Audit Program Development: Laserbond Ltd., Holmes Institute, T1 2019

This assignment is a comprehensive audit program developed for Laserbond Ltd., a publicly listed company. It begins with an overview of the audit process, emphasizing the auditor's role in examining financial statements and related information. The project includes a financial analysis of Laserbond, highlighting key ratios and trends, followed by a discussion of materiality and its application in selecting account balances for detailed examination. The assignment details the use of materiality levels (2% of revenue) and the ASA 530 sampling method for audit sampling. It also addresses audit risk modeling, including inherent, detection, and control risks. Recommendations are provided, such as maintaining auditor independence and managing financial leverage. The assignment covers assertion tests, audit procedures, and work steps, providing a practical approach to assessing business processes and transparency. References to relevant literature are also included.

Audit and assertion test
NAME OF THE STUDENT
MODULE NUMBER:

Introduction
Auditors of company after carefully examining the financial statements,
account books and other related information, carefully draws
conclusion where to invest money.
This presenting focuses on the different audit procedures which needs
to be followed by an independent and responsible auditor in his audit
programme would be discussed.
The study has been done on Laserbond Ltd. Company which is a public
entity.

Prepared audit risk
model of Company
Laserbond’s financial statements contain major complexities within
them and therefore they have increased numbers of misstatements and
thus causes the high chances of inherent, detention and control risk
within company’s financial statements

Financial analysis of the
Laserbond Company
The current ratio of Laserbond Company has increased to 1.3 points
which reflects that company has increased its overall investment in its
current assets by 20% since last three year.
Profitability of company has increased by 22 % since last three years.
The return on capital employed has decreased by 12% since last three
year due to the increased operating expenses in its business process.
Liquidity/Financial Health 2014-06 2015-06 2016-06 2017-06 Latest Qtr
Current Ratio 1.2 1.1 1.1 1.7 2.1
Quick Ratio .88 .98 1.1 1.5 1.9

MATERIALITY AND SELECTION OF
MATERIAL ACCOUNT BALANCES in
the Resonance Health Company
Laserbond too have a very complex and diverse
accounting system with many account balances.
in order to select the account balances which
needs to be checked in detail, an audit tool is used
known as materiality level
. The figure shown in the revenue base is 2%. After
computation of 2% revenue and studying ongoing
trends in company’s business, resultant amount is
adjusted.

Materiality test
The materiality amount is:
Revenues: AUD 2,896,395
2% of revenue: 57,928
Assets Liabilities
Account receivable Creditors
Debtors Deferred revenues
Prepaid expenses Current liabilities
Plants and property
Intangible assets set in IAS 138.

Sampling plan method
In order to select the items and arrange them to make a sample base,
an audit sampling named ASA 530 is used
The number of the items in sample size is generally not predetermined
Smaller sample size is normally enough if the auditor feels that the risks
in the financial statements in the organization are not too prevalent
depth audit large sample size is required to represents large number of
accounts (Houghton, Jubb & Kend

Recommendation
It is important that the auditor is independent and do not have any
conflict of interest with the organization.
Sample size modelling is used to asses the business viability.
To understand the audit risk, audit risk model should be used to assess
the inherent, detention and control risk.
The financial leverage of company should be taken down to strengthen
the business outcomes.

Conclusion
the audit rest model is used to assess the business viability
Assertion test, audit procedure and audit work steps are followed to
assess the changes in the business process and transparency.
.

References
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