Analysis of Auditing and Assurance in Financial Reporting (ACC6030)

This report provides a detailed analysis of auditing and assurance practices, specifically focusing on the financial statements of Elders Limited. The study investigates the true and fair value of the financial statements, the role of independent audit reports, and the significance of key audit matters. The methodology employed includes a risk-based auditing approach, auditing concepts, and relevant auditing standards and case laws. The report examines various auditing standards, their impact, and their relationship to accounting practices. It delves into the responsibilities of directors in preparing financial statements and the role of auditors in providing an opinion. The analysis covers the implications of findings and provides recommendations based on the audit of the company. The study also explores the practical application of Australian Accounting Standards (ASA) and the Corporations Act 2001, offering insights into corporate governance, inherent control risks, and potential frauds. The report uses the annual report of Elders Limited to critically assess the audit process and its outcomes, emphasizing the importance of independent audits in maintaining the integrity of financial reporting. The report provides a good understanding of the audit process.

Running head: AUDITING AND ASSURANCE
Auditing and Assurance
Name of the Student
Name of the University
Author’s Note

1AUDITING AND ASSURANCE
Executive Summary
This current report has focused on the process of auditing and assurance of the
company along with considering the accounting standard and other auditing standard.
Elders limited have been considered in the study and the annual report have been
disclosed by the company with proper maintaining of standard. Elders limited is an
Australian multinational company which is based in Adelaide and this public limited
company is listed in ASX and falls under the industry of agribusiness. This study
includes the investigation of the research team which reports on the true and fair value
of the financial statement along with maintaining high profile for the business. The
opinion for independent audit report is to be maintained and focusing on the key audit
matters of the company. Different types of auditing standards have been discussed in
this study which sheds light on the nature and treatment of the financial statement.
Moreover, certain concepts and practices have also been discussed in the study which
highlights the impact as well as the relationship of the auditing standards.

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Table of Contents
Introduction........................................................................................................................3
Problem statement.............................................................................................................4
Methodology......................................................................................................................4
Findings...........................................................................................................................10
Implications of findings....................................................................................................14
Conclusion and recommendation....................................................................................20
References.......................................................................................................................22

3AUDITING AND ASSURANCE
Introduction
Auditing is vital for an organisation as the process of auditing involves the
examination of financial statement, statutory records and non-financial disclosure of the
business. The true and fair value of the concern is also maintained by the process of
auditing which are associated with the normal business course. Auditors are appointed
by the company for inspecting the report that are prepared by the management of the
company. Assurance is the overall process of analysing the total assessment of
accounting entries that have been recorded in the books of accounts of the business.
The accuracy of the financial statement is analysed by the process of assurance which
points out the right process for evaluating the optimum results. In this study, Elders
limited have been taken into consideration along with disclosing the annual report for
the current financial year. As the member of the investigation team assist in researching
and reporting on true and fair value status on the financial statement that are mainly
prepared by the company. Elders limited has disclosed their annual report which consist
of independent audit report and those are important in focusing the details which are
present in the audit report of the company.
The key audit matters is provided by the appointed auditors of the company and
those are to be approached during the annual general meeting. The above mentioned
facts are to be investigated by using the risk based auditing approach and some
concepts of auditing is also included in the study. The standard of auditing and certain
case laws have been taken into considered for better analysis of critique opinion.
Different types of auditing standards have been included in the study which points out
the effective application of standards and their importance in the study. On the other
hand, the impact and the relationship of auditing standard is associated with the study
which includes the concepts of accounting and practices that would help in analysing
the mentioned auditing standard. Elders limited is an Australian multinational company
which is based in Adelaide and founded in the year 1839 by Alexander Lang Elder. This
public limited company is listed in ASX and falls under the industry of agribusiness.
Moreover, this report includes the corporate governance, inherent control risk, frauds

4AUDITING AND ASSURANCE
and misappropriation and others. Australian standard of auditing is included which are
basically based on the international standard of auditing.
Problem statement
The true and fair value of the financial statement is to be maintained and certain
opinion is to be provided from the independent audit report that are associated with key
audit matters. The main purpose of this report is to analyse the annual report of Elders
limited for the year 2018 and evaluating the implementation procedure of Australian
Accounting standard. The consequences and outcomes is also to be analysed and the
problem on the annual report is to be included with the external independent auditor of
Elders limited. It can also be seen that the external auditing process is performed by a
top notch auditing firm, PWC. The primary problem that is highlighted by the auditors of
the company is to measure the related assets and claims for the key audit matters. After
a certain period of time, unpredictable factors might affecting the outcome which might
take long time for recovering.
Key audit matters is considered as the second problem that might demand
significant judgement on the future flow of cash which are estimated for a particular
timeframe. Some policymakers noticed the problem and recognised different aspects for
maintaining the policy and the auditor claimed for significant judgement. The impairment
of key audit matters is also another problem that are highlighted in the annual report of
the company. This problem requires significant level of judgement and focus by the
auditors and might lead to its solution. Therefore, the main problematic area is the true
and fair value of financial statement along the key audit matters. Some of the auditing
standards have been chosen that relates to Elders limited which would help in analysing
the problem and their respective results.
Methodology
Methodology is the procedure or the methods that is used in the study along with
pointing out the significance of the study. The techniques and methods that are used in
this particular study are highlighted and the theoretical analysis is also mentioned in this
particular study (Cohen and Simnett 2014). The methodology of audit mainly targets the
audit efforts that are required to be reflected in the areas of financial statement of the

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company. The process of integrated quality control mainly includes the policies and
procedures which are required to be engaged for maintaining the nature as well as
effectiveness of the services. The audit methodology is the process that is established
by cutting edge technology which are required to be improve in the normal business
course (Junior, Best and Cotter 2014). Different steps that are associated with the audit
methodology such as planning, assessment of risk, evaluation of internal control, testing
of audits and conclusion.
Planning for audit is the first step in the process of auditing which is associated
with preparation of timetables as per the requirements. The strategy for auditing is to be
structured as per the business along with assessment of risk in the critical business
areas (Simnett, Carson and Vanstraelen 2016). It also includes the evaluation of
internal controls which are to be included in the financial data of Elders limited. The
appointed auditors of the company uses sophisticated tools that includes integration of
data and interrogation of software by which the transaction and balances are to be
enhanced for the operation. The accuracy of work results in actionable sights that
rapidly drive in improvements over the company (Farooq and De Villiers 2017). The
data that have been gathered from the company follows an ethical way and no one
have been forced to gather the information which is included in the study. Data
Protection Act is used for protecting the data which are gathered for the company.
True and fair value of financial statement
The process of auditing involves the techniques that is true and fair value of
financial statement and these statement is to be free from material misstatement. The
true and fair value of the financial performance provides the financial position of the
company along with maintaining the accounting literature (Marques, Santos and Santos
2016). True value of the financial statement is the correct fact that are to be prepared as
per the reporting framework such as the IFRS and ASA. On the other hand, fair value of
the financial statement mainly presents the faithful information without any kind of bias
along with reflecting economic substance of the recorded transactions. The
responsibilities of the directors of a company is to prepare the financial statement after
considering the true and fair value of financial statement at the time of providing the

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audit opinion. Financial statement that are prepared under the basis of true and fair
value points out the responsibilities of the directors for implementing the corporate law.
Fulfilment of responsibilities of the directors is to be considered by the appointed
auditors of the company (Messier Jr 2014). Certain jurisdiction is generally required by
the auditors for stating their audit report and those opinion help in presenting the true
and fair value of the financial statements of Elders limited.
The annual report of the company consist of the director’s declaration which
provides notes to the financial statements that are prepared as per the Corporations Act
2001. Providing with true and fair value of financial statement is to be complied with
Australian Accounting Standard and Corporations Regulation 2001
(Investors.elderslimited.com 2019). The reasonable grounds of declaration is to be
received from the directors according to section 295 A of the Corporations Act 2001.
The opinion of the directors includes the members of the closed groups and those
would have the obligation for virtue of cross guarantee. The audit committee of the
company mainly audited the consolidated statement of financial position, income
statement and flow of cash along with changes in equity. The directors are responsible
for assessing the ability of the company for disclosing the going concern along with the
accounting rules. Material misstatement might arise in the financial statement that are
caused by the fraudulent activities and the expected influences from the economic
decision is to be considered for the financial report (Knechel 2016). Moreover, the
reasonable assurance is to be provided in the financial report that are generally audited
by the appointed auditors of Elders limited.
Independent audit report
Independent audit report is the report that is generally prepared by the appointed
auditors of the company in a certain fiscal year. An internal auditor or an external
auditor is responsible for preparing the audit report which is to be included in the annual
report of the company (Peters and Romi 2014). Elders limited has prepared their
independent audit report as per the Corporations Act 2001. Providing the true and fair
value of the financial position is to be report in the audit report along with maintaining
the financial performance within the accounting year. The report is to be complied with

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the Australian Accounting Standard along with other standard of accounting that are
followed in the country (Wong and Millington 2014). Elders limited have reported in their
audit report that the consolidated financial statements of the company have been
included with the declaration from the directors. The responsibilities under the standard
is to be described by the responsibilities of the auditors which are to be associated with
financial report of the company. As the audit report points out the appraisal of complete
financial status which is to be reflected in the annual report of the company (Knechel
2016). The accounting professionals mainly covers the assets and liabilities of the
company which are to be presented in the financial position of the firm.
The disclosed financial report of Elders limited mainly control the entities that
points out the financial position of the business. The independent audit report have
been prepared by the appointed independent auditor which are to be included in their
annual report on the basis of Corporations Act 2001 (Brody, Haynes and White 2014).
Financial position of Elders limited have accompanied with true and fair value along with
complying the Australian Accounting Standard. The appointed auditors of the company
have audited their group of financial reports which have been prepared on the basis of
Australian Accounting Standard and responsibilities of those standards (Kilgore,
Harrison and Radich 2014). The following statement have been audited by the
appointed auditors of the company.
 The statement of financial position which is consolidated in nature
 The statement of comprehensive income statement for the year ended which is
also consolidated in nature
 The consolidated statement that shows specific changes in equity for the year
ended
 Consolidated statement of cash flow along with the notes that are available with
the prepared statement
 Overall summary of significant accounting policies and the declaration of
directors

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Therefore, these are the statement of the company which are audited by the auditors of
the company and the declaration report have also included in the independent audit
report.
Key audit matters
Elders limited have communicated the following key audit matters which are
associated with audit, risk and other compliance committee. The deferred tax assets
that are recoverable in nature is to be associated with rebates for the process of
accounting (Dai, and Vasarhelyi 2016). Significance for the audit and the audit reports
includes the financial report that are required to be included with the current time period.
The deferred tax assets that are to be included in the financial statement of Elders
limited and the benefits are to be realised by the process of reducing the amount of tax
payable. The forecasted profits to be consistent with the board that are to be included
with the accounting profit of the year (Baharud-din, Shokiyah and Ibrahim 2014). The
reconciliation of tax losses is to be managed by the recalculated deferred tax assets
and other accounting values of the business. The disclosure is to be made as per the
requirement of Australian Accounting Standard and those to be included within the
report. Key audit matters of Elders limited follows the certain Australian accounting
standard which focuses on the report that are to be included with different aspects (Dai,
and Vasarhelyi 2016). Moreover, Elder limited is required to communicate with the
applicability of deferred tax assets which would be recovered by the company in an
efficient way.
The auditing standard which is associated with key audit matters is ASA 701 that
applies in the audit of financial report in a certain financial year. Corporations Act 2001
mainly plays an important role in the overall communicating key audit matters (Earley
2015). A complete set of financial statement is to be included with the procedures along
with other financial and historical information. The scope of this auditing standard
highlights the responsibility which are to be intended for pointing out the communication
of key audit matters. Communicating the key audit matters has the intention of
understanding the entity as well as the areas that requires judgement of significant
management in the financial statement of the business. The requirement of key audit

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matters is to be charged with the governance and those are to be selected from the
attention of auditors. The appointed auditors of the company that is Elders limited is to
follow the areas of high assessed risk of material misstatement and other significant
risks. In addition to this, the judgement of auditors that relates to the preparation of
financial report includes the accounting estimates that are required to be included of
higher degree of ascertaining of risk (Hay 2015). Certain events are to be included with
the transactions that have occurred in a particular financial year.
Audit matters to risk and compliance committee
Key audit matters of the company must include the applicability as well as the
recoverability of deferred tax assets along with accounting for rebates. The professional
judgement plays the most significant role in the financial report of the company which
are to be addressed in the auditing context (Rahmina and Agoes 2014). Separate
opinion on these matters are to be included for expecting better result in the audit
procedures. Recoverability of deferred tax assets points out the unused tax losses in
future time period and these are to be included in the consolidated statement of
financial position. Deferred tax assets is to be recognised by the Australian accounting
standard and those points out the effective probability of taxable amount. It also help in
highlighting the overall profitability of the company which are to be initiated in the
process of demonstrating future utilisation of financial losses (Kilgore, Harrison and
Radich 2014). The company have earned a profit of around $ 17028 million in the year
2018. Forecasting of profit also plays a vital role in the auditor’s report which are to be
included as well as evaluated for the board of directors.
The difference between the accounting profit and the taxable profit consist of the
ability for carrying the amount of tax losses and certain future deduction which are to be
made in the financial statement. In addition to this, accounting for rebates includes the
retail goods from suppliers and prices varies as per the nature of the product ( Saputra
2015). Reduction of cost of inventory is to be purchased for providing the benefits of the
company in their effective business course. Arrangement of suppliers is to be made for
pointing out the learning elements which points out effective preparation of consolidated
financial statement. The terms and condition that are agreed by the appointed auditor

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points out the recalculation of the agreement of the suppliers and the amount of rebate
(Gomes, Eugénio and Branco 2015). The calculation of rebate receivable points out the
relevant suppliers’ agreement that would be received on the financial course of year.
Findings
The study consist of the risk based auditing approach and auditing concepts that
are to be associated with certain auditing standards and case laws. The risk based
auditing is the new way of obtaining the relative evidence for the process of opinion and
subsequent degree of assertions (Burton et al. 2014). The appointed auditors of the
company starts the audit process by implementing the knowledge and resources in the
business entity. It also includes the procedures of risk assessment that are required to
be associated with audit procedures and those are to be obtained with certain
objectives and techniques (Ojala et al. 2014). Several accounting standard of Australia
have been considered in the study which points out the information about the process of
auditing in the business of Elders limited.
Risk based auditing approach
The standards of auditing are mainly prepared by the Auditing and Assurance
Standards Board of Australia includes the account amendments. ASA 315 is included
within the company that mainly points out the identification and assessing the overall
risk of material misstatement. The objective of this particular standard to identify and
assess the risk that are associated with material misstatement by different types of
frauds and errors in normal business course (Wilkinson and Coetzee 2015).
Understanding the entity for identifying the internal control designs the implementation
process that are required to be informed within the assessed risk of material
misstatement. Decision making process points out the effective risk that are required to
be mitigated for better performance of the company. The reliability of financial reporting
highlights the effectiveness which are to be compiled with applicable laws and
regulations. Risk resulting in certain significant condition which are to be changed by the
governance and management. Identification of significant risk is to be assessed and
those are to be identified in the process of material misstatement (Liao, Lin and Zhang

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2018). The following are the auditing standard which are included in the company and
the report by the auditor is solely based on these mentioned auditing standards.
Auditing Standards
ASA 560 – Subsequent events
This particular auditing standard points out the auditors that includes the effective
recording of subsequent events that would help the company for meeting their targets.
The responsibilities that relates to subsequent events is to be included in the auditor’s
report at the end of the fiscal year (Ratzinger-Sakel and Schönberger 2015). It does not
include the matters that relates to the responsibilities of the auditors after obtaining the
auditor’s report from the auditors of Elders limited. Certain events that occurs in the
business might hamper the quality as well as recordings in the financial statement. The
sufficient appropriate audit evidence mainly occurs between the dates of the financial
report and the auditor’s report date. Adjustment and disclosure are to be maintained
which would reflect the applicability of the financial reporting framework. The facts that
are associated with the report of the auditor includes the applicable framework which is
to be included with the process of amendment of auditor’s report of Elders limited. The
requirement of this particular standard is to design the auditing framework and collecting
audit evidences that have occurred between the two above dates (Fuhrmann et al.
2017). An additional audit procedures is to be applied which provides different
satisfactory conclusion and the performance of the auditor includes the procedures
which is required by Paragraph 6 of this auditing standard.
ASA 570 – Going concern
It is the auditing standard that mainly deals with the overall operation of the
business along with its modes of operation. Going concern of the business mainly
highlights that the business would continue its operation even after death of the founder
and partners. Elders limited itself is an entity which would continue its operation
irrespective of the effecting factors of the business (Shan and Troshani 2014). On the
basis of accounting, financial report is to be prepared assuming that the entity is the
going concern and foreseeable future. The going concern is the basis of accounting

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which are to be prepared on the basis of tax for certain particular jurisdiction. The
appropriate assets and liabilities are recorded on the base of the entity that are
discharged in the normal course of business. The financial reports of Elders limited are
generally prepared using the concept of going concern in accounting. Liquidating the
entity for creasing the operation includes the financial reports that are to be associated
with company. The objectives of this standard is to obtain audit evidence along with
using the management going concern basis of accounting. This help in preparation of
financial report which are based on the audit evidences and material uncertainty (Soh
and Martinov-Bennie 2015). The condition of significant doubt consist of the ability of
the firm that focuses on the certain auditing standard. The appointed auditors of Elders
limited help in determining the management of preliminary assessment which focuses
on the ability of the entity to continue as going concern.
ASA 700 – Forming an opinion and reporting on a financial report
The application of the auditing standard is to audit the financial report as per the
Corporation Act 2001 and those are to be included in annual report of the company. The
operative date of this auditing standard is 15 December 2016 and the responsibility of
the auditor is to form an opinion about the financial report of Elders limited.
Communicating the key audit matters deals with the content of the report that are
published by the auditors and those are to be included in the report ( Wahab, Gist and
Majid 2014). Emphasis of the matter paragraph is also included in the report by the
auditor and those are to be applied with certain framework in the auditing standard. The
appropriate balance between the consistency and comparability of auditors includes the
value that are to be increased with certain specific elements. The requirement of the
standard is to be aimed by providing the appropriate balance and those are to be
included for promoting the overall consistency of the standard. Consistency of the
audited report is to be conducted under particular circumstances which are to be
included in individual jurisdiction of Elders limited. The objective of this auditing
standard is to form an opinion for the financial report that are prepared by the company
and evaluation is to be drawn on the evidences (Martínez-Ferrero and García-Sánchez

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2018). Expressing clear opinion through the written report along with acknowledging the
implicit management framework represents the wide range of compliance framework.
ASA 706 – Emphasis of Matter paragraphs and other matter paragraphs in the
independent auditor's report
The consequential alignments with the requirements is to be included with certain
revised auditing standard which are to be presented in the annual report. The
requirement is to add with the report which are mainly issued by the international
auditing standard board and conforms to the requirement of Corporation Act 2001. The
equivalent requirements are to be based on the definition which is usually used in
Australia. Both of the matter paragraph includes the independent standard settings
which are to be included with the effective explanatory materials in the auditing standard
(Sarwoko and Agoes 2014). The application of this standard is to audit the financial
report as per the Corporation Act 2001 and the complete set of financial statement is to
be included with several other purpose. Historical financial information is to be added
with the additional communication of the auditors that includes the effective auditing
procedure in the financial report of Elders limited. The objective of this particular
auditing standard is to draw the attention of user for judging the auditors that requires
the clear way of additional communication in the report. The appropriate presentation
and disclosing the financial report is of such importance which highlights the viability of
the auditor report (Yee et al. 2017). Emphasis of matter paragraph mainly refers to the
disclosed financial report which points out the judgement for the fundamental users of
Elders limited. The judgement of the auditor is also important as it focuses on the
understanding of the financial reports.
APES 110 – Code of ethics for professional accountants
The code of ethics for professional accountants mainly points out the
fundamental principles which includes the members of the company for reflecting the
recognition of responsibility for public interest. This code mainly provides the conceptual
framework which helps in identifying and evaluating the threats to compliance within the
available fundamental principles (Dzuranin and Mălăescu 2015). The process of audits
and reviews includes the assurance agreements for setting the code which are to be

14AUDITING AND ASSURANCE
applied in the conceptual framework and cope up with the threats to the independence
of auditors of Elders limited. Relation to the engagement includes the fundamental
principles along with the conceptual framework which are to be applied to both audit
and review engagement. The code and other professional standard includes the
development that are generally issued by the public interest which are to be comprised
with certain standards. APES 110 Code of ethics for professional accountants includes
the independence standard that are to be involved with professional standard and
guidance notes. The member of the professional bodies complies with the codes and
professional standard for highlighting the professional activities. This particular code of
ethics consists of three parts namely the fundamentals principles and conceptual
framework in part one (Lenz and Hahn 2015). Part two consist of members in the
business and employment relationship and public practice. In the last part, it includes
the independence standards for audit and review engagements.
Professional behaviour requires certain members who are responsible for
complying the relevant laws and regulation which would duly carry the code of ethics.
Relevant parties might breach the report which would be affected by the professional
bodies as well as the regulatory bodies of Elders limited. Certain fundamental principles
are directly associated with the code of ethics such as integrity, objectivity,
confidentiality and professional behaviour (Ruhnke and Schmidt 2014). Integrity mainly
highlights the straightforward and honesty towards the professional as well as the
business relationship. The objectivity is not comprised with the professional or business
judgement as conflicts might arise for the interest or undue influence. In addition to this,
confidentiality is the respect to the confidentiality of the acquired information for
maintaining better relationship and professional standards. Complying with relevant
laws points out the professional behaviour which might influence the profession and
discrete the conducting members. Moreover, the professional behaviour is to be
maintained by complying the professional behaviour that mainly requires a member for
avoiding any kind of faults in the overall process. The code of ethics is generally
highlights the ethical standards that are required to be maintained for conducting the
audit procedure by the auditor of Elders limited (Green, Taylor and Wu 2017). The code
mainly sets out the application as well as the requirements of the material that are

15AUDITING AND ASSURANCE
directly associated with the business circumstances along with mentioning the
professional activities.
Implications of findings
The study includes the impact as well as the relationship of the auditing standard
which are to be associated with the concepts and practice that points the auditing
theories. Business risk is included in the business which are to be mitigated form the
business as early as possible. The corporate governance is associated win the
business which are to be implemented in the normal business course (Edgley, Jones
and Atkins 2015). Elders limited mainly demonstrated the statement of corporate
governance which is to be updated on the field of compliance, transparency and
disclosure of financial information. The risk compliance includes the continual
improvement which are to be managed by the risk and those are to be included with the
respective business approach. Ethics and culture are based on the values that are
required to be demonstrated by the report and those are to be included with the
statement of corporate governance. Possessing the solid financial skills is to be served
in the part of the financial services that are to be included with annual report of the
company (Hines et al. 2015). The impact and relationship of the auditing standard
includes some other topics which are mentioned in the following part.
Auditing Standards
ASA 315 – Identifying and assessing the risk of material misstatement through
understanding the entity and its environment
This particular auditing standard mainly points out the process of identifying the
risk of material misstatement that might take place in the financial statement of Elders
limited. Fraudulent activities and errors in the financial statement mainly focuses on the
material misstatement and these are to be mitigated for increasing the overall
profitability of the company (Fernandez-Feijoo, Romero and Ruiz 2016). Total amount
of profit have decreased from profit of $ 118571 million in the year 2017 then to profit of
$ 73927 million in 2018. The internal control and implementing the responses points out
the material misstatement which is disclosed in the annual report of Elders limited.

16AUDITING AND ASSURANCE
Significant condition in the business results in risk which mainly affects the ability of the
business for achieving the objectives and targets. It also help in understanding the
nature of the entity which assessed the risk along with the nature of the business.
Operations on the other hand, clearly reflects the application of laws and regulation
which are to be associated with the business. The process that is designed for
maintaining the charges for government along with management includes the effective
implementation of strategies of Elders limited. The procedures of risk assessment
mainly highlights the audit procedures which are to be obtained from the environment of
the entity (Pizzini, Lin and Ziegenfuss 2014). The risk of material misstatement is to be
assessed for pointing out any kind of frauds or error in the financial report of the
company. Elders limited has applied this particular auditing standard that would help in
initiating the process of eliminating the frauds and errors in the financial statement.
ASA 320 – Materiality in planning and performing an audit
It is the auditing standard which mainly focuses on the financial report of a
business organisation and the statement are prepared as per the Corporation Act 2001.
The auditing procedure of financial report included every financial statement that are
mainly prepared by the management of the company and generally audited by the both
internal auditor and external auditor of the company (Chiu, Liu and Vasarhelyi 2014).
Material misstatement generally consist of errors and omission of material which are
required to be recorded in the financial statement of the business firm. The context of
materiality in the standard mainly focuses on the presentation of financial report which
are to be initiated by the help of reporting framework that are represented by the
accounting bodies of Australia. The historical financial information are operative after
the period of commencing period along with pointing out the responsibility of the
auditors towards Elders limited. Elders limited have implemented this particular auditing
standard which influences their economic decision for collaborating it with effective
presentation of annual report (Vanstraelen and Schelleman 2017). It also help in judging
the matters about the performance of an audit which takes place at the end of a
financial year.
ASA 330 – The auditor’s response to assessed risk

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It is the auditing standard which highlights the acceptance of auditor’s standards and
deals with responsibility for designing the responses of material misstatement. The risk
of material misstatement is also identified as well as assessed by the auditors as per
the guidelines of other auditing standard (Dobler 2014). Obtaining of appropriate audit
evidence regarding the assessed risk mainly highlights the risk of material misstatement
by designing and applying specific responses of those risks of Elders limited. This
particular auditing standard mainly provides the responses to the risk that have already
been assessed by the appointed auditors of the company. The responses of the risk are
the main requirement that are required to be highlighted in the financial statement of the
company.Auditors of Elders limited is required to respond on the risks that are assessed
within the accounting period (Toy and Hay 2014). Moreover, it includes the substantive
procedures that are to be designed for evaluating the overall procedure of material
misstatement at assertion level.
ASA 705 – Modifications to the opinion in the independent’s audit report
ASA 705 mainly deals with the responsibility of the appointed auditors for better
examination of the financial statement that are prepared by the management of the
company. The applicability of this auditing standard is to highlight the modifications that
have been made in the financial report by the auditors of the firm (Kend 2015). The
opinions for modifications includes different types such as qualified opinion, adverse
opinion and disclaimer opinion. The modification of the report are to be included in the
study as it includes the audit based evidences along with the financial report which
might be free from material misstatement. The time when the auditor is unable to obtain
the sufficient evidences that is to be free from material misstatement. These opinions
are to be included in the report by the auditor along with obtaining sufficient audit
evidences. The objectives of the auditors is to clearly express the certain appropriate
opinion which are to be modified as per the requirement of auditor’s report of Elders
limited. The appointed auditor would disclaim the opinion that are to be involved for the
subsequent audit evidences (Moffitt, Rozario and Vasarhelyi 2018). The possible effect
of financial reports is associated with undetected material misstatement that would be
reliable in their overall business objectives. At the time of reporting an accordance

18AUDITING AND ASSURANCE
includes a fair presentation that would be associated with effective presentation of
financial data. Moreover, the adverse opinion provides the significance of matters that
would be obtained for appropriate audit evidence of Elders limited.
Auditing Approach
Business risk and corporate governance
The possibility of the company that is Elders limited might expect that the
business would earn quite a less amount of profit than expected profit and this
phenomenon is coined as business risk. It is mainly influences by different types of
factors which are associated with the business along with affecting the overall
profitability of the firm (Simnett and Huggins 2015). The total volume of sales, per unit
price of the product, input cost, overall competition and government regulation are some
of the factors that puts the company in business risk of Elders limited. Sales have been
recorded to $ 1613278 million in 2018 than $ 1582520 million in 2017. It also refers to
the loss making stage of the business where the business should earn less amount then
the expected profit in a certain financial year. The risk can only be minimised by
minimising the influencing factors from the business by representing the effective
control measurement. Nature of business also plays a vital role in representing the
business risk along with adopting the technique for mitigating the chances for occurring
this particular event. On the other hand, corporate governance includes the process of
balancing the interest with the stakeholders of the company along with sharing the
information with management of Elders limited (Ackers and Eccles 2015). Elders limited
focuses on the culture based value which highlights the compliance and transparency of
the company. The obligation of the policies points out the sustainability of the business
which allows the firm to capitalise their opportunities.
Ethics, culture and whistle blowing
Ethics and culture of Elders limited have highlighted in the annual report which
mainly points out the APES 110 Code of Ethics for professional accountants. The
financial report of the company also mentioned the other ethical responsibilities which
are ordered as per the code. The practices of risk compliance sounds good for the firm

19AUDITING AND ASSURANCE
as they are subject to continual process of improvement (Rajendran and Swamynathan
2016). It is the approach that is a type of hallmark for effective management of the
company as help in capitalising the opportunities and managing the downside of
business. Moreover, whistle blowing is the situation when an employee seeks the
suppliers for the normal management and reported to be suspected at work. In other
words, it is also denoted as the situation when an employee speaks out the secret
information about Elders limited in a confidential manner. The culture of the organisation
also gets affected by this particular process as it leaks out the important information of
the company to general public (Ejoh and Ejom 2014). This might create an advantage to
the rival company to plan certain strategies which would help in increasing their overall
profitability.
Inherent and control risk
Inherent risk and control risk are the types of risk which associates with the
process of auditing in a business organisation. An inappropriate opinion in expressed by
the appointed auditor on the financial statement is coined as audit risk (Samagaio and
Rodrigues 2016). Inherent risk is the types of risk which is associated with material
misstatement and arise due to errors and omission of financial information. Elders
limited have faced absence or lapse of control on the financial statement mainly cause
the material misstatement or omission on recording of data. Certain significant trade
might expose in complex instruments which are to be established for the manufacturing
concerns for a stable competitive environment. In addition to this, control risk includes
the adequate internal control which are to be prevented and detected from the focus of
frauds and errors (Decaux and Sarens 2015). It is considered to higher as it points out
the audit entity for effective auditing procedure of Elders limited.
Actions by stakeholders and internal control
Stakeholders of Elders limited might be effective for the company as the
objectives and actions are to be performed by them after a certain period of time. The
key stakeholders of the company includes the creditors, directors and employees along
with government (Andon, Free and Sivabalan 2014). The role of stakeholders includes
the performance of business which points out the effective management in business

20AUDITING AND ASSURANCE
structures of Elders limited. In addition to this, internal control are the activities or
actions that are performed for Elders limited for achieving certain objectives and targets.
It also assist in ensuring the payment that are initiated by the company to the third
parties for certain valid services and renders. Moreover, it also reduces the variations
which mainly leads to more number of predictable customers and the operational
effectiveness is also assured by the process of internal control (Seguí‐Mas, Bollas‐
Araya and Polo‐Garrido 2015). Elders limited appoints the directors for determining the
valuable financial statement and conforms the true and fair value from the material
misstatement.
Obligations of auditors and negligence
Reporting obligations is to be included in their annual statement that are
prepared by the management of the company. The auditors of Australia mainly uses
Form 912 to lodge reporting obligations and the obligation is to be lodged within one
month of registration (Al-Akra, Abdel-Qader and Billah 2016). Different institutional
bodies are associated for lodging the complaints of the appointed auditors and those
are to be presented within the financial statement of Elders limited. Moreover, the
negligence of an auditors points towards the liability of the company as any kind of loss
might occur to the business and those are to be mitigated at utmost observation. The
purpose of the procedure is to allow the shareholders of the company for better
analysing the financial statement that have already reviewed by the auditors.
Independence, duties, policies and regulatory bodies
Independence of the auditors is the integrity and the approach by which the audit
process is included with financial interest. The appointed auditor carries out the work in
a free manner which are to be included by the management of the business (Edgley,
Jones and Atkins 2015). No other employees of the company would influence the
auditor during auditing the financial statement of Elders limited. The duties of the auditor
is to examine the financial statement of the company and highlights the faults and
errors. It also help in highlighting the material misstatement which might lead to
company towards financial loss. The policies for auditing the statement includes
different aspects such as it has to be completed and interim audit might also occur

21AUDITING AND ASSURANCE
during the overall process (Martínez-Ferrero and García-Sánchez 2018). Moreover, the
regulatory bodies in Australia supports the auditors for auditing the statement along with
supports the companies for presenting the true and fair value of financial statement of
Elders limited.
Conclusion and recommendation
The study states the process of auditing and assurance which are to be carried in
the business course and those are to be associated with the financial statement of the
company. the inherent and control, risk are to be associated that points out the practice
of auditing standard and those are to be included in the regulatory agencies. Decision
making process points out the effective risk that are required to be mitigated for better
performance of the company. Internal control weakness is also associated with the
respective culture in the aspect of the company and those are to be initiated by
presenting the financial statement in a proper way. The accuracy of work results in
actionable sights that rapidly drive in improvements over the company. True value of the
financial statement is the correct fact that are to be prepared as per the reporting
framework such as the IFRS and ASA. The audit committee of the company mainly
audited the consolidated statement of financial position, income statement and flow of
cash along with changes in equity. The report is to be complied with the Australian
Accounting Standard along with other standard of accounting that are followed in the
country. The appointed auditors of the company have audited their group of financial
reports which have been prepared on the basis of Australian Accounting Standard and
responsibilities of those standards.
It can be recommended that Elders limited is required to appoint an external
auditor for auditing the financial statement on the basis of true and fair value along with
mitigating the risk that are associated with the business. APES 110 Code of ethics for
professional accountants includes the independence standard that are to be involved
with professional standard and guidance notes. The risk can only be minimised by
minimising the influencing factors from the business by representing the effective
control measurement. The financial report of the company also mentioned the other
ethical responsibilities which are ordered as per the code. Significant condition in the

22AUDITING AND ASSURANCE
business results in risk which mainly affects the ability of the business for achieving the
objectives and targets. The context of materiality in the standard mainly focuses on the
presentation of financial report which are to be initiated by the help of reporting
framework that are represented by the accounting bodies of Australia. The facts that are
associated with the report of the auditor includes the applicable framework which is to
be included with the process of amendment of auditor’s report.

23AUDITING AND ASSURANCE
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