Analyzing Ansell Ltd's Audit Report: Key Audit Matters ASA 701 & 570

This report delves into the application of ASA 701 and ASA 570 auditing standards in the context of Ansell Ltd, a company providing safety solutions and security products within the healthcare industry. It addresses the rationale behind ASA 701, which focuses on communicating key audit matters in the independent auditor's report, and ASA 570, concerning the going concern assumption. The report analyzes how these standards are applied in Ansell Ltd's audit, highlighting instances where the company experienced a drop in sales and profit, and examining the management of financial statements and risk factors. It also discusses the importance of disclosing key audit matters to investors and the need for transparency in financial reporting. The report concludes with recommendations for enhancing corporate governance and risk management strategies to improve the company's performance and ensure compliance with accounting regulations. Desklib is your go-to platform for accessing a wide range of solved assignments and past papers to aid in your studies.

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Auditing & Assurance

Ansell Ltd
Executive Summary
There have been many instances in the past where corporate failures have occurred due to
low level of profit or various problems pertaining to the business. The failure can be cited due
to the inefficient management or the weak strategies. Further, the failure of the giant
corporate in the past few decades such as Lehman brother, HIH, etc are eye opener. It stress
upon the role of the auditors. The downfall of these giants puts a question on the role of the
auditors. In this report, the selection of Ansell Ltd has been done and the selected industry is
healthcare where ASA 701 and ASA 570 that is the going concern has principle if focussed in
the report.
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Contents
Introduction...........................................................................................................................................3
The connection of ASA-701 and audit report........................................................................................3
The case of ANSELL Limited and other Healthcare companies..............................................................4
Recommendation..................................................................................................................................6
Conclusion.............................................................................................................................................6
References.............................................................................................................................................8
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Ansell Ltd
Introduction
The company ANSELL Limited is said to have a business of providing the customers with
safety solutions and security products. It gave the major focus on the type of goods which
helps to protect the entire body and is observed to design manufacture and develop many
varieties of products for such concerns. The company also in order to prevent it from any
kind of market risk have put all the risk factors up in the annual report so that it can be
analyzed carefully and major actions can be taken in order to remove them. It has been
clearly stated in some of the accounting standards like ASA-570 and ASA-701 that the
identification and analysis of risk and any type of material misstatement and communicating
barrier in auditing matters should be recorded when the preparation of audit report takes place
(Cooper & Coram, 2015).
The connection of ASA-701 and audit report
The introduction of ASA-701 was made in order to evaluate the actual audit matter. It should
be taken into fact that after the proper assessment of all the audit matters there needs to be
communication made between the management so that an opinion that is free from any kind
of business may be achieved on the important topics. It should be seen that management
directly approaches this type of audit reports for the assessment of the risks present in the
working environment of the organization (Moroney & Trotman, 2016). Also, the main
concern while preparation of the audit report should be to make a clear picture of all the
important topics so that the investors can analyze the document in order to make decisions
about their plans of getting involved in business with the company in upcoming future. It has
been observed that it is very difficult to use and mould some of the important information
while the implementation of ASA-701 is made in preparation of an audit report (AUASB,
2015). The users are seen to be influenced by the material facts rather than any other news
which is prevailing in the market. During the preparation of audit report there are some kind
of audit matters which can't be ignored because of their compulsory nature to track and
calculate the risks that can be prevailing upon the organisation and may cause the firm to lead
to any kind of uncertainty or risk in future relating to the audit process or any of the
transactions that are taking place within the company (CAANZ, 2016).
It is the sole duty of the auditors in order to disclose all of their key audit matters in their
audit reports because they play a vital role in the assessment of the company's financial report
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Ansell Ltd
and also the after the completion of audit report the facts that were concealed while
preparation of the report should also be released (Christensen, 2011). These information’s
will be very helpful for the companies decision-making facility and if the facts were tried to
be kept hidden and fabricated then it will directly impact on the performance of the company
leading it to have difficulties while making any decisions or performing any task. ASA-570 is
set to allow the auditor's with the responsibility in order to manage the financial statements of
the organization so that any implications can be used by the report in the audit report which is
prepared by them (Merchant, 2012).
The company follows the Going Concern concept of GAAP in which it is clearly stated that
an organization should work in a manner that its states it is never going to end. This concept
makes it easier to make decisions for the organization by assuming that working Period of the
firm is never going to end and the firm will last forever (CAANZ, 2016). While preparing the
reports using these kinds of principles the company is allowed to analyze all the values of
Assets and liabilities and the manner which will be very helpful for it to calculate the actual
expenses and cause that are incurred by it.
The case of ANSELL Limited and other Healthcare companies
It has been seen that the ANSELL Limited has tried to sell its fixed assets because of the
major setback of the Going Concern and thus the company has to conduct its business on the
current assets or by taking Assets on rent from now on. So it should be checked at the end of
every year the concept of Going Concern is being used by the organization or not and hence
the auditor shall also mention in his report. The organization has also stated that disposal as
per relevant ISA-570 that it wishes to dispose of is not a Going Concern (Roach, 2010).
They were all the matters that were considered by the auditors during the preparation of audit
report which would have been considered a cab disclosed. Some of them are:
Ansell Limited has experienced a drop down in sales and profit in comparison to the data of
2016 which went down by 4.4% and also the EBIT it went negative by 3.5%. Also, the
earnings per share were reduced by 14.2% because of the result of low sales which have been
resulted because of the currency change that was experienced by the company because of its
International dealings (Ansell Limited, 2017). It was clearly seen that the sales of the
company went down and thus the company should have taken preventions of reducing the
cost so that the profit can adhere. These were all key audit matters and were required to be
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present in the audit report so as to inform the investors and the customers of the form
regarding this downfall.
These were not the only information that was concealed by the auditors. Some of the
important factors which were to be accrued at the end of the financial years and had impacted
the business in relation to its profit were not taken into consideration by the group of auditors.
Also, the auditor's need to clearly depict the affairs that are related to the operations of the
Ansell Limited in the audit report (Ruhnke & Schmidt, 2014). Ansell Limited should design
and safety measures for the workers and peoples living nearby by installing new and
premium safety plans and measures. Going by the operations of the healthcare industry it can
be commented that the company should install fire safety plans and also other effective safety
measures that can be checked regularly by installing proper and legitimate safety equipment
in the new sites that are required by the organization (Ansell Limited, 2017). The auditors
have failed to ensure that these types of risk measures are taken into the application which
may affect both the organization and the environment at the same time. It is imperative for
the healthcare companies that they should formalize a risk ascertaining committee which may
look after these kinds of obligations and thus try to improve new safety measures in the
company (Niemei & Sundgren, 2012).
Ansell Limited is said to earn its profits in the currency of dollar and hence tremendous rate
changes in the foreign exchange have been observed that have led to huge losses that are
being incurred by the organization. Also, it was observed that the technological department of
Ansell Limited was very important for the assessment of audit report because almost all the
companies’ goodwill was dependent on the operations that were being carried out by the
information technology setup. Further, it is noted that there are new sets ups that paves the
way for more enhanced process (AUASB, 2015). Companies such as CSL limited, Cochlear
Limited, Sonic healthcare are into establishing new manufacturing set ups that needs proper
attention. Also, the application of new manufacturing setups which are automatic or manual
which resulted in the malfunctioning of the organizations activities. There were also reasons
that were unknown relating to the hazard of risk for human life. The organization should take
this point into consideration at is as it is very important and also they try to inculcate new
safety and health measures for the environment and public so that the risks can be removed
from the working environment of the organization (Dauber, 2009). The board was said to be
enhanced with new directors who are very experienced in this field and had great knowledge
in respect to this industry (CAANZ, 2016). The board has also made decisions and new
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Ansell Ltd
implications for the business with required funding which was being made by there were no
known sources. The sources of find where to be mentioned in the audit report as they need a
backup for borrowings that may be needed by the firm in future if there is any constraint
arising in relation to the payments. Hence this was also a risk that was not managed carefully
by the auditing team does create a risk for the concerned workers and customers.
The key audit matter should be included in the audit report of the healthcare industries as it
will help the investors in taking correct decisions. These key audit matters not only have a
financial impact but also has a nonfinancial impact on the Governance of the organization's
audit report (Matthew, 2015). Thus the application of this kind of risk management strategies
will be very helpful in the preparation of the audit report and also the new implications of risk
management strategies in relation to the corporate governance principles should be taken into
use while preparation of the audit report.
Recommendation
It should be seen that the financial and nonfinancial aspects of the companies audit report
might be kept in front of the customers and investors so diet day can make proper decisions
in relation to the investments that they are going to make in the organization. It not only helps
to evaluate the company's performance but also make this very profitable for it on both
National and local level. It should be seen that the company exercises transparency while
preparation of the audit reports. The auditor with have been hired by the organization should
also look after the processes and confirm whether they are working in accordance with the
principles and Standards or not. The auditor is also asked to ensure that the company is
running in a smooth manner and also the timely audit report is being made so that the
material misstatement can be safeguarded in the best interest of investors. Healthcare
industries should also try to enhance the ethics and application of corporate governance in its
management so that new risk management strategies may be applied and an improvement in
the profit statement can be made.
Conclusion
After the clear analysis of all the reports of the company, it can be clearly stated that the
healthcare industries needs to comply with the accounting regulations in order to get the best
output result. All the decisions relating to the financial matters should be depicted in the
financial statement as this may help the business in many concerns and also may affect the
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economic conditions of the country if they are not managed in a particular manner. Hindi it is
very important for Ansell Limited and other healthcare organization so that all the investors
can be informed about the position of the organization. Hands it should be ascertained that
the financial statements depicting share values in relation to the business carried out by
Ansell Limited and also c that the company is working in accordance to the principles and
regulations that are obligatory.
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References
Ansell Limited. (2017) Ansell Limited annual report and accounts 2017 [online]. Available
from: http://www.ansell.com/en/About/Media-Center/Press-Releases/Ansell-Limited-
Announces-2017-Full-Year-Results.aspx [Accessed 20 May 2018]
AUASB. (2015) Auditing Standard ASA 701 Communicating Key Audit Matters in the
Independent Auditor’s Report[Online].
Available at: http://www.auasb.gov.au/admin/file/content102/c3/ASA_701_2015.pdf
[Accessed 20 May 2018].
CAANZ. (2016) Auditing, and Assurance Handbook 2016 Australia. Australia: John Wiley
& Sons.
Christensen, J. (2011) Good analytical research. European Accounting Review. [online].
20(1), p. 41-51. Available from: https://doi.org/10.1080/09638180.2011.559030 [Accessed
21 May 2018]
Cooper , B. and Coram, P. (2015) Modern Auditing & Assurance Services. 6th ed. Australia:
Wiley.
Dauber, N. (2009) Wiley The Complete Guide to Auditing Standards, and Other Professional
Standards for Accountants. NY: John Wiley & Sons.
Matthew, S. E. (2015). Does Internal Audit Function Quality Deter Management
Misconduct?. The Accounting Review [online]. 90(2), p. 495-527. Available from:
https://doi.org/10.2308/accr-50871 [Accessed 20 May 2018].
Merchant, K. A. (2012). Making Management Accounting Research More Useful. Pacific
Accounting Review [online]. 24(3), p. 1-34. Available from:
https://doi.org/10.1108/01140581211283904 [Accessed 20 May 2018].
Moroney, R., and Trotman, K.T. (2016) Differences in Auditors' Materiality Assessments
When Auditing Financial Statements and Sustainability Reports. Contemporary Accounting
Niemi, L., and Sundgren, S. (2012) Are modified audit opinions related to the availability of
credit? Evidence from Finnish SMEs. European Accounting Review. [online] 21(4), p. 767-
796. Available from: https://doi.org/10.1080/09638180.2012.671465 [Accessed 21 May
2018]
Research. [online]. 33(2), p.551-575. Available from: https://doi.org/10.1111/1911-
3846.12162 [Accessed 9 May 2018]
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Ruhnke, K., and Schmidt, M. (2014) Misstatements in financial statements: The relationship
between inherent and control risk factors and audit adjustments. Auditing: A Journal of
Practice & Theory. [online]. 33(4), p.247-269. Available from: https://doi.org/10.2308/ajpt-
50784 [Accessed 9 May 2018]
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