HA3032 Auditing: Developing an Audit Program for Sultan Resources Ltd

This assignment analyzes the audit program for Sultan Resources Limited, an Australian mining exploration company. It begins by identifying various audit risks, including inherent, control, and detection risks, along with specific market, interest rate, and exchange rate risks. Financial analysis is performed using ratio analysis, followed by the identification of materiality factors such as transaction size and business nature. Key material accounts, including cash, receivables, and exploration expenses, are then outlined, with corresponding audit assertions like valuation, completeness, and existence. The assignment further discusses sampling methods—judgmental, random, and selective—used due to the large volume of transactions. The conclusion summarizes the key elements of the audit program, referencing relevant auditing standards. References include key academic and professional sources related to auditing practices and risk assessment.

HA3032 Auditing

 There has been the consideration of the audit risk for
sultan resources limited.
 All the business risks have been identified.
 The material accounts are identified and then
assertions for them are provided.
 The ratio analysis is performed for evaluation
purpose.
 Sampling plan has been made.
Introduction

 Sultan resources limited is operating in western
Australia.
 The company has been listed in 2018.
 It is involved in mining exploration activities.
 The main minerals which are considered involves
copper, cobalt, nickel, and gold.
Company overview

Audit risk is the risk which is to be considered by the auditor and they will be
responsible for the same. In this there are various risks which are involved
and they are:
 Inherent risk
 Detection risk
 Control risk
Audit risk

Sultan resources has various risks which are involved and they are
identified which are:
 Market risk
 Interest rate fluctuation risk
 Exchange rate fluctuation risk
 Credit risk
 Liquidity risk
Risks in sultan resources limited

Financial analysis
The ratios for the company have been calculated under the analytical
procedure which is performed.
Ratio Formula 2018
Debt ratio Total liabilities/total assets 0.44
Net profit ratio Income/Sales *100 -88105.00%
Total asset turnover ratio Revenue / Total assets 0.0006
Current ratio Current assets/current liabilities 1.650120335
Debt to equity Total debts/ Equity capital 0.77

In the ascertainment of the materiality there will be consideration of
various factors which includes the following:
 Size of the transaction
 Other relevant business factors
 Nature of the company
Materiality

The main material accounts which are involved in the company
have been identified and they are as follows:
 Cash and cash equivalents
 Accounts Receivables
 Exploration and evaluation
 Trade and other payables
 Provisions
Material accounts

The evaluation of the material accounts is to be made and for that
there are certain factors which are considered. They have been
identified and are as follows:
 Valuation
 Completeness
 Existence
 Right and obligation
Audit assertions

In the business there are vast number of transactions which takes place
and it is not possible to take all of them for evaluation. Due to this
some of them are taken as the sample for the purpose of evaluation.
This process is determined to be the sampling. The various approaches
which are used in this are as follows:
Judgemental sampling
Random sampling method
Selective sampling
Sampling

 All of the business risks which are involved for sultan resources
limited have been identified.
 There is the ratio analysis which has been performed.
 All of the material accounts have been identified.
 The assertions which are used for the evaluation have been
determined.
 The methods which will be used for the sampling have been identified.
Conclusion

 ASA 320. (2009) Materiality in Planning and Performing an Audit.
[Online] Available at:
https://www.legislation.gov.au/details/f2009l04080 [Accessed 15
Sep. 2019]
 Palinkas, L.A., Horwitz, S.M., Green, C.A., Wisdom, J.P., Duan, N.
and Hoagwood, K. (2015) Purposeful sampling for qualitative data
collection and analysis in mixed method implementation
research. Administration and policy in mental health and mental
health services research, 42(5), pp.533-544.
 Acharya, V. and Naqvi, H. (2012) The seeds of a crisis: A theory of
bank liquidity and risk taking over the business cycle. Journal of
Financial Economics, 106(2), pp.349-366.
References