Comprehensive Audit Assurance and Compliance Report: DIPL Corporation

This report provides a comprehensive analysis of audit assurance and compliance, focusing on the financial reporting of DIPL Corporation. The report begins by applying analytical procedures to DIPL's financial information, explaining how the results influence audit planning decisions. It then identifies...Read More

Running head: AUDIT ASSURANCE AND COMPLIANCE
Audit Assurance and Compliance
Name of Student:
Name of University:
Author’s Note:

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Answer to Question 1:
Application of analytical procedures to the financial report information of DIPL
The information provided in the financial report of DIPL is based on development of the
audit plan. The audit plan has been further seen to be considered as per the particular guideline
followed during the undertaking of the audit process. In general, this particular this has helped
the assessor in considering the audit cost at a reasonable level and assists in the aversion in the
misunderstanding along with clientele. The analytical approach to the financial considerations of
DIPL has been referred by dissemination of the information in the financial declarations of the
company. The main process of the evaluation analytical approach has been considered based on
the specific approach of the financial declarations, accountants and the financial analysts which
has been seen to be vital in making business decisions.
The analytical approach has been further based on the common sizing with the analysis of
the reference point. This has been conducive in the comparison of the financial statements as per
different period in different corporations. The ratio analysis has been based on the comparison of
the financial declarations in the planning of the audit (Mahmoud HOSSEINNIAKANI, Inácio
and Mota 2014).
Explanation of the way the results influence planning decisions for the audit
The planning decision results has been considered for the audit planning and is necessary
for the various types of the results of the analytical approach taken into consideration for the
disseminating information based on financial statements. The different outcomes of the ratio has
been evaluated as per current ratio of the firms for DIPL. This has been computed as 1.42 in

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2013, 1.46 in 2014 and 1.5 in 2015. The profitability aspect of the ratio of calculated as per 0.068
in 2013, 0.60 in 2014 and 0.06 in 2015. The profitability ratio based on the profit margin has
been further able to reveal the position of the net income earned by the firm in compared to the
net sales from DIPL. Despite of this, the assessor needs to understand whether the expenses are
low or high and the management is having the requirement to curtail the budget and time. The
favourable and the unfavourable changes in the ratio can be factor has been further based on the
factor as per the audit assessment and soundness in the financial position. Similarly in 2015 and
2013 the solvency ratio has been identified to be 0.62 and 0.21 (Yasin and Nelson 2013).
Answer to Question 2:
Identification of inherent risk factors that arise from nature of business operations of DIPL
The several types of the important factors in the auditing have shown several incidences
of material misstatements in the financial announcements of a particular concern. The systematic
and the unsystematic risks have been considered from the financial misstatements and the
financial declarations of the corporation. The various types of the risks detected has been
considered based on the both financial as well as non-financial factors. Nevertheless, an
evaluator might consider it as demanding to detect certain risks. The risks identified may be
linked to the various types of the other risks correlated to omission and diverse errors and the
diversified nature of the errors in business operations of DIPL (Sultana et al. 2015).
Based on the given scenario, the numerous transactions are particularly omitted by the
accountants otherwise the management of the DIPL Corporation. This can sequentially be
directed for the various types of the inconsistency particularly with the essential planning along
with the sales activities. Furthermore, the evaluations based on the financial declarations which

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have been revealed based on accomplishment of the profit from the revenue generated from
sales. The analysis of the present case has been able to reveal that the IT implementation process
has been generated with particular issues. DIPL is not seen to be having adequate staff to handle
the execution process and the execution from the installation and carrying out of the
reconciliation and the testing of new arrangement by the end of year (O. et al. 2013).
The various considerations for the recording of the cash receipts have been considered as
per the finance professionals of the company and the inherent risk has not been properly handled.
The staff member has been able to follow an appropriate sequence for properly registering the
sequence of account receivables (Kubuabola 2013).
Risk and way it might affect the risk of material misstatement in the financial report
The different types of the inherent risk have been considered based on the susceptibility
and the particular consideration of the material misstatement.
Excessive pressure on employees and management- The Excessive workload of the members
of the staff of the corporation has further led to poor bookkeeping. The certain attributes has
been considered mainly based on the issues such as encountering of poor liquidity, poor
operating outcomes and various types of the cash flow issues (Hummel, Schlick and Fifka 2017).
Risks of errors or else incorrect misrepresentation- The identified remains has been further
seen to be based on intricacy and the errors of the risk which have been misrepresented
simultaneously.

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Integrity of the entire management- DIPL management has been essentially seen to lack the
required integrity and the expectation to prepare for the reputational loss in the entire business
community.
Unusual pressure on management- At times the existence of the incentives for the
management has been based on the exits incentives for the misstatements in the pecuniary
declarations.
Nature of entity business- The aforementioned facets may be further seen to be affected base on
the various types of the consideration which has been seen to be related to inherent risk of the
business entity for the business entity for the analysis of the audit planning structure. DIPL has
led to the growth of the business through major economic competitive circumstances. (Wade et
al. 2017).
Answer to Question 3:
A) Identification and explanation of two key fraud risk factors relating to
misstatements arising from fraudulent financial reporting
Asset Loss The indicated risk has been seen to lead to the considerable amount of losses
pertaining to the asset for the fraud. The dissatisfaction of the workforce has
been further seen to be based on the employees who can induce the involvement
in the fraud. Furthermore, the expectations from the investors to report for the

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financial outcomes or particularly based on the management to consider the
specific performance based targets, which leads to high risk of fraud. This has
been further seen to be considered based on the declaration of the specific
financial outcomes in averting the guarantees generated.
Fraud incidence for
workforce
engagement
The various types of the fraud risk has been seen to be associated to the
operations of the firm DIPL. Some of them have been seen with the main
operations pertaining huge pressure from particularly the board to acquire
a novel accounting system. The excess pressure from the employees has
been carrying the installation process of new IT systems which might
lead to accounting fraud. This has further revealed that the employees
may get engaged to the fraudulent activities and handle the reconciliation
process and subsequently material misstatement. The case study has
further focused on the incidences of improper handling of the process for
the implementation of information technology and the improper
allocation of certain transactions at the end of each year. This may further
lead to losses pertaining to material misstatement and risk of fraud.
Financial reporting
fraud
The financial reporting of the fraud has been identified as another risk
component. During the time of excessive pressure it has been seen that outside
financiers can declare on the specific announcements on financial
management to meet certain goals to qualify for the acquisition of the
debt. The high risk has been further seen to be based on the improper
financial announcements. The financial position of the DIPL has depicted
that the various considerations for the revenue has shown an increasing
trend from 2013 to 2015. Furthermore, the total assets and the current

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assets of DIPL have also increased considerably increased. Moreover, the
gross profit has been also considerably increased in the period of 2013 to
2015. The various types of other consideration for the study has been
able to focus on the loan amounting to 7.5 million particularly in the loan
agreement made maintain the current ratio of 1.5 and the along with this
debt equity of the company has been seen to be lower than 1. This
requirement has been able to relate to the various types of the
considerations made from the improper reflection of the financial
position. The company has failed with the various types of the reflection
which is related maintain the definite benchmark which can make the
company non-eligible for the finance of the BDO finance.
Unsuitable average
cost
Based on the given case it has been sees that the valuation of the different raw
material inventory at a certain average cost was not appropriate as the present
cost was not suitable because the cost of paper was more than the average cost.
The risk of the fraudulent actions has been further seen to be persistent
with the consideration of new IT system which can be monitored based
on different activities at different phases. The risk of the financial
reporting has been further seen to be based on the evaluation of the
financial statements and monitored at the same time (Geertse et al. 2015).

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Reference
Geertse, T. D., Holland, R., Timmers, J. M. H., Paap, E., Pijnappel, R. M., Broeders, M. J. M.
and den Heeten, G. J. (2015) ‘Value of audits in breast cancer screening quality assurance
programmes’, European Radiology, 25(11), pp. 3338–3347. doi: 10.1007/s00330-015-3744-x.
Hummel, K., Schlick, C. and Fifka, M. (2017) ‘The Role of Sustainability Performance and
Accounting Assurors in Sustainability Assurance Engagements’, Journal of Business Ethics, pp.
1–25. doi: 10.1007/s10551-016-3410-5.
Kubuabola, S. (2013) External Quality Audit, External Quality Audit. doi: 10.1016/B978-1-
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Mahmoud HOSSEINNIAKANI, S., Inácio, H. and Mota, R. (2014) ‘A Review on Audit Quality
Factors’, International Journal of Academic Research in Accounting Finance and Management
Sciences, 4(2), pp. 243–254. doi: 10.6007/IJARAFMS/v4-i2/861.
Sultana, N., Singh, H., der Zahn, V. and Mitchell, J.L., 2015. Audit committee characteristics
and audit report lag. International Journal of Auditing, 19(2), pp.72-87.
Yasin, F. M. and Nelson, S. P. (2013) ‘Audit Committee and Internal Audit: Implications on
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