Semester 1 ACCT5015: Accounting Audit Assignment for OZ Limited

This document presents a comprehensive solution to an accounting audit assignment. The assignment focuses on auditing procedures for two companies: OZ Limited, a hotel company, and Curasafe Limited, a healthcare provider. The solution identifies key accounts and associated audit assertions for OZ Limited, including revenue, management fees, loyalty program redemption liability, and intangible assets. It outlines necessary documentary evidence and accounting treatments for each assertion. For Curasafe Limited, the assignment highlights audit considerations for investments, insurance, claim liability provisions, and arrear insurance premiums, providing insights into relevant audit assertions and procedures. The solution emphasizes the importance of verifying financial statement accuracy and completeness through detailed examination of transactions and account balances. The document also includes a bibliography of relevant academic sources.

Running head: ACCOUNTING
Accounting
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Question 1:.................................................................................................................................2
Part a:.....................................................................................................................................2
Part b:.....................................................................................................................................3
Question 2:.................................................................................................................................4
Part 1:.....................................................................................................................................4
Part b:.....................................................................................................................................6
Bibliography:..............................................................................................................................7

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Question 1:
Part a:
Auditing is the process of checking and inspecting all the accounting transactions and
records and making a conclusion about the true and fair view of the final financial statement
of an organisation. In the given case study, the accounts and the statements of the OZLimited
are in the review and audit. Auditors select some key accounts balances for checking and
inspection in details on a sample basis as all the accounts and transactions could not be
checked manually in a large organization where numerous transactions occur daily. For the
OZ Company Limited, following accounts and its balances have been selected for the
analysis along with assertions at risk associated with those accounts1.
Revenue:
Audit assertions related to the revenue account is its occurrence, completeness and
valuation and correctly recording in the financial books of accounts, and lastly correctly
presentation in the financial statement. The revenue is an important part of the financial
statement depicting the financial performance of the company. Hence, it is important to
consider the revenue account for auditing2.
1 da Silva, Thayanne Costa, and José Alves Dantas. "Audit Assertions and Change of
Auditors' Opinion in the Brazilian Market." Revista de Educação e Pesquisa em
Contabilidade 12, no. 1 (2018).
2 da Silva, Thayanne Costa, and José Alves Dantas. "Audit Assertions and Change of
Auditors' Opinion in the Brazilian Market." Revista de Educação e Pesquisa em
Contabilidade 12, no. 1 (2018).

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Management Fees:
It can be observed from the given case study that, the management fees is an
important part of the revenue and there are increasing number of disputes regarding that. The
assertions related to the management fees is the occurrence of the transaction and its
completeness obligation and valuation or correctly charging the amount of fees.
Loyalty Program Redemption Liability:
The OZ Company Limited is having a loyalty program, and creates a liability for
redemption of loyalty credit points. There have been few suspects in the account which must
be investigated properly. The audit assertions related to the loyalty program redemption
liability account is the completeness, valuation and its presentation.
Intangible Assets:
The company is building a new hotel booking system or an intangible asset. It must be
take care that all the amounts have correctly been capitalized and presented in the financial
statement. Audit assertions related to the intangible assets are, completeness, its correct
treatment and valuation in the financial books of accounts3.
Part b:
For each of the above audit assertions, necessary documentary evidences must be
collected to check the occurrence of the transaction. Amount of obligation involved or the
valuation aspect must be taken care of properly. Accounting treatment must be checked for
3 da Silva, Thayanne Costa, and José Alves Dantas. "Audit Assertions and Change of
Auditors' Opinion in the Brazilian Market." Revista de Educação e Pesquisa em
Contabilidade 12, no. 1 (2018).

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each of the above assertions and transactions and must be ensured that all the above
transactions are correctly recorded in the financial books of accounts. Lastly, it must be
checked that balances of all the above accounts have been presented correctly in the financial
statement.
Question 2:
Part 1:
Curasafe Limited is an Australian health care company providing healthcare related
services. In the given case study of the company, few accounts and information have been
pointed out which needs consideration of an auditor. Based on that information provided in
the case study, following accounts have been selected along with its audit assertions4.
Investment:
The company maintains an investment portfolio for meeting the insurance claims.
Hence, transactions occurring related to the account must be checked properly. The audit
assertion related to the investment account is the amount of invested in which types of assets.
Amount utilized from the investment, accounting treatment and presentation in the financial
statement5.
Insurance:
4 Knechel, W. Robert, and Steven E. Salterio. Auditing: Assurance and risk. Taylor &
Francis, 2016.
5 Kharisova, F. I., and N. N. Kozlova. "Applying the category of «Assertions (or
preconditions)» in audit of financial statement." Mediterranean Journal of Social
Sciences 5, no. 24 (2014): 180.

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The company is having various insurance schemes related to the health insurance. It
must be properly checked that insurers are being salted with their claims properly. Therefore,
audit assertions related to the insurance is to check the whether the insurance premium has
been collected correctly, insurance claims have been settled timely and in correct amount, all
the accounting transactions have been recorded and presented in the financial statement
correctly6.
Claim liability provision:
It is maintained to compensate the insurance claim liability. The provision made for
the account must be checked correctly. All the transactions related to the provision must be
checked and recorded in the financial books of accounts. The utilization of the provision must
be checked with due care7.
Arrear insurance premium:
It can be observed that there are various insurance premiums in arrears. Hence, the
arrear insurance premium account must be checked with the occurrence, completeness,
correct accounting treatment and presentation in the financial books of accounts8.
6 Hay, David, W. Robert Knechel, and Marleen Willekens. "Introduction: The function
of auditing." In The routledge companion to auditing, pp. 23-32. Routledge, 2014.
7 Knechel, W. Robert, and Steven E. Salterio. Auditing: Assurance and risk. Taylor &
Francis, 2016.
8 Hay, David, W. Robert Knechel, and Marleen Willekens. "Introduction: The function
of auditing." In The routledge companion to auditing, pp. 23-32. Routledge, 2014.

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Part b:
For all the above accounts and balances identified above accounts cane be
summarized as follows. For the investment, check the bank account balance and certificate of
investment. For the insurance, check the insurance certificates issued and claim settlement
papers. For claim liability provision, check the claim settlement papers and valuation. For the
arrear insurance account check the insurance certificates and verify with the amount of
insurance collected9.
9 Kharisova, F. I., and N. N. Kozlova. "Applying the category of «Assertions (or
preconditions)» in audit of financial statement." Mediterranean Journal of Social
Sciences 5, no. 24 (2014): 180.

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Bibliography:
da Silva, Thayanne Costa, and José Alves Dantas. "Audit Assertions and Change of Auditors'
Opinion in the Brazilian Market." Revista de Educação e Pesquisa em
Contabilidade 12, no. 1 (2018).
Hay, David, W. Robert Knechel, and Marleen Willekens. "Introduction: The function of
auditing." In The routledge companion to auditing, pp. 23-32. Routledge, 2014.
Kharisova, F. I., and N. N. Kozlova. "Applying the category of «Assertions (or
preconditions)» in audit of financial statement." Mediterranean Journal of Social
Sciences 5, no. 24 (2014): 180.
Knechel, W. Robert, and Steven E. Salterio. Auditing: Assurance and risk. Taylor & Francis,
2016.