Comprehensive Audit Program: Financial Reporting Analysis

This audit program analyzes a corporate entity's financial statements for the year 2017, focusing on business operations, investment and financing activities, and financial reporting practices in accordance with International Financial Reporting Standards (IFRS). Key business operations include Zinclear product growth, US manufacturing commencement, and Australian manufacturing considerations. Investment activities involve investments in subsidiaries, while financing activities focus on cash flow components. The program assesses financial performance using ratios like asset turnover, return on equity, current ratio, and gross operating margin, comparing results from 2016 to 2017 to determine the firm's efficiency and liquidity. The analysis concludes with an evaluation of the firm's ability to meet its debt obligations and maintain a true and fair view of its financial position.

Running head: AUDIT PROGRAM
Audit Program
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Table of Contents
Introduction......................................................................................................................................2
Business Operations.........................................................................................................................2
Investment activities........................................................................................................................4
Financing activities..........................................................................................................................4
Financial reporting practices............................................................................................................4
Auditing framework.......................................................................................................................11
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

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Introduction
The issue that has been presented in the question refers to the fact that the accounting
statements of a corporate entity can be analyzed for the purpose of understanding the operations
of a corporate entity in regards to a single financial year. This means that the financial report of a
corporate entity describes the financial performance of the business organization. Moreover, the
stakeholders and the other investors of the corporate firms tend to understand and forecast the
business performance of the corporate entities on the basis of the financial information that has
been represented in the annual report of the firm (Raju et al. 2015). Furthermore, this kind of
financial information can be utilized for the purpose of analyzing the business operations that
have been carried out by a business entity and whether the business operations have been in
accordance to the accounting standards that have been established by the accounting regulatory
body.
This particular study aims to analyze the financial statements of a business corporation.
This means that the accounting statements of the corporate entity that has been chosen for the
purpose of the study is of the name…. The financial statements that have been chosen belong to
the financial year of 2017.
Business Operations
The certain business operations that have been carried out by the business entity refers to
the essential operations that have been carried out by the corporate firm throughout a single
financial year. These business operations can be listed down as follows:
 Zinclear – the revenue in regards to the Zinclear range of products has continued to grow
in regards to the percentage of 14.32%. This means that the corporate entity has partnered

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with Devereaux Specialties for the purpose of carrying out partnership with the
distribution partner for a longer period of time. The firm also aims to grow its sales by the
financial year of 2018. ANO has aimed to build the distribution network in Europe.
 Manufacturing in the US – the corporate entity of ANO has been planning to result in the
commencement of the production that will be full scale in nature in the country of US in
October 2017. The occurrence of the delays that have been technical in nature and the
equipment that have been required for the assistance in the manufacturing process
(Tuinamuana 2016). The US partners have also been helpful particularly in regards to the
R&D Department that have provided the required assistance in regards to the changes in
the production of the sunscreen. At the time of the commencement of the US
manufacturing the generation of the efficiency of the operation and has reduced the
logistic times to the Europe and US.
 Australian Manufacturing – the careful consideration of the different options of
manufacturing in Australia. The management of the corporate entity has been involved in
the negotiation of the long-term lease. This particular transition has been operational in
the creation of a new equipment (Howes et al. 2015).
 The financial year of 2017 has been significant for the corporate entity due to the fact that
the company of ANO has resulted in the successful filing of the three new patents. The
patents have been in regards to the products of a battery, a XPA end formulation recipe
and 3D Ceramics. The new patents have also been filled in the financial year of 2018.
 It must also be further noted that the corporate entity of ANO has resulted in the
development of a network of chemists that have been global in nature. The corporate
entity had developed a network of 28 chemists with 11 chemists. In the current times, the

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corporate entity have developed 29 end formulations. The cost in regards to the
development of the project has been anticipated to be less than $500,000 includes the
approvals that are fully regulated in nature.
Investment activities
The investment activities that have been carried out by the corporate entities is that the
corporate entity has resulted in the investment in the subsidiaries and have been accounted for at
cost in the accounting statements in the books of the business entity. The investment activities
that have been included in the corporate accounting statements refer to the fact that the particular
amounts that have been included are the financial components of the purchase of the property,
plant and equipment (Lakhanpal et al. 2015). The other financial components are the payment in
regards to the development of the assets and the net amount of cash that has been used in regards
to the investing activities.
Financing activities
The financial component that has been included in the financing activities in the cash
flow statement of the corporate entity are the increase or decrease in regards to the cash and cash
equivalents. Moreover, the component of cash and cash equivalents have also been included in
the annual report of the corporate entity (Lehner et al. 2018). The next financial component that
has been included in the cash flow from the financing activities include the adjustment in regards
to the rate of exchange. The cash and cash equivalent that has resulted from the financial
components at the end of the financial year amount to $908,287.

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Financial reporting practices
The financial reporting practices that have been included in the accounting statements of
the corporate entity refer to the fact that the accounting statements or the books of accounts have
been prepared on the basis of the International Financial Reporting Standards. This means that
the books that have been prepared by the accounting body, are based upon the accounting
guidelines, that are issued by the accounting regulatory body of International Accounting
Standards Board. These accounting standards are known as the International Financial Reporting
Standards. Furthermore, the declarations or the assertions that have been included in the financial
report of the corporate entity can be listed down as follows:
 The compliance with the accounting standards, which has been included in the basis of
preparation of the financial statements, has been stated accounting statements the
International Financial Reporting Standards.
 The accounting statements that have been included tend to give a fair and true image of
the accounting statements of the corporate entity.
 It has been further mentioned in the annual report of the corporate entity that the financial
statements that have been prepared have been properly constructed and maintained in
accordance to the section 286 under the Corporations Act 2001.
 The financial statements the particular accounting notes also comply with the mentioned
accounting standards. This means that the management of the firm has asserted the
particular value that the financial statements have been prepared to reflect a proper true
and fair view of the accounting statements of the corporate entity (Wang et al. 2017).
 Lastly, the directors of the corporate entity have reported in the financial report of the
corporate entity that the financial statements have been prepared in accordance to the

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accounting standards. Moreover, the financial position of the firm has been such that
there are reasonable grounds to make the corporate entity believe that the company will
be able to make the required payment of the debts of the company at the point when it
becomes due in nature and has to be paid immediately.
The issue that has been presented in the question refers to the fact that the financial
performance of the firm has been asked to be analyzed for the purpose of the fact that the
investors and the other stakeholders of the firm can determine the investment or the
economic decisions in regards to the investment in the selected corporate entity. This means
that the particular financial tool that can be utilized for the purpose of determining the
financial performance of the firm (Worthington and Pardy 2015). This means that the
significant ratios that have been utilized for the purpose of determining the financial
performance of the firm can be listed down as follows:
 Asset turnover ratio
 Return on equity ratio
 Current ratio
 Gross Operating margin
The asset turnover ratio refers to the particular ratio that results in the identification of the
result whether the optimum amount of returns from the assets of the firm has been acquired by
the corporate entity of the firm. The higher the amount of the asset turnover ratio more is the
ability of the firm to acquire the optimum amount of returns from the financial assets of the firm.
The return on equity ratio refers to the ability of the firm to secure optimum amount of
returns by utilizing the amount of equity that has been contributed by the stakeholders of the

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firm. The higher the amount of the return on equity ratio more is the ability of the firm to acquire
the optimum amount of returns from the equity capital of the firm (Thompson et al. 2015).
The current ratio refers to the liquidity position of the firm. This means that the current
ratio refers to the ability of the current assets of the firm to make the payment for the current
liabilities of the firm. It must be noted here that more the amount of the current more improved
will be the liquidity position of the firm.
The gross operating margin on the other hand refers to the returns that have been secured
from the operating profit of the firm. This means that higher the operating profit of the firm
higher will be the value of the ratio that has been obtained from the operating margin of the firm
(Kurmis et al. 2015).
The ratios that have been computed can be listed down as follows:
Advanced Nano Technologies Limited
2016 2017
Asset turnover ratio Sales Total Assets Ratios Sales Total Assets Ratios
Sales/Total Assets 5097488 5773626
0.8828
92 4480132 5392688
0.8307
79
Return on equity Net Profit Equity Net Profit Equity
Net Profit/ Equity 561174 4201408
0.1335
68 119868 3640234
0.0329
29
Current Ratio
Current
assets
Current
Liabilities
Current
assets
Current
Liabilities
Current Assets/ Current
Liabilities 3745112 588365
6.3652
87 3217573 702978
4.5770
61
Gross Operating Margin Sales Gross Profit Sales Gross Profit
Net Sales/Gross Profit 5097488 561174
9.0836
14 4480132 119868
37.375
55

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The table that has been included above shows the financial performance of the selected
firm in terms of the ratios that have been computed on the basis of the financial components that
have been included in the financial statement of the corporate entity. This means that the asset
turnover ratio has decreased over the financial year of 2017 from the financial year of 2016. This
means that the firm has not been able to obtain the required amount of returns from the assets of
the company in comparison to the financial year of 2016 (Chintrakarn et al. 2017).
Next, the particular ratio that has been included refers to the return on equity ratio which
has fallen over the financial year of 2017 in comparison to the financial year of 2016. This means
that the management of the firm due to reasons like a high debt structure and other potential
issues has not been able to acquire the optimum amount of returns from the equity capital of the
corporate entity in regards to the financial year of 2016 (Rey‐Conde et al. 2016). This means that
the management of the business entity has not been able to secure the required returns from the
equity or the retained capital. The potential reasons might bad acquires or involvement in too
much debt that belongs to the third party investors.
The current ratio on the other hands clearly indicates the liquidity position of the firm.
This means that if the liquidity position of the firm is good then the health of the business entity
can be regarded as healthy. However, it must be noted here that the a firm having a too high
liquidity position refers to the fact that the liquid cash content of the firm is too high which again
reflects the fact that the financial structure of the firm is not strong enough. In case of the
selected firm, it can be noted that the liquidity position of the firm has fallen in regards to the
financial year of 2016. This means that the management of the firm has not been able to maintain
an optimum amount of current assets that will be required to substitute the current liabilities of
the firm (Heng et al. 2018). This means that the situation might have been such that the firm has

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to sell or give up certain current assets of the firm for the purpose of meeting up to certain debts.
This has reduced the ability of the firms to make the payment for the current liabilities that have
been acquired by the firm in the current financial year of 2017 in comparison to the financial
year of 2016.
The gross operating margin reflects the fact that the ratio has increased over the financial
year of 2017 in comparison to the financial year of 2016. This means that the management of the
firm has been able to make certain that the profitability of the firm increases from the financial
year of 2016 to the financial year of 2017 (Wilkinson et al. 2015).
Inventory Account
746708 1475460 -7287.52
The details of the inventory
account has been mentioned in
the annual report of the
corporate entity. However, there
has been no mention of assertion
in the financial report of the
corporate entity. This means that
there has been no accounting
disclosure in regards to the
discrepancy in regards to the
amounts of the inventory
account. Therefore, the account
might be subjected to fraudulent
activities like material
misstatement.
Trade and Other Receivables
1936080 539248 13968.32
The trade receivable cycle has
been mentioned in the annual
report of the corporate entity.
However, there has been no
mention of assertion in the
financial report of the corporate
entity. This means that there has
been no accounting disclosure in
regards to the discrepancy in
regards to the amounts of the
trade and other receivables
account. Therefore, the account
might be subjected to fraudulent
activities like material
misstatement.

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Other Financial Assets
154037 6670 1473.67
It has been mentioned in the
financial report assertion, the
particular areas where the
financial assets has been
required and their particular
amounts. This means that the
financial assets that have been
utilized in regards to the different
financial components have been
revealed. However, the reasons
behind the financial components
utilizing the assets have not been
stated in the financial report of
the corporate entity.
Non-Current deferred income
877056 1037096 -1600.4
The non-current deferred income
is another financial component,
to which no proper financial
disclosure has been provided in
the accounting statements of the
corporate entities.
Cash and Cash Equivalent
908287 1196195 -2879.08
In regards to the financial
account of cash and cash
equivalent, the financial report
assertion that has been
mentioned by the management
of the firm reveals the cash flow
statement which provided the
needed explanation in regards to
the amounts that have been
mentioned in the account.
Development Assets
72153 0 721.53
There has been no mention of
assertion in the financial report
of the corporate entity. This
means that there has been no
accounting disclosure in regards
to the discrepancy in regards to
the amounts of the development
assets account. Therefore, the
account might
Other financial liabilities
313 120 1.93
Other financial liabilities are the
financial components that have
been utilized in the form of the
different financial instruments.
This has been properly disclosed
in the accounting disclosures in
the annual report of the
corporate entity.

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Provisions
106797 12380 944.17
Proper disclosure have also been
provided in regards to the
accounting framework of the firm
thus the issue of materiality is
not a concern
Trade and other payables
324943 355324 -842.32
There has been no mention of
assertion in the financial report
of the corporate entity. This
means that there has been no
accounting disclosure in regards
to the discrepancy in regards to
the amounts of the trade and
other payables account.
Therefore, the account might be
subjected to the issue of material
misstatement.
Other current provisions
103383 187615 -842.32
There has been no mention of
as+D3:H12sertion in the financial
report of the corporate entity.
This means that there has been
no accounting disclosure in
regards to the discrepancy in
regards to the amounts of the
other current provisions
account. Therefore, the account
might be subjected to the issue
of material misstatement.
Auditing framework
The particular auditing framework that should be adopted by the auditor for the purpose
of checking the authenticity of the financial information that has been reflected in the accounting
statements of the corporate entity refer to the fact that the auditor should engage in constructing a
potential framework. This means that it is not possible for the auditor to check each and every
financial transaction in the books of accounts (Stevens et al. 2017). Therefore, the auditor should
adopt the process of sampling for the purpose of checking and evaluating the fact that whether in
reality the issue of materiality or material misstatements has occurred in the books or not. Before
ascertaining this particular fact, it is the duty of the auditor to make sure that the exact amount of