HA3032 Auditing Group Report: Legend Corporation Audit Program

This report, prepared for the HA3032 Auditing course at Holmes Institute, presents an audit program for Legend Corporation Limited. It begins with an overview of the company, its operations, and the audit risks involved, including control, inherent, and detection risks, as well as specific risks like credit and foreign currency risk. The report details analytical procedures, including ratio calculations for performance evaluation, and addresses the concept of materiality, identifying material accounts such as borrowings, cash, property, accounts receivable, and trade payables. It outlines audit assertions like completeness, valuation, and existence, and discusses sampling methods such as cycle counting, judgmental, random, and selective sampling techniques. The report concludes by summarizing the key findings and referencing relevant sources, providing a comprehensive analysis of the audit process for the selected company.

HA3032 AUDITING

• The report has been made on the legend corporation limited.
• Identification of all the key risks have been made.
• There is the consideration of the material misstatements
which are involved.
• Calculation is made of the ratios for performance
evaluation.
• Assertions have been identified for all material accounts.
• The method of the sampling to be considered is identified.
Introduction

Company overview
• The company legend corporation is incorporated in
Australia.
• It is involved in engineering services which are provided.
• Other services include mining, rail, medical and many
more.
• The establishment of the company has been done in 1942.
• USA, china and Europe are the countries in which exports
are made by the company.

Risk in audit
The process of audit involves various risks and they have been identified. The
procedure will be performed and the main involved risks are:
• Control risk
• Inherent risk
• Detection risk

Risks involved in legend corporation limited
The company involves various risks and the evaluation has been made
for their identification. The main risks which are collected are as
provided below:
• Credit risk
• Foreign currency risk
• Interest rate risks
• Liquidity risk

Analytical procedure
The ratios have been calculated under this procedure and with that
evaluation is made of the financial position. The main results which are
identified are as follows:
Ratio Formula 2016 2017 2018
Current ratio Current assets/current liabilities 2.36 2.44 1.99
Debt to equity Total debts/ Equity capital 0.76 0.65 0.92
Net profit ratio Income/Sales *100 4.34% 3.38% 5.20%
Total asset turnover ratio Revenue / Total assets 0.99 0.96 0.82

Materiality concept
The business involves various material aspects which needs
to be understood. In the determination of the accounts which
are material there is the consideration of various aspects
which are as follows:
• Size of the activity
• Nature of the company

Material accounts
The company involves various material accounts and with the proper
procedure they have been identified and includes:
• Borrowings
• Cash and cash equivalents
• Property and plant
• Accounts Receivables
• Trade and other payables

Audit assertions
The evaluation of the material accounts is to be made in appropriate
manner and for that audit assertions are required. Some of them are:
Completeness
Valuation
Existence
Right and obligation

Sampling
The business is made by taking various transactions and in all the
material accounts there are various entries which are made. It is not
possible to check all and for that various methods of sampling are used
which are as provided.
Cycle counting method
Judgemental sampling
Random sampling method
Selective sampling

The overview of the company has been obtained.
The business risks which are involved have been determined.
There is the material misstatement and that has been understood in
effective manner.
The analytical procedure is performed for better decision making.
The materiality is undertaken and identification of material accounts is
made.
Assertions and sampling techniques have been discussed.
Conclusion

References
• Legend Corporation Limited. (2017) Annual report. [Online]
Available at:
https://www.legendcorporate.com/investor_relations/annual_reports/
AR2017.pdf [Accessed 16 Sep. 2019]
• Legend Corporation Limited. (2019) About Legend corporation.
[Online] Available at:
https://www.legendcorporate.com/about/index.html [Accessed 16
Sep. 2019]
• Bakker, I.S., Grossmann, I., Henneman, D., Havenga, K. and
Wiggers, T. (2014) Risk factors for anastomotic leakage and leak‐
related mortality after colonic cancer surgery in a nationwide audit.
British Journal of Surgery, 101(4), pp.424-432.