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

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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

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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

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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