Audit Assurance and Compliance Report: DIPL's Financial Performance

This report provides a comprehensive analysis of an audit assurance and compliance report, focusing on the financial performance of DIPL. It begins with an application of analytical procedures to DIPL's financial statements, evaluating the impact of results on audit planning decisions. The report then identifies inherent risk factors arising from the nature of DIPL's business operations, detailing how these risks could lead to material misstatements in the financial report. Furthermore, the report identifies and explains two key fraud risk factors related to misstatements arising from fraudulent financial reporting, including asset loss and financial reporting fraud. The analysis includes a review of financial ratios, assessment of management integrity, and the impact of IT infrastructure implementation on financial reporting processes. The report highlights the importance of understanding and mitigating risks to ensure accurate and reliable financial reporting.

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

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Table of Contents
Answer to Question 1:.....................................................................................................................2
Answer to Question 2:.....................................................................................................................3
Answer to Question 3:.....................................................................................................................7
References........................................................................................................................................9
List of Appendix............................................................................................................................11

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Answer to Question 1:
Application of analytical procedures to the financial sreport information of DIPL
The various types of the aspects of the financial processing of DIPL have been developed
based on the audit plan. The blueprint of the audit has been considered based on the time taken to
frame the audit plan. In this aspect, the assessor has been able to consider the auditing costs at a
reasonable aspect for assisting and averting the misunderstanding with the clientele. The
declarations associated to the analytical framework for DIPL is considered as the dissemination
process of the information in terms of the financial proclamations. The evaluation mechanism
needs to be set as per the proper utilization of the variety of the mechanisms. The analytical
procedure needs to be based on the financial considerations. The different types of the evaluation
process needs to be considered as per the utilization of the various mechanism procedures.
Despite of this, the analytical process needs to be analysed as per the financial declarations of the
firm. The various types of the evaluation process is based on the dissemination of information as
per the financial information for DIPL. The evaluation process has been carried as per utilizing
the various types of the mechanisms. The financial declarations has been further analysed as per
the vital decisions made for the business (Regoliosi & d’Eri, 2014).
The common sizing for the analytical process has been considered as per the common
reference point. The comparison of the financial statement has been done based on the
consideration of the various corporations. The assessors need to consider the financial report and
evaluate the method for reporting. The registering of the items as per the net liabilities and the
assets needs to consider as per the owner’s equity in the financial report. This needs to be further
examined as per digressing from normal procedure. The analytical benchmarking is based on the

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utilization of the audit plan. The actual variance from the benchmark from the financial
declarations is seen to detect the root cause (Regoliosi & d’Eri, 2014).
The ratio analysis has not been considered appropriately and this needs to be further
considered for the plan of audit.
Explanation of the way the results influence planning decisions for the audit
The decisions associated to the audit plan have been based on the influence of the
analytical approach and segregation of the data as per the annual report. The current ratio has
been seen to be 1.42 in 2013, 1.46 in 2014 and 1.5 in 2015. In the profitability ratio, the profit
margin of the company has been seen to be 0.068 in 2013, 0.60 in 2014 and 0.06 in 2015. Based
on the various types of the information associated to the profitability, the various aspects of the
net income are compared based on the net sales of the DIPL firm. The assessor will be able to
understand the expenses are appropriate and whether the same can be considered to curtail the
budget and time consideration of the firm. The various natures of the changes in the ratio has
been considered as per the soundness of the financial position and financial condition. For
instance, the solvency ratio is discerned as 0.62 in 2013, 0.44 in 2014 and 0.21 in 2015. This has
been further seen to be considered as per the trends of the financial statements. The comparison
of the ratio for the three periods has been seen to be based on the overall cash transactions based
on the long term liability evaluation of the corporation (Yang & Jia, 2013).
Answer to Question 2:
Identification of inherent risk factors that arise from nature of business operations of DIPL

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The several types of the important considerations have been considered as per the
material misstatements in the financial consideration of the specific concern. This has been
further seen to be considered as per risks reference as per the misstatement in the financial
decisions taken by the corporations. The identified risks have been able to reflect the various
facets of the misstatement as per the financial data. The different nature of the risks has been
further associated to the financial and non-financial factors which can be considered to be true
with a fair view of the financial declarations. The evaluator may further see it demanding for the
associated risk. The evaluator may further detect the risk for non consideration of the various
natures of the distinct risk factors. The identified risk may also be seen to be related to the
diverse errors in the specific bookkeeper. With this essence the main form of the inherent risk
may arise in terms of the DIPL business operations (Ryoo et al., 2014).
The given study has shown the numerous transactions which are particularly omitted by
the accountants or the management of the corporation of DIPL. This can however be sequentially
avoided by DIPL. The corporation has direct lead towards the various types of the
inconsistencies which will be ineffective based on the planning of the sales activities. In addition
to this, the financial declarations of the firm has revealed about the preferred level of profit from
the revenue which has been considered from the sales. The management of the firm may decide
to specify the requirement and the consequent adjustments which need to be made based on the
functionality of the corporation. It can be hereby stated that the DIPL has led to failure for
analysing of the micro and the macro economic factors and associating the existence of the same
in the social and political factors. The subsequent consideration has been further seen to be
reflected as per the poor sales figure and the inherent risks.

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The firm has stated about the various nature of the inherent risk. The main consideration
for this has been based on the lack of expertise and the proficiency of the employees of the
corporation along with the escalated issues. The specific business concern has been dependent on
the members of the staff to prove their competency. In addition to this, the various types of the
non-proficient workforce will be able to enhance the inherent risk of making mistakes, errors
associated to the exclusion and other announcements made by the firm (Carey et al., 2013).
The significant aspects of the risks have been further seen to be categorised as per the
material misstatements, environmental risks and the consideration of the falsified exercises. The
environmental consideration has been made as per the internal risk and the associated valuation
for the major issues of stiff competition, inventory and generic market along with the shortage in
the capital. The corporation will be further able to consider the material misstatements which
have been directed for the inherent risk.
The present DIP case has reflected on the various types of the complexities and the
difficulties on the succession process of CEO based on the inherent risk. The succession of the
CEO has been further able to consider the individual candidates. There has been several risks
which has been further associated to the quality of the selection procedure. The process which
are not complying with the initiating the process and the strategy has been considered for
inadequate involvement of the CEO and the candidate’s departure from the firm (Al-khaddash et
al., 2013).
The case study has shown the implementation process of IT infrastructure has generated
significant problems. DIPL does not have adequate staff for execution and the installation of the
reconciliation process which is necessary for making prior arrangement at the end of the year.

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The initial testing has shown that the transaction has not seen to be considered properly in the
given time span. This has been further seen to be based on the various considerations of material
misstatements and the inherent factors which are necessary for the considerations of the
omissions and the financial declarations.
The cash receipts have been recorded by the finance professionals and they might
consider the various types of the internal risks. The members of the staff need to follow the
sequence as per the accounts receivable registered and the recording of the same in terms of the
bank reconciliation statements. The revenue registration has been generated from the e-book and
taking into consideration for reprinting the textbooks and upcoming period off the internal risks
and the complexity of the process (Mihret, 2014).
Risk and way it might affect the risk of material misstatement in the financial report
The inherent risk is considered as per the particular assertions made in terms of the
material misstatement.
Excessive pressure on employees and management- The excessive workload of the staff has
led to poor bookkeeping. The propensity of the certain aspects has been further considered as per
the poor liquidity, cash flow issues and outcomes of the poor operating outcomes.
Risks of errors or else incorrect misrepresentation- The intricacy and the reliability have been
related to the risks of errors of misrepresentation.
Integrity of the entire management – The management of DIPL, has been able to consider the
essential drawback of the required integrity and prepared with the reputation loss and entire
community of the business (Lee & Talen, 2014).

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Unusual pressure on management – The existing incentive in terms of the management and the
misstatements in the declarations.
Nature of entity business – DIPL has considered as per the competitive aspects. The main
consideration of the overall internal risk is essential for audit analysis and the structure of the
audit plan in an effective way(Wang et al., 2013).
Answer to Question 3:
A) Identification and explanation of two key fraud risk factors relating to
misstatements arising from fraudulent financial reporting
Identification of the fraud risk leads to considerable amount of losses pertaining to the material
misstatement.
Asset Loss In various cases the losses of the assets has led to several instances of fraud. The
workforce dissatisfaction has further considered from the excessive workload
among the employees which can be considered for the fraud. The expectation of
the investors need to report the specific considerations of the management to
attain the appropriate performance leading to fraud risk. The strong pressures to
declare the specific financial are outcomes to generate the guarantees.
Financial reporting
fraud
The major involvement of the risks pertaining to fraud has been further seen to
be considered as per the operations of DIPL, which includes the workforce
engagement of the fraudulent activities. As per the given case the DIPL
operations management remains a challenge pertaining to the novel accounting
system. The enormous pressure on the employees has been further seen to be
based on the installation of the new IT system, which might lead to accounting.
This has been further able to imply that the fraudulent activity related to handle

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the procedure for reconciliation done in an inappropriate manner with the
subsequent misstatement in the material. The case study has been also able to
consider the various processes for the execution related to the implementation
of the certain transactions which has been considered in the end of each year.
This may further lead to losses for the fraud risk and the material misstatements
(Jans et al., 2013).
Unsuitable average
cost
Another important financial reporting has been further considered as per the
financial fraud reporting. During the time of excessive expectation from the
outside financiers, the financial announcements needs to meet with the specific
performance related to meet with the qualification of the goal criteria and the
high amount of the risk related to the improper announcement of the finance.
The various information of the financial position has been further seen to be
based on the revenue of DIPL which has increased from 2013-2015.
Furthermore, the current and the total assets for DIPL have also increased
considerably. As per the given situation the valuation of the raw materials from
the inventory cost was not seen to be suitable for the present cost on paper,
which was considerably higher than the average costs. The risk of the
identification of the fraudulent acts are involves as per the implementation of
the new information technology systems, which can be carried out based on the
monitoring of the various activities in various phases. The financial risk of the
reporting has been based on the evaluation carried as per the monitoring,
assessing and control of the mechanisms.

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References
Al-khaddash, H., Nawas, R. Al, & Ramadan, A. (2013). Factors affecting the quality of
Auditing : The Case of Jordanian Commercial Banks. International Journal of Business and
Social Science, 4(11), 206–222.
Carey, P., Knechel, W. R., & Tanewski, G. (2013). Costs and Benefits of Mandatory Auditing of
For-profit Private and Not-for-profit Companies in Australia. Australian Accounting
Review, 23(1), 43–53. https://doi.org/10.1111/auar.12003
Jans, M., Alles, M., & Vasarhelyi, M. (2013). The case for process mining in auditing: Sources
of value added and areas of application. International Journal of Accounting Information
Systems, 14(1), 1–20. https://doi.org/10.1016/j.accinf.2012.06.015
Lee, S., & Talen, E. (2014). Measuring Walkability: A Note on Auditing Methods. Journal of
Urban Design, 19(3), 368–388. https://doi.org/10.1080/13574809.2014.890040
Mihret, D. G. (2014). How can we explain internal auditing? The inadequacy of agency theory
and a labor process alternative. Critical Perspectives on Accounting, 25(8), 771–782.
https://doi.org/10.1016/j.cpa.2014.01.003
Regoliosi, C., & d’Eri, A. (2014). “Good” corporate governance and the quality of internal
auditing departments in Italian listed firms. An exploratory investigation in Italian listed
firms. Journal of Management and Governance, 18(3), 891–920.
https://doi.org/10.1007/s10997-012-9254-1
Ryoo, J., Rizvi, S., Aiken, W., & Kissell, J. (2014). Cloud Security Auditing: Challenges and
Emerging Approaches. IEEE Security & Privacy, 12(6), 68–74.

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https://doi.org/10.1109/MSP.2013.132
Wang, C., Chow, S. S. M., Wang, Q., Ren, K., & Lou, W. (2013). Privacy-preserving public
auditing for secure cloud storage. IEEE Transactions on Computers, 62(2), 362–375.
https://doi.org/10.1109/TC.2011.245
Yang, K., & Jia, X. (2013). An efficient and secure dynamic auditing protocol for data storage in
cloud computing. IEEE Transactions on Parallel and Distributed Systems, 24(9), 1717–
1726. https://doi.org/10.1109/TPDS.2012.278

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List of Appendix
Financial Ratios of DIPL
Particular 2013 2014 2015
Net Income/ Profit Ratio
Net Profit $23,59,190 $22,91,362 $29,72,183
Sales $3,42,12,000 $3,76,99,500 $4,34,59,500
Net Income/Profit Ratio
=
2359190/3421200
0*100
=
2291632/3769950
0*100
=
2972183/4345950
0*100
6.90% 6.08% 6.84%
Current Ratio
(Total Current Assets / Total
Current Liabilities)
Total Current Assets $53,85,938 $75,09,150 $96,00,929
Total Current Liabilities $37,80,000 $51,20,250 $63,97,500
Current Ratio 1.42:1 1.47:1 1.50:1
Debt to Equity Ratio
Total Liabilities $37,80,000 $51,20,250 $13,89,7500
Total Equity $91,50,000 $1,07,83,650 $1,22,50,491
Debt to Equity Ratio 0.41:1 0.47:1 1.13:1
Allowance for Doubtful Debts $1,65,000 $2,10,000 $2,40,000
Account Receivables $26,47,500 $4,53,000 $ 53,13,309
Allowance for Obsolescence of
Inventory $1,06,312 $1,25,876 $0