CQUniversity ACCT20075: Audit Report Analysis and Findings

This report provides an in-depth analysis of an audit report, focusing on the key elements of the audit process for a chosen listed company (I Shares). The report begins by exploring the concept of materiality and its scope within the audit, calculating planning materiality, and reviewing company disclosures. It then delves into the application of analytical procedures, examining various financial ratios to assess the company's financial performance. The analysis extends to the company's cash flow statement, highlighting its importance in understanding the financial health of the business. Finally, the report concludes with a review of the annual report, including the auditor's opinion and the application of auditing standards. The report emphasizes the auditor's role in ensuring accurate financial reporting and adherence to accounting standards. It also considers the application of analytical procedures to determine the key financial objectives and how they help the auditor gain proper knowledge of company financial statements.

Running head: AUDIT
AUDIT
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction................................................................................................................................2
Section 1.....................................................................................................................................2
Materiality and Scope of Audit..............................................................................................2
Review of Company Disclosures...........................................................................................4
Section 2.....................................................................................................................................4
Application of Analytical Procedure......................................................................................4
Section 3.....................................................................................................................................6
Analysis of company cash flow.............................................................................................6
Review Annual Report...........................................................................................................6
Conclusion..................................................................................................................................7

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Introduction
Each company have to make proper accounting information so that the user will able
to get accurate information about the company financial statement. Company having proper
knowledge of presenting the information in company financial statement is check by the
process of audit1. The auditor is the one who inspect the financial statement properly so that it
can know whether the company is able to meet all the accounting standard or not. The
company should able to make proper adjustment in the business so it can show all the related
information about the company business in their financial statement. The report deals with
the company name I shares which is the family of exchange-traded fund and managed by
Black Rock. The report show different aspects of the company in regards of audit and how
the auditor is able to meet the requirement process of auditing in company financial
business2. Auditor should able to analysis all the company aspects so that it can get proper
detail of company financial statement so that the auditor is able to give proper opinion upon
the company financial statement.
Section 1
Materiality and Scope of Audit
The objective of these report to show the materiality and scope of audit about the
company I Shares3. The company financial report is been consider to carry the audit process
1 Alzeban, Abdulaziz, and David Gwilliam. "Factors affecting the internal audit effectiveness: A survey of the
Saudi public sector." Journal of International Accounting, Auditing and Taxation 23.2 (2014): 74-86.
2 Arena, Marika, and Kim Klarskov Jeppesen. "Practice variation in public sector internal
auditing: an institutional analysis." European Accounting Review 25.2 (2016): 319-345.
3 Baharud-din, Zulkifli, Alagan Shokiyah, and Mohd Serjana Ibrahim. "Factors that
contribute to the effectiveness of internal audit in public sector." International Proceedings
of Economics Development and Research 70 (2014): 126.

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and to check whether the report is having any kind of materiality in the business or not. The
report is focusing upon the overall materiality in company business. Auditor have tom
ascertain the materiality attached with company statement as this help the auditor to gain
proper knowledge about the company financial statement. It help the auditor to ascertain the
audit process more easily in the company as if the company is having high amount of
materiality than the auditor have to ascertain proper process in regards of company financial
statement4. This also help the auditor to gather the audit evidence in the company financial
statement and help them to give proper opinion about the company financial statement in the
business. The auditor have to check each item in company financial statement so that t can
ascertain materiality in company business.
Auditor have to plan the materiality associated in company financial statement so that
it can plan the audit process keeping the materiality concept base upon it. It have to check all
the details of company information so it can know that the company is able to have true and
fair view or not. The first thing which the auditor have to do is to calculate the planning
materiality in the company financial statement. This is purely based on the judgement which
is taken by the auditor in regards of company financial statement as the auditor had to
estimate the same in company so that it will able to have proper analysis of the same in
company financial statement5. It basically depend on company transaction as it is based on
total asset, equity and sale of the company. The planning materiality is basically based upon
4 DeFond, Mark, and Jieying Zhang. "A review of archival auditing research." Journal of
Accounting and Economics58.2-3 (2014): 275-326.
5 Furnham, Adrian, and Barrie Gunter. Corporate Assessment (Routledge Revivals): Auditing
a Company's Personality. Routledge, 2015.

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the highest amount of above mention items so as per the company financial statement the
value of total asset is the highest in the company financial statement so the total asset in 2018
was $407798880 on which planning materiality calculation is computed. The planning
materality calculation is show below:
Planning Materiality=Total Asset∗5 %
¿ $ 4.077 .98880 .000
¿ 5 %
¿ $ 20,289,944
The above calculation shows that about the company planning materiality in the
business. The planning materiality in the business is $20,289,944 on that the auditor will able
to plan the performance of company materiality and able to carry different audit procedure in
the company financial statement. These will help the auditor to take all the necessary
estimation in regards of company financial statement and how the company should able to
deal with materiality in their financial statement.
Review of Company Disclosures
The company annual report should able to have proper amount of disclosure in the
company financial statement so that this will help the company to know all the details in the
company financial statement 6. This should be properly analysed by the company so that it
will able to know the materiality aspects more properly in the business.
The company is an investment company so it is necessary for the company to consider
all the investment details in the business so this will help the company to gain proper
6 Griffiths, Phil. Risk-based auditing. Routledge, 2016.

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advantage in the business. Auditor should able to have proper analysis of the company
investment which will it to know how the company is able to carry its business activities in
the business.
Section 2
Application of Analytical Procedure
The auditor is able to analysis the company financial performance with the help of
different financial figure as this will help the auditor to gain proper amount of information
with the company financial statement (Goh, Krishnan & Li 2013). This show about the
different aspects of the company so that the financial user is able to get proper knowledge
about the company performance in the business
As the above table show the different financial objective of company and how it help
the auditor to gain proper knowledge of company financial statement.

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Price- Earning Ratio – This ratio show how much the company is able to get money back
from the initial investment in the company financial return as it show about the amount of
money invested in the company and the return which the company will able to give upon the
investment. This ratio show the overall performance of the company. As per the company
ratio is consider it is 20.25 which is good as the investor is good return from the company
business. The auditor should able to analysis that the company is not having any kind of
materiality in the financial statement and also how the company is able to manage its
business operation in the financial statement.
Price-Book Ratio – This ratio compare the price value and book value in the company
financial statement so that it can know how good the company is able to perform in the
market as well it show the financial position of the company. As per the company it can see
that they are having 3.16 which is good sign but still the company is able to improve more in
their business so the auditor should analysis that the company have taken proper amount of
market value while considering the price/book ratio of the company. It should also analysis
the company financial statement so that it can know the book value are appropriate in
company business and also it should also check the necessary assumption which the company
have taken into consideration in regards of the book value in the company financial
statement.
Current Ratio

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It show about how the company manage it short-term liability with the current asset, the table
show that the company is having very good amount of liquidation in the current year. It can
also be increased with the help of changing strategies in the company business
Net Profit Margin
\
This show about the money the company is able to earn for the company shareholders as how
the company is able to earn in their business activities. It show there is a downfall so
company should change their marketing strategies which will help them to gain more amount
of profit in the business.
Section 3
Analysis of company cash flow
Cash flow statement is the statement which show the inflow and outflow of company
cash in the business. It show the source of the company inflow and outflow of cash in the
business7. The company should able to have proper amount of resources so that it able to
have better analysis of business in the market. Cash Flow shows how the company is able to
manage the overall fund in the business so that this will help the financial user to get proper
information about the cash activities in the business. The company is a holding company so
as per FRS 102, the company is not having a cash flow statement.
7 Groomer, S. Michael, and Uday S. Murthy. "Continuous auditing of database applications:
An embedded audit module approach." Continuous Auditing: Theory and Application.
Emerald Publishing Limited, 2018. 105-124.

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Company having proper cash flow signify that it able to have proper working capital
and able to carry its business operation easily and effectively. Company should able to
manage the inflow and outflow so that it have proper liquidity in the business. As the
company is finance based business so it will have more effect on cash from financing
activities rather than investing activities. Company should able to give proper analysis of
financial statement so that the user is able to get better knowledge of inflow and outflow of
cash. As the source of cash also help the user to know how the company is able to carry its
business activities. The source show the business activities in the company so this help to
invest properly in the company business.
Review Annual Report
Each company have to prepare annual report in the company so that the user will able
to get proper knowledge about the company financial statement. Company should able to
follow all the rules and regulation while preparing the financial statement of the business.
auditor have to do proper review of company financial statement so that it will help the
company user to know more about of company information in the business.
The auditor report show that the company is able to apply all the rules and regulation
in company financial statement so that this show that the company is having true and fair
view in the business. As per the auditor report it show that the auditing company have
followed all the rules and regulation in the procedure of carrying the audit process of the
financial statement.
The auditor stated that in the auditor report that they perform different activity to
know the risk of material mis-statement in the business. Material mis-statement are the error
and omission which the company have in their financial information so these show that the
company is able to have material misstatement in business. It also did the analysis of

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company fraud so that the company is able to have less amount of materiality. Company
estimation are also been analysis by the auditor that there been taken proper assumption in
company financial statement.
Key audit matters are not there in the company financial statement as these are the
matter which the auditor have to show in the annual report which show the risk that are been
associated in company financial statement.
Conclusion
The report concludes about the audit process in the company financial statement, the
auditor are the one who analysis the company financial statement and show that the company
is having proper formulation of accounting standard or not. Company should able to have
proper application of all the rules and regulation while preparation of company financial
statement. Auditor have to analysis all the company process so that it can know the ascertain
of company information so that it can give proper opinion in the financial statement. It
conclude about the company materiality aspects as it show that there is any misstatement in
the company financial statement. It also conclude about the financial ratio of the company so
that to show the performance of the company, as it help the auditor to ascertain the risk in the
company financial statement. Lastly the report conclude about the review of annual report as
it show how the company is able to have auditor report in the business. It show the opinion
which the auditor is able to give to the company as well as the procedure which the auditor
have to follow in regards of company financial statement.

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Reference and Bibliography
Alzeban, Abdulaziz, and David Gwilliam. "Factors affecting the internal audit effectiveness:
A survey of the Saudi public sector." Journal of International Accounting, Auditing and
Taxation 23.2 (2014): 74-86.
Arena, Marika, and Kim Klarskov Jeppesen. "Practice variation in public sector internal
auditing: an institutional analysis." European Accounting Review 25.2 (2016): 319-345.
Baharud-din, Zulkifli, Alagan Shokiyah, and Mohd Serjana Ibrahim. "Factors that contribute
to the effectiveness of internal audit in public sector." International Proceedings of
Economics Development and Research 70 (2014): 126.
DeFond, Mark, and Jieying Zhang. "A review of archival auditing research." Journal of
Accounting and Economics58.2-3 (2014): 275-326.
Furnham, Adrian, and Barrie Gunter. Corporate Assessment (Routledge Revivals): Auditing a
Company's Personality. Routledge, 2015.
Griffiths, Phil. Risk-based auditing. Routledge, 2016.
Groomer, S. Michael, and Uday S. Murthy. "Continuous auditing of database applications:
An embedded audit module approach." Continuous Auditing: Theory and Application.
Emerald Publishing Limited, 2018. 105-124.
Hall, James A. Information technology auditing. Cengage Learning, 2015.
Knechel, W. Robert, and Steven E. Salterio. Auditing: Assurance and risk. Routledge, 2016.
Knechel, W. Robert, and Steven E. Salterio. Auditing: Assurance and risk. Routledge, 2016.