Auditing and Assurance in Australia: Analysis of Woolworths Ltd. Audit Report

This report evaluates the basic key auditing factors that help in making the audit report of the company Woolworths Ltd. It discusses auditing standards, key auditing matters, audit opinion, and the responsibility of the company auditors for the materiality and standard of auditing.

Running head: AUDITING AND ASSURANCE IN AUSTRALIA
Auditing and Assurance in Australia
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Executive Summary
The main purpose of this report is to make evaluation of the basic key auditing factors that
helps in making the audit report of the company Woolworths Ltd. The basic auditing
standards consists of the key auditing matters that are discussed in this report for the
purpose of evaluating all the basic auditing ethics.
In order to make evaluation of the efficiency of audit report, there are some instances that
can be taken into consideration such as the auditors and their basic remuneration. In
addition the term and key elements of audit matters, along with audit opinion and the
responsibility of the company auditors for the materiality and standard of Auditing.

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Table of Contents
Introduction...............................................................................................................................3
Audit Report Analysis.................................................................................................................4
Auditors Independent Requirements........................................................................................4
Non - Audit service nature.........................................................................................................4
Audit Committee........................................................................................................................5
Remuneration of the Auditors...................................................................................................6
Key Auditing Matters..................................................................................................................7
Main basis of Audit Opinion.......................................................................................................7
Main differences between the responsibilities directors and auditors.....................................9
Subsequent events of Auditing................................................................................................10
Materiality standard of Auditing Reports................................................................................11
Follow up questions.................................................................................................................12
Conclusion................................................................................................................................13
Reference List...........................................................................................................................14

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Introduction
This audit report of the complaint Woolworth Ltd needs to be analysed for detailing
the perspectives and the aspects that are stated in the report for making evaluation the
audit reports (Zhou, Simnett and Green 2016). It would also enable to make identification of
the financial status of the business entity that keep a note on the audit reports. The key
factors can be essentially considered for the evaluating the company’s annual reports that
comprises of the non-audit and the audit Services that is provided by the company’s audit
committee, the auditing key factors, the auditors remuneration reports, effectiveness and
intense materiality of the company audit report and the financial opinion that is generated
from the audit reports.
Auditing within a business firm needs to be done for recording the statutory data of
the company through a systematic and independent manner. All the records of finance and
voucher along with documentation that is related to the company’s financial activities are
strictly considered while laying down the audit reports. The main focus of the audit data
reporting is based on the disclosing the non-financial and financial statements of the
business entity to the organisation’s stakeholders (Stewart, Kent and Routledge 2015). It is
required for ensuring for meetings the legal obligations that needs to be performed with all
considerations.

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Audit Report Analysis
Auditors Independent Requirements
The independent requirements of the company’s auditor can be stated in the
Corporation Act 2001. In the act of understanding the independent requirements of auditing
the certain types of key legislations can be taken into main consideration. The divisions that
consists of 3,4,5 and under the section 307C under the Corporation Act 2001, the APES 110
Code Of Ethics and the standards of auditing ASQC 1 and the auditing standards ASA 220. All
the provisions are mainly required for evaluating the auditing independence for the
business entity’s auditors. In the other aspects, the company auditors must also work upon
independently in the real terms of interest conflict and bring upon rotational relief after
independent applying the required safeguards for the threats that are upcoming and is
required at the same time (Soh. and Martinov-Bennie 2015).
It is very essential to bring upon the declaration that is given by the auditors. It is
stated by the auditor by making the preparation of the following proper requirements that
is stated under the Corporation Act 2001 is regarding the company auditor’s Independence.
These are following declarations that are made by the auditor for disclosing all the
requirements for initiating the process of Audit report preparation of a business entity
(Simnett, Zhou and Hoang 2016).
Non - Audit service nature
The Deloitte Touche Tohmatsu’s company auditors have essentially provided with
some of the services that are related to non-auditing services of the company in the
financial year. It needs to be specifically stated that the non – auditing services may be

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provided by the auditors for not compromising the legal obligations but achieving the
structure that is mentioned under Corporation Act 2001 that deals with Code of Ethics APES
110. The ethical coding that are stated by the Accounting Professional and the Corporate
Ethical Standards Boards are mentioned with relevance. The various kinds of non – auditing
services needs to be provided by the company auditors that is limited within the area of
work and this makes the non-audit service does not constitute any such conduct that is not
at all relevant to the ethics of auditing. Even the company management does not interferes
or review the reports of audit that are published themselves by the company of the Auditors
in accordance to the stated suggestions and the proper ethical regulation. The company
auditors also works as company advocates for each of the financial year pointing all the risk
along with the rewards of the company. The company auditors also provide unique kind of
consultations that are quite essential for settling the financial issues of the business entity
that is not at all associated with the audit reports and the various company accounts
matters. It also relates to the assurance services that is related to debt raising, company
regulatory reviews along with certain sundry services and financial diligence in due (Simnett,
Carson and Vanstraelen 2016).
Audit Committee
Deloitte Touche Tohmatsu’s is the main auditor of the company. The firm is located
in the city of Sydney, New South Wales and is much associated with the company for last
few years (Simnett. and Huggins 2015). The company’s auditor has been working with full
dedication for the company’s welfare while properly maintaining the independent
requirements while managing the professional conduct that is completely related to audit.
Few partners name must be kept apart, among them Andrew V Griffith who is the auditing

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partner of the auditor Deloitte Touche Tohmatu. Mr. Andrew is basically the company’s
Chattered Account and has collaborated as a working member with DIT for the last few
years.
Remuneration of the Auditors
To be specific enough the, the company’s auditing committee is having two
personals who are working for the company as company auditors (Sarens 2015). Deloitte’s
remuneration was allocated for specific auditing purpose and the review of the
company’sfinancial report that amounted $ 3254000. The amount allocated for the specific
regular and service related to compliance that amounted to $ 12900 for the fiscal year of
2017. The total number of amount is $ 421000 that was allocated to auditors for the
payment for the related service of non-audit service on providing assistance to various types
of accounting matters and the assurance in relation to the regulatory reviews and the
financial due diligence and the other services related to sundry. The last instance, the sum
was $ 108000 that got allocated to the auditors as specific remuneration for the compliance
services on tax (Rahim and Idowu 2015).
Apart from Deloitte’s, the other auditors of the business organisation claims to be
the international associates who are the only auditors of the organisation. Even for
compensation, the company’s auditors who are serving Woolworth in the profession of
auditor, a sum of about $305000 got allocated for reviewing the company’s financial report
and auditing the most essential and necessary data for the organisation. The total amount
that was sanctioned for the auditor’s of the company was for executing the non-auditing
services was estimated to be around $ 154000. The amount was rewarded to the auditors

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for meeting the tax compliance. Deloitte Touche Tohmatsu received an amount of about $
3912000 and the other company’s auditor received $ 5420000 as a auditing compensation.
Key Auditing Matters
The main judgements based on professionalism are termed to be most significant in
the context of auditing for the company’s financial report. The key essentialities are mainly
the result of the main auditing that is done by the company auditors upon the opinions that
are discussed completely separate in the reports of auditing (Moroney and Trotman 2016).
The audit matters are discussed below:
 The discussion is based on home improvement exits that can be considered as one of
the key auditing matter. It includes, liquidation, sale, and the taxation.
 The next key element that was published in the company’s annual report is the
property plant Big B and the company’s equipments for making further decisions
about the trading performance in future days (McKee 2015)
 The company needs to also discuss the context of data inventory and the inventory
assessment at a much lower realisable value.
 Apart from the control of finance, the company’s auditors need to monitor the
operation of the company’s IT system.
 The overall evaluation for appropriateness of the financial structure needs to be
made by the director
Main basis of Audit Opinion
The main reason for evaluatingthe audit report was to provide a fair and true
evaluation of the company’s financial position by maintenance of all the all the regulatory

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acts that are based on the Australian Accounting Standards and the sections of Corporation
Act 2001. The auditing report of the business entity was produced mainly for the provision
stated in the AAS. It is the responsibility of the company auditor for practicing the code of
ethics for Professional Accountants. The independence of the auditors can be allocated
under the Corporation Act 2001 and the other kind of auditing responsibilities that needs to
be performed according to the code of ethics. All the ethics can be declared as independent
declaration that can be maintained along with proper and stable guidelines that is stated
appropriately in the company legislations (Knechel and Salterio 2016).

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Main differences between the responsibilities directors and auditors
The company directors are highly obliged with the individual responsibility for
preparing reports of company finance (Kend 2015). It can be prepared by maintaining a
proper and stableaccounting integrity that is mentioned in the Australian Accounting
Standards and the section under the Corporation Act 2001. The basis internal controls that
strives within the management of the company lies mainly in the hand of the managing
director. All the controls and the various types of policy distribution can be only
implemented by the company directors for facilitating the financial reports that has some
true and fair values. Even the disclosures can be made on certain matter only by the
company director only by the means of accounting structure. There are certain kind of
exceptions that the directors go for liquidation intentionally that cease upon some particular
kind of operation.
The main responsibility of the auditors is based on the action to figure out the basis
of the financial reporting of the company (Kend and Basioudis 2017). It is notified that
whether the reports have been presented by the company directors and is completely free
from any kind of misstatements. The company auditors also need to establish a ground that
provide adequate reasonable assurances that presents the reports that are free from aspect
of any kind of fraudulent activities or errors. There must be a reasonable assurance that
must be provided by the company auditors. Basically in the terms of providing at least a
minimumguarantee for adequate material detection and conditions of material
misstatements in accordance to the specific terms of the Australian Accounting Standards. It
is quite difficult to meet up to all the aspects of the company’s financial statements. It can
be considered that for considering a condition of material misstatement that may arise

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situations like fraudulence or even error in individual case, the aggregate that very much
influence the all over decision that need to be taken by economic intervention by the
business entity. It must be noted that the company’s decision and the misstatement is
directly liable to the company’s directors and they are all responsible for the preparation of
the financial report of the concern (Junior, Best and Cotter 2014).
Subsequent events of Auditing
On considering the general curriculum of Audit, there were some kind of subsequent
auditing that occurred in the ending of the company from the ideals of home improvement
business. In the year 2017, the company went into an agreement for shares selling to
Hydrox that estimates to be around the total of 66.7% that also constitute the total amount
of share for Home consortium that subjects to the result of selling the share of Lowe’s. The
agreement sales contains about 40 Freehold Master trading sites and about 21 freehold
master development sites along with 20 master’s sites of leasehold. The three master
freehold sites was actually effort and acquisition of Woolworth as well as the company looks
the responsibility for all the assumption that is associated with about 11 leases. Even in the
same fiscal year, Lowe’s in Hydrox was sold off to the trust as a beneficiary for a return of $
250.8 million along with home consortium. In the case, JVA got terminated. The agreement
made with Hydroxled to crystallisation and the losses that was incurred was quite
associated with the sale of Hydrox after date of balance. The home consortium’s related
transactions got finally completed and possible estimations was made on the capital loses
that amounted to $ 1.8 billion (Hay, Stewart and Botica Redmayne 2017). The association of
Tax assets along with the taxes utilisedand recognised the forceeable future.

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Materiality standard of Auditing Reports
The standard of materiality is prepared following the audit report of the business entity
based on certain guidelines that are distinctly stated in the Australian Auditing Standards
(Carson, Fargher and Zhang 2016). The judgement is made after proper professional
sceptism that is maintained under this very segment. The essential key standards are
considered for audit preparation.
 Assessing and identifying the material misstatement risk within the financial report
in case of fraudulence or error (Green, Taylor and Wu 2017).
 Figuring out the sufficient evidenced of audit for providing a proper basis of audit
opinion.
 Need to understand the relevancy of the control internally and then impart it so that
the procedures of auditing can be much appropriate in any circumstances. This
understanding does not make any such disclosure of the company’s internal
working.
 The accounting policies and the estimates can be evaluated in terms of
appropriateness and reasonability. The disclosure depicts truthfulness that is a
declaration given by the company’s directors (Fernandez-Feijoo, Romero and Ruiz
2016).
 The accounting method on the going concern basis can be used by the company
directors and also measures the appropriateness of the matter of fact. The
examination can be done on the material uncertainty basis. The company’s financial
events must be related. The committee of Audit is quite responsible for drawing
attention towards the matter of uncertainty especially in case of disclosure.

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 The evaluation done overall is based on identifying the appropriateness of the
following presentation that describes the statement of finance of the company that
can be counted as the standard of materials for the auditors. It is the auditor’s duty
to check the transactions that are stated in accordance to all the disclosure that are
made in the reports of finance (Farooq and de Villiers 2017).
 It is the responsibility of the auditors to give specific directions and adequate
supervision for the performance of group auditing and opinions on audit. It is very
much required for the auditor to examine the audit evidence appropriateness that
can be stated in the information on finance (Cohen and Simnett 2014).
Follow up questions
The analysis suggests some of the specific questions that arise due to entity’s audit
report. The following questions are as follows:
 If the company’s auditor has managed work without any kind of influence via the
directors?
 Where the amount of payment (remuneration) that are made to the Auditorsis
absolutely appropriate according to their work pressure?
 Does the audit opinion that has been stated by auditors resembles the company’s
financial condition?
 Is the audit report free completely free from any kind of major financial
misstatement?
 Was there any other kind of material information that is missing in the information
stated by the company auditors?

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Conclusion
It can be deciphered from the given assessment that the auditing reports of the
specific entity has particularly followed a proper structure of legislation for integrity in
accordance to the Australian Auditing Standard. The main audit matters are stated and
efficiently performed. It is the responsibility of the auditors and the directors to perform all
the task maintaining the ethical concepts and proper balance for stating the finance and the
company’s auditing reports. The company’s auditor needs to balance with proper
justification that must follow the company’s material information and must cover all the
points in that particular segment.

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Reference List
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Farooq, M.B. and de Villiers, C., 2017. The market for sustainability assurance services: A
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