Comprehensive Auditing Report: Afterpay Touch Group Limited Financials
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This report presents an audit program for Afterpay Touch Group Limited (ATG), examining its operations, investments, and financing activities, alongside its financial reporting practices. It analyzes financial ratios to assess ATG's financial position and determines materiality. The report identifies ten material account balances (five assets and five liabilities) and assesses their relevance to financial reporting assertions. Furthermore, it designs a comprehensive set of worksteps for the material account balances, ensuring sufficient evidence for managing these accounts. The analysis includes liquidity, efficiency, solvency, and profitability ratios, highlighting fluctuations and critical areas. The study emphasizes the importance of IFRS and AAS compliance for stakeholders' trust and confidence. The report also details the company's investment strategies and financing activities, including equity shares and external financing, and how these influence the financial statements.

Auditing 1
Auditing
Auditing
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Table of Contents
Introduction......................................................................................................................................3
1. Nature of Afterpay touch group limited and industry..............................................................4
a. Business operations..............................................................................................................4
b. Investments and investment activities..................................................................................4
c. Financing and financing activities........................................................................................5
d. Financial reporting practices.................................................................................................5
2. Analytical procedures of statement of financial position and financial performance..............6
3. Material account balances and materiality for planning of the accounts.................................8
4. Selection of ten different material account balances as five assets and five liabilities..........10
5. Relevancy of material account balances for financial reporting assertion and applicability of
each account...................................................................................................................................11
6. Designing of comprehensive set of worksteps for the material account balance of Afterpay
touch Group Limited......................................................................................................................17
Conclusion.....................................................................................................................................19
References......................................................................................................................................20
Table of Contents
Introduction......................................................................................................................................3
1. Nature of Afterpay touch group limited and industry..............................................................4
a. Business operations..............................................................................................................4
b. Investments and investment activities..................................................................................4
c. Financing and financing activities........................................................................................5
d. Financial reporting practices.................................................................................................5
2. Analytical procedures of statement of financial position and financial performance..............6
3. Material account balances and materiality for planning of the accounts.................................8
4. Selection of ten different material account balances as five assets and five liabilities..........10
5. Relevancy of material account balances for financial reporting assertion and applicability of
each account...................................................................................................................................11
6. Designing of comprehensive set of worksteps for the material account balance of Afterpay
touch Group Limited......................................................................................................................17
Conclusion.....................................................................................................................................19
References......................................................................................................................................20

Auditing 3
Introduction
Auditing is having significant role in the smooth functioning and avoiding issues related to the
compliance of the IFRS and AAS. The report will be focused toward development of audit
program for Afterpay touch Group limited (ATG); it will discuss the operations, investments and
financing activities followed by the company along with the financial reporting practices (ATG,
2018). The report will also focus on analysis of the financial ratios to identify the financial
position and the concept of materiality for company. The report will also include financial
reporting of the material accounts and developing the audit plan for the material accounts
identified so that the there should be enough evidence for Afterpay touch to manage these
accounts.
Introduction
Auditing is having significant role in the smooth functioning and avoiding issues related to the
compliance of the IFRS and AAS. The report will be focused toward development of audit
program for Afterpay touch Group limited (ATG); it will discuss the operations, investments and
financing activities followed by the company along with the financial reporting practices (ATG,
2018). The report will also focus on analysis of the financial ratios to identify the financial
position and the concept of materiality for company. The report will also include financial
reporting of the material accounts and developing the audit plan for the material accounts
identified so that the there should be enough evidence for Afterpay touch to manage these
accounts.
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1. Nature of Afterpay touch group limited and industry
This company is working in the field of software and services. It is a technology driven
payments company, it is provides financial services in the country with specialty in finance.
ATG serves with innovative digital payments to the organisations operating in
telecommunication, health and convenience retail sector in Australia and overseas (ATG, 2018).
a. Business operations
Aftertouch group is providing exclusive payment services and offering platform for payments of
the goods such as apparel, watches, personal care products, food, beverage or any other kind of
goods or services for which payments are to be made (ATG, 2018). This company is serving
large number of customers in Australia. The mission of the company is to make purchasing feel
great for a global customer base. ATG is also driving innovation in the retail sector by allowing
leading retailers with the services of ‘buy now, receive now, pay later that eliminates the need of
end-customers to opt for a traditional loan or payments of any kind of upfront fees and interest to
the company. The company is serving to more than 1.8 million customers and more than 14000
retailers for daily payments (Afterpay touch Group, 2018).
b. Investments and investment activities
Company has investment in the expansion activities and is entering in to New Zealand market as
international expansion strategy. The company is also investments in the technology so that it
will be able to provide smooth transfer of the funds. It is also ensuring high level of security for
the various payments made by the customers to the retailers it is serving various sectors such as
health care and telecommunication businesses (Afterpaytouch, 2017). The investments are also
1. Nature of Afterpay touch group limited and industry
This company is working in the field of software and services. It is a technology driven
payments company, it is provides financial services in the country with specialty in finance.
ATG serves with innovative digital payments to the organisations operating in
telecommunication, health and convenience retail sector in Australia and overseas (ATG, 2018).
a. Business operations
Aftertouch group is providing exclusive payment services and offering platform for payments of
the goods such as apparel, watches, personal care products, food, beverage or any other kind of
goods or services for which payments are to be made (ATG, 2018). This company is serving
large number of customers in Australia. The mission of the company is to make purchasing feel
great for a global customer base. ATG is also driving innovation in the retail sector by allowing
leading retailers with the services of ‘buy now, receive now, pay later that eliminates the need of
end-customers to opt for a traditional loan or payments of any kind of upfront fees and interest to
the company. The company is serving to more than 1.8 million customers and more than 14000
retailers for daily payments (Afterpay touch Group, 2018).
b. Investments and investment activities
Company has investment in the expansion activities and is entering in to New Zealand market as
international expansion strategy. The company is also investments in the technology so that it
will be able to provide smooth transfer of the funds. It is also ensuring high level of security for
the various payments made by the customers to the retailers it is serving various sectors such as
health care and telecommunication businesses (Afterpaytouch, 2017). The investments are also
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Auditing 5
in Available for sale financial assets that include equity investments. After the initial
measurement of the investment it is identified that the financial assets are recognized at fair
value with unrealized gains or losses are identified in other comprehensive income. The
investing activities also include investments in associate –Afterpay. There are some investments
that are sold includes plant and equipments and intangibles (Afterpaytouch, 2017).
c. Financing and financing activities
Financing and financing activities are related with the management of finance in case of needs
for the company with the help of external sources it may includes issue of shares, debentures or
external borrowing. It is identified that the other financial asset which is cash held for the
repayment of the borrowings is increased which was nil in last year. ATG is also able to generate
proceeds for exercise of share options. The equity shares issued during the year were worth
$3000000 and it has also utilized external financing form financial institutions to complete the
financial needs (Afterpaytouch, 2017). The managing of the finance and the costs related to the
arrangement and repayment is considered as financing activities. Financing activities also
includes the interest and bank fees, capital raising expenses and repayments of the internal and
external borrowings.
d. Financial reporting practices
It is necessary for the companies to maintain and follow the IFRS and AAS for true and fair
picture of the accounting statements so that the external stakeholders will be having trust and
confidence towards the company. The report is based on the historic cost and it is presented in
Australian dollars. ATG also complies with IFRS and shows comparative information for the
current and past year. ATG is also following new AS and interpretations relating to method of
depreciation and amortization, relating to materiality and financial reporting requirements for
in Available for sale financial assets that include equity investments. After the initial
measurement of the investment it is identified that the financial assets are recognized at fair
value with unrealized gains or losses are identified in other comprehensive income. The
investing activities also include investments in associate –Afterpay. There are some investments
that are sold includes plant and equipments and intangibles (Afterpaytouch, 2017).
c. Financing and financing activities
Financing and financing activities are related with the management of finance in case of needs
for the company with the help of external sources it may includes issue of shares, debentures or
external borrowing. It is identified that the other financial asset which is cash held for the
repayment of the borrowings is increased which was nil in last year. ATG is also able to generate
proceeds for exercise of share options. The equity shares issued during the year were worth
$3000000 and it has also utilized external financing form financial institutions to complete the
financial needs (Afterpaytouch, 2017). The managing of the finance and the costs related to the
arrangement and repayment is considered as financing activities. Financing activities also
includes the interest and bank fees, capital raising expenses and repayments of the internal and
external borrowings.
d. Financial reporting practices
It is necessary for the companies to maintain and follow the IFRS and AAS for true and fair
picture of the accounting statements so that the external stakeholders will be having trust and
confidence towards the company. The report is based on the historic cost and it is presented in
Australian dollars. ATG also complies with IFRS and shows comparative information for the
current and past year. ATG is also following new AS and interpretations relating to method of
depreciation and amortization, relating to materiality and financial reporting requirements for

Auditing 6
Australian group with a foreign parent company (Afterpaytouch, 2017). This change does not
affects financial reporting as it will be effective after 30 June 2017.
2. Analytical procedures of statement of financial position and financial performance
It is necessary to identify the financial performance of the organization which leads to measurement of
the performance of the organisation in context to the competitors, industry and comparison of past
performance for the internal evaluation (DRURY, 2013). The most popular measure for the
measurement of the financial position are financial statements such as income statement, balance sheet
and cash flow analysis based on this information ratios are calculated which provides the actual financial
position of the company (Afterpaytouch, 2017). There are four main types of ratios that are used to
identify various aspects of the companies. These ratios also support the auditors to evaluate the
performance of the company (William Jr, et al., 2016). These measures are useful for the external
stakeholders who are not able to understand and study the financial statements of the company and
compare the various companies working in the same sector and under specific industry (DRURY, 2013).
Ratio Analysis for Afterpay Touch Group Ltd.
Particulars 2014-15 2015-16 2016-17
Liquidity ratio (Weygandt, et al., 2015)
Current ratio = Current assets/current liabilities 0.160459884 29.6433473 4.70602706
Current assets 582337 27521269 148817409
Current liabilities 3629175 928413 31622727
Efficiency Ratio
Asset turnover = net sales/average total assets 0.006656828 0.06497974 0.16401059
Net sales 23847 1383241 22905727
Average total assets 3582337 21287266 139660047
Australian group with a foreign parent company (Afterpaytouch, 2017). This change does not
affects financial reporting as it will be effective after 30 June 2017.
2. Analytical procedures of statement of financial position and financial performance
It is necessary to identify the financial performance of the organization which leads to measurement of
the performance of the organisation in context to the competitors, industry and comparison of past
performance for the internal evaluation (DRURY, 2013). The most popular measure for the
measurement of the financial position are financial statements such as income statement, balance sheet
and cash flow analysis based on this information ratios are calculated which provides the actual financial
position of the company (Afterpaytouch, 2017). There are four main types of ratios that are used to
identify various aspects of the companies. These ratios also support the auditors to evaluate the
performance of the company (William Jr, et al., 2016). These measures are useful for the external
stakeholders who are not able to understand and study the financial statements of the company and
compare the various companies working in the same sector and under specific industry (DRURY, 2013).
Ratio Analysis for Afterpay Touch Group Ltd.
Particulars 2014-15 2015-16 2016-17
Liquidity ratio (Weygandt, et al., 2015)
Current ratio = Current assets/current liabilities 0.160459884 29.6433473 4.70602706
Current assets 582337 27521269 148817409
Current liabilities 3629175 928413 31622727
Efficiency Ratio
Asset turnover = net sales/average total assets 0.006656828 0.06497974 0.16401059
Net sales 23847 1383241 22905727
Average total assets 3582337 21287266 139660047
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Auditing 7
Solvency ratio
Solvency ratio = (net income after tax +
depreciation)/ short and long term liabilities -0.042197 -3.809332 -0.11961253
Net income + depreciation -39301 -3547852 -9598245
short term + long term liabilities 931358 931358 80244481
Profitability ratio
Operating margin ratio = operating profit/net
sales -1.648257 -2.789729 -0.6109005
Operating profit or income -39306 -3858868 -13993120
Net sales 23847 1383241 22905727
While analyzing the financial performance of the ATG with the help of ratio analysis the current
ratio identifies that there are huge fluctuations in the liquidity position of the company. Current
ratio identifies the condition of the company to mitigate daily operations this ratio is also
considered as working capital ratio. It is considered that the company having the current ratio of
2 is having good availability of the cash to meet and carry daily operations (Weygandt, et al.,
2015). The current ratio in year 2015 was just 0.16 shows critical condition for meeting current
operations. In context to this the position of the company changed and this ration jumped to
29.64 times which shows huge surplus of funds with the company. It is again declined but still
better than the required liquidity ratio 4.71.
Efficiency ratio signals towards the returns generated by the assets of the company, it is
identified that there is continuous improvement in the efficiency of the company (DRURY,
Solvency ratio
Solvency ratio = (net income after tax +
depreciation)/ short and long term liabilities -0.042197 -3.809332 -0.11961253
Net income + depreciation -39301 -3547852 -9598245
short term + long term liabilities 931358 931358 80244481
Profitability ratio
Operating margin ratio = operating profit/net
sales -1.648257 -2.789729 -0.6109005
Operating profit or income -39306 -3858868 -13993120
Net sales 23847 1383241 22905727
While analyzing the financial performance of the ATG with the help of ratio analysis the current
ratio identifies that there are huge fluctuations in the liquidity position of the company. Current
ratio identifies the condition of the company to mitigate daily operations this ratio is also
considered as working capital ratio. It is considered that the company having the current ratio of
2 is having good availability of the cash to meet and carry daily operations (Weygandt, et al.,
2015). The current ratio in year 2015 was just 0.16 shows critical condition for meeting current
operations. In context to this the position of the company changed and this ration jumped to
29.64 times which shows huge surplus of funds with the company. It is again declined but still
better than the required liquidity ratio 4.71.
Efficiency ratio signals towards the returns generated by the assets of the company, it is
identified that there is continuous improvement in the efficiency of the company (DRURY,
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Auditing 8
2013). Assets turnover ratio in year 2017 was 0.16 better than last year 0.064. On the other side
the solvency ratio indicates that the position of the company is critical in terms of solvency. It is
recommended that the company must focus and improve the solvency position although there is
improvement in current year -0.12. It is identified that the long term obligation payment capacity
of the company is not good which is needed to be improved (Weygandt, et al., 2015). The
profitability position of the company is also not good with operating margin ratio in negative
figures indicated the criticalness (DRURY, 2013). The profitability ratio is improved in year
2017 indicating recovery of the company to generate higher profits in the sales.
3. Material account balances and materiality for planning of the accounts
Materiality is the concept related to the importance of entering or omitting a particular
transaction in the business. The activities which are having most significant impact on the
performance of the organisation are considered material. Similarly the transactions and activities
which are having highest financial weight are considered material (William Jr, et al., 2016).
Although there are no specific materials misstatements related to the recording and preparation
of the financial information. Still some of the material account balances that signals towards the
critical condition and needed to be improved (Afterpaytouch, 2017). The revenues of the
company are having increasing trend but still ATG is in loss, it is identified that asset impairment
and provision for onerous contract and merger related costs leads to critical condition of the
company. Finance cost of the company is also on higher side. Cash and other financial assets are
having positive balance indicates enough cash to payout interest and installments. There is
significant growth in trade receivable that is needed to be improved for improving current
financial position. Likewise trade payables are also having huge amount of liability on the
company (William Jr, et al., 2016). The reason behind the materiality of the above mentioned
2013). Assets turnover ratio in year 2017 was 0.16 better than last year 0.064. On the other side
the solvency ratio indicates that the position of the company is critical in terms of solvency. It is
recommended that the company must focus and improve the solvency position although there is
improvement in current year -0.12. It is identified that the long term obligation payment capacity
of the company is not good which is needed to be improved (Weygandt, et al., 2015). The
profitability position of the company is also not good with operating margin ratio in negative
figures indicated the criticalness (DRURY, 2013). The profitability ratio is improved in year
2017 indicating recovery of the company to generate higher profits in the sales.
3. Material account balances and materiality for planning of the accounts
Materiality is the concept related to the importance of entering or omitting a particular
transaction in the business. The activities which are having most significant impact on the
performance of the organisation are considered material. Similarly the transactions and activities
which are having highest financial weight are considered material (William Jr, et al., 2016).
Although there are no specific materials misstatements related to the recording and preparation
of the financial information. Still some of the material account balances that signals towards the
critical condition and needed to be improved (Afterpaytouch, 2017). The revenues of the
company are having increasing trend but still ATG is in loss, it is identified that asset impairment
and provision for onerous contract and merger related costs leads to critical condition of the
company. Finance cost of the company is also on higher side. Cash and other financial assets are
having positive balance indicates enough cash to payout interest and installments. There is
significant growth in trade receivable that is needed to be improved for improving current
financial position. Likewise trade payables are also having huge amount of liability on the
company (William Jr, et al., 2016). The reason behind the materiality of the above mentioned

Auditing 9
accounts are due to the vital importance in analyzing the performance of the company. The
company is having increased revenues still it is facing losses is difficult to judge for a common
man.
accounts are due to the vital importance in analyzing the performance of the company. The
company is having increased revenues still it is facing losses is difficult to judge for a common
man.
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Auditing 10
4. Selection of ten different material account balances as five assets and five liabilities
From the financial statement of Afterpay Group Limited the material account balance is detained
in order to gain the information about the assets and liabilities of company. The ten different
material balance is extracted from the accounting information of Australian is as follows
Assets Amount ($) Liabilities Amount ($)
Cash and cash
equilant
29,601,808 Trade and other
payables
22,835,949
Trade receivables 98.385,482 Income tax payable 1,065, 348
Property plant and
equipments
4,459,859 Reserve 1,891,059
Net loss after income
tax
9,619,630 Interest and bank fee
paid
542,637
Asset impairment 13,595,869 Interest bearing loans 46,747,800
(Source: ASX, 2017)
From the financial statement of Afterpay Touch Group Limited for the year 2017, five assets and
five liabilities are determined in relation to the material account balance (Bloomberg, 2018).
4. Selection of ten different material account balances as five assets and five liabilities
From the financial statement of Afterpay Group Limited the material account balance is detained
in order to gain the information about the assets and liabilities of company. The ten different
material balance is extracted from the accounting information of Australian is as follows
Assets Amount ($) Liabilities Amount ($)
Cash and cash
equilant
29,601,808 Trade and other
payables
22,835,949
Trade receivables 98.385,482 Income tax payable 1,065, 348
Property plant and
equipments
4,459,859 Reserve 1,891,059
Net loss after income
tax
9,619,630 Interest and bank fee
paid
542,637
Asset impairment 13,595,869 Interest bearing loans 46,747,800
(Source: ASX, 2017)
From the financial statement of Afterpay Touch Group Limited for the year 2017, five assets and
five liabilities are determined in relation to the material account balance (Bloomberg, 2018).
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5. Relevancy of material account balances for financial reporting assertion and
applicability of each account
The financial reporting assertion is very important for the company and its shareholders to follow
the standard practices and the rules for the preparation of income statement, profit and loss and
balance sheet. In relation to this, the Afterpay Company has followed the standards of financial
data presentation in relevant manner. The assertion existence is applicable for all the items and
accounting transaction is presentation with the proper evidence. The financial reporting assertion
is valuable for the stakeholder as they determine the stock valuation from the assessment of
financial performance of business in positive conduct manner. The assertions are the regulations
that are developed by the management of organization so that the financial statement of business
can be audited by the external parties. For the above chosen material account balance, the
following assertions are followed in order to deliver the important information to its
stakeholders. The listing of financial reporting assertions is as described as
Name of Assertions Relevancy Applicability
Accuracy For all the selected material
account statement in the
balance sheet and income
statement, these are used in
high accuracy manner so that
the external stakeholder can
determine the actual position
On the other hand, this
assertion is applicable because
the company cannot produce
the misstatement of
information due to the losing
market image in this
5. Relevancy of material account balances for financial reporting assertion and
applicability of each account
The financial reporting assertion is very important for the company and its shareholders to follow
the standard practices and the rules for the preparation of income statement, profit and loss and
balance sheet. In relation to this, the Afterpay Company has followed the standards of financial
data presentation in relevant manner. The assertion existence is applicable for all the items and
accounting transaction is presentation with the proper evidence. The financial reporting assertion
is valuable for the stakeholder as they determine the stock valuation from the assessment of
financial performance of business in positive conduct manner. The assertions are the regulations
that are developed by the management of organization so that the financial statement of business
can be audited by the external parties. For the above chosen material account balance, the
following assertions are followed in order to deliver the important information to its
stakeholders. The listing of financial reporting assertions is as described as
Name of Assertions Relevancy Applicability
Accuracy For all the selected material
account statement in the
balance sheet and income
statement, these are used in
high accuracy manner so that
the external stakeholder can
determine the actual position
On the other hand, this
assertion is applicable because
the company cannot produce
the misstatement of
information due to the losing
market image in this

Auditing 12
of company in the concerned
market. The material account
balance is accurate for the
assets and liabilities as the
balance is extracted from the
financial transactions of
business in the particular time
duration (Cristian, Giacomini
and Teodori, 2018). All the
related information to loans,
payables, receivable and the
interest and income tax is in
fair manner.
competitive era.
Completeness This assertion is also followed
by the Afterpay Limited in
order to prepare the full
information which is recorded
in the financial transactions.
The assertions should also be
followed by the business and
the footnotes information
should also be developed so
that the query and the full
The completeness is also
applicable over the selected
material account as cash and
cash equilant, trade
receivables, payables, and
income and liability items
because the company do not
state the false information as it
is listed on the ASX and the
Australian stock institution is
of company in the concerned
market. The material account
balance is accurate for the
assets and liabilities as the
balance is extracted from the
financial transactions of
business in the particular time
duration (Cristian, Giacomini
and Teodori, 2018). All the
related information to loans,
payables, receivable and the
interest and income tax is in
fair manner.
competitive era.
Completeness This assertion is also followed
by the Afterpay Limited in
order to prepare the full
information which is recorded
in the financial transactions.
The assertions should also be
followed by the business and
the footnotes information
should also be developed so
that the query and the full
The completeness is also
applicable over the selected
material account as cash and
cash equilant, trade
receivables, payables, and
income and liability items
because the company do not
state the false information as it
is listed on the ASX and the
Australian stock institution is
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