnson et al. 2012). The favourable as well as unfavourable changes in the ratio are possible to
be utilized as a factor in the reference for the audit assessment of the financial health soundness
as well as the DIPL’s overall financial condition. The solvency ratio is also useful for
understanding the desirable and the undesirable trends in the firm’s financial condition. It is

3AUDIT
calculated to be 0.62 in 2013, 0.44 in 2014 and 0.21 in 2015. To understand whether the overall
cash flow of the financial corporation is enough or adequate in order to meet both the short as
well as long term liabilities of DIPL the comparison of the ratio of the three-year period is useful.
It is possible for the assessors to understand the firm’s relative position in connection to the three
year period as well as to analyse the factors leading to the undesirable or unfavourable conditions
of the corporation.
Answer 2:
Identification of inherent risk factors arising from the nature of DIPL’s business
operations:
It can be said that there are several important factors that influence the auditing and
involve incidences of material misstatements in the financial announcements of a specific
concern. It can however be made certain that that different forms of systematic as well as
unsystematic risks exist which help in the reflection of financial misstatements in the
corporations’ financial declarations. It is possible that the detected risks might be due to both
financial as well as non-financial factors which can eventually avert a particular corporation for
reflecting a fair as well as a completely free view for pertinent financial declarations (Blankley,
Hurtt and MacGregor 2012). However it can be said that an evaluator may find it demanding to
detect several risks. It has been opined by William that identified risks can be linked to various
risks which are correlated with omission along with the risks of several diverse errors which are
absolutely unthinkable for a specific book-keeper. As an overall viewpoint, it can be asserted that
the inherent risk has a possibility of arising from the business operations and its nature in regard
to the DIPL.