University Audit, Assurance and Compliance Report Analysis

This report provides a comprehensive analysis of an audit, assurance, and compliance case study, focusing on Double Ink Printers Limited (DIPL). It begins with an examination of the audit plan, emphasizing the importance of financial data analysis techniques, such as benchmarking and ratio analysis, to assess DIPL's financial performance and identify potential issues. The report then delves into the identification of inherent risks, including inventory risk and acquisition risk, detailing their causes and potential impacts on financial statements. Furthermore, it addresses fraud risks, outlining potential fraudulent activities and their audit implications. The report also includes clarifications on financial ratios and explanations of audit impacts, providing a detailed understanding of the audit process and the challenges faced by DIPL. Finally, it examines the fraud risks and their audit implications, offering insights into mitigating these risks. Overall, the report provides a thorough assessment of the audit, assurance, and compliance aspects of DIPL, offering valuable insights into financial analysis and risk management.

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

1AUDIT, ASSURANCE AND COMPLIANCE
Table of Contents
Answer to Question 1:.....................................................................................................................2
Answer to Question 2:.....................................................................................................................5
Clarification:................................................................................................................................8
Reply to Question 3:........................................................................................................................8
Answer to Part A:........................................................................................................................8
Answer to Part B:.......................................................................................................................12
Reference List................................................................................................................................14

2AUDIT, ASSURANCE AND COMPLIANCE
Answer to Question 1:
In the technique for setting up the audit plan of Double Ink Printers Limited (DIPL), the
investigative strategy related with financial data gives gigantic esteem. Actually, audit plan
conveys the required bearings and rules to the evaluators amid the audit operations. Exactly,
audit plan empowers the evaluators in keeping up the cost of audit in a specific point of
confinement for anticipating misconception with the audit customers (Alam 2014). The logical
approach identified with the financial data of DIPL indicates the technique for spreading
financial data from the different financial assertions of the organization. The strategy for
breaking down the financial data of the organizations could be brought out through a few
systems.
With the assistance of diagnostic approach for evaluating the financial data, the
accountants and financial investigators of the organization s could use such data for undertaking
distinctive financial and accounting choices (Baylis et al. 2017). The normal size explanatory
approach empowers in the strategy for dismembering the financial presentation of the
organizations from the regular perspectives. One of the essential advantages is that it helps in
expanding support in differentiating the financial reports from different financial courses of
events.
The accountants and financial experts could use diverse lines of things from the financial
reports and they could confirm their base of planning for the organizations. For example, the
enlistment methodology of various financial and accounting things in the financial reports, for
example, net liabilities, resources, proprietor's value and others could be viewed as combined
with appraisal of straying from the typical situation (Brawley et al. 2015).

3AUDIT, ASSURANCE AND COMPLIANCE
Benchmarking is the primary diagnostic procedure of financial data and this strategy
could be used for assessment of the audit plan of the organization. The benchmarking procedure
helps in distinguishing the changes in the financial reports of the organizations and the genuine
explanations for the events of these differences could be learned by recognizing the underlying
driver of these fluctuations. Other than the procedure of benchmarking, ratio investigation is
declared as a noteworthy scientific technique for financial data of the organizations. Ratio
examination is colossally advantageous in differentiating the financial explanations of at least
two organizations for setting up the arrangement of audit (Chambers and Odar 2015).
The embraced scientific methodologies of the organization s in assessing the financial
data has huge impact on the improvement of the procedure identified with audit arranging and
this is vital to spread financial data among the diverse bureaus of the organizations. The
accompanying ratios have been considered for this reason:
RATIOS 2013 2014 2015
Current Ratio 1.42 1.47 1.50
Quick Ratio 0.83 0.94 0.85
Gross Profit 17.55% 16.13% 15.20%
Net Profit 6.90% 6.08% 6.84%
Return on Equity (ROE) 25.78% 21.25% 24.26%
Return on Assets (ROA) 18.25% 14.41% 11.37%
Debt to Equity 10.25% 8.00% 67.65%
Debt to Capital 7.25% 5.42% 31.69%
Interest Coverage 44 43 5

4AUDIT, ASSURANCE AND COMPLIANCE
Clarifications:
RATIOS EXPLANATIONS AUDIT IMPACT
Current
Ratio
Current ratio has demonstrated
upward pattern driven by change
in current resources from FY13
to FY15.
From the DIPL case, there are a ton of things that are to
be viewed as in order to help with settling on arranging
choice for the review. Something that must be
considered is the installment of inventories utilizing the
money of the nation from which the crude materials
have been requested from. There is the danger of
change in so far as freedom of inventories is concerned
on the grounds that every single Asian nation don't
utilize one cash. An arrangement for vacillation should
there be put aside for the other money related year.
Quick
Ratio
This ratio has stayed pretty
much level as the proportionate
changes in both current
resources and liabilities have
been comparative.
The ratio is driven by the estimation of the present
resources and liabilities and as we realize that the
estimation of some present resources is unpredictable
because of market connected esteem or
acknowledgment estimation of the advantages
subsequently the ratio can be controlled.
ROE The ratio has declined because
of the way that according to
bookkeeping strategy the net
benefit must be added to the
save of the organization thus
value base has expanded and the
As respects the income that is gotten for capacity of E-
Books, the same ought not be perceived when
solicitations for the charges are sent however when the
same is gotten. This is on account of DIPL dangers
inability to pay inside time by the distributing
organizations. This subsequently implies monies got

5AUDIT, ASSURANCE AND COMPLIANCE
ROE has declined. from capacity should just be perceived upon the
genuine installment.
ROA
ROA of the organization has
declined. The purpose behind
the same could be the way that it
has obtained resources of NPL,
which has not contributed much
to incomes, subsequently the
denominator has expanded
while numerator has not
expanded proportionality thus
the ROA has gone down.
Concerning the journal and medical books by NPL
distributing organization getting to be plainly old in
view of the new innovation, the organization should
move quickly and end the agreement they have with
NPL in light of the fact that they have not purchased
any offers in the organization but rather just operation.
Net
profit
Margin
Net income margin has stayed
stable by virtue of comparative
development in the incomes and
net income. This is
characteristic of the way that the
productivity of the organization
has not expanded.
DIPL ought to likewise not depend on the straight line
strategy for devaluation in ascertaining the deterioration
of their advantages yet ought to depend on a technique
that considers that after consistently the estimation of a
benefit changes and thusly deterioration ought to be
computed from the present estimation of the benefit and
such strategies incorporate total of-year technique.
Answer to Question 2:
RISK REASON OF INHERENT RISK RISK OF MATERIAL

6AUDIT, ASSURANCE AND COMPLIANCE
MISSTATEMENT
Inventory
Risk
1. This hazard is characterized to
be a hazard or the likelihood which that
because of value change/cash rate
vacillations.
2. The danger of physical harm and
additionally distorting of valuation of the
same
3. Complexity of the stock
administration framework
1. Valuation of stock will not be
precise as the figures might be exaggerated
or downplayed
2. Due to many-sided quality of the
exchange, the odds of blunders and danger
of material error increments
Acquisition
Risk
Acquisition is done on the premise of
some conceivable vital arrangement and
projections and the same can turn not be
valid because of changes in ecological
components.
1. The goodwill is made by the value
that is paid in overabundance to the
incentive and in addition intangibles are
made and inspectors need to watch out for
the same.
2. As, the NPL esteem has out of date
and the foreseen misfortune is characteristic
and not considered in this said obtaining so
it has made a potential danger of material
error.

7AUDIT, ASSURANCE AND COMPLIANCE
Certain risk components could be raised from the business operations of DIPL. As per the
contextual investigation, the administration of an organization has neglected to enter different
business exchanges of the organization. This method has coordinate organization with the
irregularities in the arranging of various showcasing and deals exercises of the organization
(Earley et al. 2016). The general financial investigation did with regards to DIPL states that the
organization has neglected to finish the focused on level of benefit from the general deals
income. The essential reason is the insufficiency and wastefulness of the administration of the
organization in business operations. In this manner, it could be watched that the organization has
neglected to gage the impact of various miniaturized scale and full scale financial components
having sway on the business operations of DIPL like political, financial and social elements.
Consequently, it could be expressed that the lower income and overall revenue of the
organization has brought about inalienable dangers (Graham 2015).
Additionally, the staffs of DIPL have expanded quickly and thus, the innate risk has
expanded too. The inalienable risk level of the organization rises in view of the absence of
polished skill and experienced capability of the staffs. This is on the grounds that the
accomplishment of a business is dependent to a great extent on the execution of its staffs (Homb
et al. 2014). Because of such naiveté and wastefulness of the workforce of DIPL, there is more
noteworthy possibility of intrinsic dangers, since the representatives will undoubtedly lead
botches. In view of the given instance of DIPL, the issues could be found in the progression
procedure of CEO of the organization. Because of this, such process has brought about ascent in
natural dangers of the organization. The primary intrinsic risk could be seen in the inadequate
strategy for choosing the CEO progression of the organization.

8AUDIT, ASSURANCE AND COMPLIANCE
Other than this, it could be watched that DIPL does not have adequate staffs for dealing
with its business operations. This reason has brought about ascent in characteristic dangers in the
general business working of DIPL. Subsequently, from the above assessment, it could be
watched that these are the essential reasons of the ascent in natural dangers in the business
operations of DIPL (Jones and Beattie 2015).
Clarification:
It has been gathered that there is high measure of workload on the representatives of the
organization. The expanding workload brings about poor accounting of the organization and this
issue additionally brings about various issues of income, insufficient working outcomes
incapable solvency and liquidity position of the organization. Other than this, the danger of
blunder could be portrayed in the financial articulations because of absence of compelling
understanding. In this unique situation, the administration of DIPL needs to assume a compelling
part. It has been watched that the DIPL administration needs responsibility and uprightness and
because of this reason, they are experiencing the worry of losing notoriety in the business group.
The more noteworthy motivating force structure identified with administration shapes extra
weight on administration and it brings about material misquotes in the financial reports (Levy
2015).
Reply to Question 3:
Answer to Part A:
In the present business organizations, extortion risk is pronounced as the primary risk
with regards to the same. Due to the event of such fake risk, the business organizations
frequently acquire serious losses in its business resources (Martin, Sanders and Scalan 2014). In

9AUDIT, ASSURANCE AND COMPLIANCE
greater part of the circumstances, the essential disappointment could be seen among the
workforce and such disappointment frequently constrain them to participate in different sorts of
fakes in organizations. Another essential reason of extortion is the desire of different financial
specialists of the organizations. The organizations regularly make guarantees for accomplishing a
particular financial execution that adds to more prominent misrepresentation level (Nalewaik and
Mills 2016).
FRAUD RISKS
IDENTIFICATION OF
FRAUD RISK
AUDIT IMPACT OF FRAUD
RISK
1. The first hazard
distinguished here is
the planned distortion
of financials records.
2. The second hazard
distinguished here is of
misappropriation of
assets.
• There have been many
occasions where the settled
installment have been postponed
• There are many negative
contract that can call for
distorting
• Performance evaluation
has been made on the premise of
offers and benefit rate
subsequently there is motivating
force for workers to distort
• Process needs to more
exhaustive in type of
experienced individuals and
additional time gave for the
same
• There is need legitimate
check for deals figures
• More distrust is called
for
Types of Risk Identification

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Fraud risk- In the setting of the business operations of
DIPL, the fundamental risk that could happen from
its business exercises is the inclusion of the staffs
in different sorts of fake exercises. This could
happen because of disappointment of the workers.
As per the given instance of DIPL, it could be
watched that there is gigantic weight from the piece
of the leading body of the organization to embrace
another arrangement of accounting. The selection
of this new arrangement of accounting builds up a
substantial weight on the workforce of the
organization and such weight brings about
extortion. Consequently, it could be expressed that
for adapting up to the compromise weight, the
staffs may embrace false exercises, which would
prompt inaccurate treatment of the general system
bringing about material errors.
As per the contextual investigation, it could
be watched that the system of wasteful treatment of
the usage of new data innovation brings about
insufficient treatment of couple of essential
financial and accounting exchanges toward the
complete of the year. This general procedure may
bring about loss of material misquotes and financial
data. Due to such freshness and wastefulness of the

11AUDIT, ASSURANCE AND COMPLIANCE
workforce of DIPL, there is more prominent shot of
innate dangers, since the representatives will
undoubtedly direct oversights. In light of the given
instance of DIPL, the issues could be found in the
progression procedure of CEO of the organization.
Because of this, such process has brought about
ascent in characteristic risks of the organization.
The fundamental inalienable risk could be seen in
the ineffectual strategy for choosing the CEO
progression of the organization. It has been
watched that the DIPL administration needs
responsibility and uprightness and because of this
reason, they are experiencing the worry of losing
disrepute in the business group.
Procedure of financial reporting- Another significant risk is related with the
strategy of financial detailing. The more serious
risk of incapable financial statements could be
seen, if extra financial desires could be seen from
various partners for the financial revelations. This
is valid in instances of declaration from the
administration of the organization to accomplish
specific focus of execution and specific focus of the
destinations for obligation procurement. In light of
the financial reports of DIPL, it could be watched
that there is ascend in income of the organization
from 2013 to 2015. Other than this, there is

12AUDIT, ASSURANCE AND COMPLIANCE
ascending in net wage and net salary of the
organization. In light of the contextual
investigation, it could be expressed that DIPL has
obtained a credit of 7.5 million from BDO Finance
in 2015.
As indicated by the contextual
investigation, it could be watched that as per the
understanding of advance, DIPL is required to keep
up a present ratio of 1.5 and obligation to-value
ratio underneath 1. The necessity of this specific
game plan may be to create weight on the
organization for reimbursing the credit as per the
concurred course of events. These necessities could
bring about forged exercises, since DIPL may
control the financial proclamations for bogus
delineation of the financial state of the
organization. On the off chance that DIPL is not
ready to keep up the required benchmark, the
organization would not be qualified to get credit
from BDO Finance (Pitt 2014).
Answer to Part B:
In light of the given case, it could be watched that the procedure of valuation of the crude
materials of the organization in view of normal cost is not suitable and viable, since the present
paper cost is over the normal cost. The essential risk in the discovery of deceitful exercises of the
staffs for executing new arrangement of data innovation could be recognized by checking the

13AUDIT, ASSURANCE AND COMPLIANCE
assignments in different expressions of occupations. Other than this risk, the risk related with the
procedure of financial announcing could be distinguished through assessment of the diverse
financial reports and explanations of the organizations with respect to the accountant s and
financial auditors through various control and expository instruments. Such procedure of
checking is required to be led in a convenient way (Warren 2014).