Comprehensive Auditing Plan for MYOB Group Limited - Finance

This auditing plan focuses on MYOB Group Limited, a multinational IT company specializing in accounting and business solutions. The plan outlines the audit objectives, which are to ensure the financial statements are free from material misstatement and fraud or error. The audit scope covers the 2016 financial year, with a materiality level set at 5% of profit from operations before tax. Significant accounts, including inventory, cash, property, receivables, and expenses, are identified as potential areas of misstatement. The audit budget is set at $400,000. The plan aims to provide a true and fair opinion on MYOB's financial statements, considering its industry, aggressive innovation strategy, and cloud-based business model. The report covers the company's background, operations, and the importance of the audit plan in providing an accurate assessment of the company's financial position.

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Auditing plan for MYOB Group Limited
Introduction
Audit plan is a process of assessing the audit risk, and setting materiality levels. It a
documentation of auditor’s explaining the client’s financial systems and internal controls (Arens,
2007). An audit plan enables the auditor to understand the client business and the environment
that it operates in. The audit plan is drafted after and agreeing on letter of engagement. The plan
sets the audit objectives that have to be met at the end of the auditing process. The audit plan
outlines the priorities that are cost effective, ensures sufficient evidence is generated from audit
work, outlines direction and control of daily audit works, ensures sufficient attention is spent on
critical areas of the audit work and ensures auditing is completed within specified time and cost
budget (Christopher, Sarens, and Leung, 2009). Therefore, an audit plan is an important
document in auditing process in order to provide true and fair opinion on the financial statements
of an organization.
The following write up is an auditing plan for MYOB Group Limited. The write up will also
discuss the MYOB Company to gain the knowledge of the business and the environment that it
operates in.
Knowledge of the business
MYOB is a public company listed in Australian Stock Exchange (ASX). MYOB is multinational
informational technology company with headquarters in Glen Waverly, Victoria State in
Australia. The Company was started in 1991 in Australia. The word MYOB is an abbreviation of
Mind Your Own Business. The company specializes in providing accounting, tax, and other IT
services to medium and small businesses. The MYOB Company is led by Tim Reed as the Chief
Executive Officer and Richard Moore as the Chief Finance Officer.
MYOB limited is a leading company in providing cloud based business solutions in
management. The company provides their services to more than 1.2 million accountants,
enterprises, and book keeping in New Zealand and Australia. The Company has 1400 employees.
The company operations are divided in three segments; SME Solutions, Enterprise Solutions,

and Practice Solutions. The SME solutions include provision of accounting software such as
payroll, tax, accounting, and other business management solutions. The practice solutions
provide practice software to over 40000 accountants. Practice software includes; practice
management, company secretarial, insolvency, and accounting solutions. The company also
provides enterprise software such as ERP and HRM software to over 7000 large and medium
businesses.
MYOB vision is to make businesses succeed by making every facet in business easier. The
company mission is to create and deliver business management tools that lead the market in
raising productivity of businesses in New Zealand and Australia. The Company strategy is to
build a leading market platform that delivers seamless connection between SMEs, advisors, and
the accounting ecosystem. Therefore, MYOB is a fast expanding business through first to the
market cloud position. The company is highly affected by change in information technology
system.
Auditing objectives
The objectives of the MYOB audit work to establish if the financial statements are;
Free from Material Misstatement
There is no fraud or error
The auditing objective will enable the auditor expresses an assurance and reasoned opinion about
the financial statements of MYOB.
Audit Scope
The audit scope of the audit is MYOB 2016 financial year. The fiscal year starts on 1st January to
31st December 2016. The audit will be done on the financial statements to establish if there is
material misstatement.
Materiality
The benchmark for materiality will be profit from operations before tax. The bench has been
chosen because of the nature of the industry that MYOB operates in. The company is also

involved in aggressive strategy that is innovation to lead in cloud based business management
tools. This means that the company profits are highly volatile from one year to another.
The materiality level will be set on 5% of the profit from operations before tax. Any account that
will have more than 5% misstatement will be declared materially significant and if an account or
balances misappropriated or misstated are 5% less of profit from operations before tax will be
declared materiality insignificant. This means that balances misappropriated or misstated behold
5% can have impact on the financial statement of the company and any balances below 5% of
the profit from operations before income tax does not have an impact on the financial statements
(Shah, 2012). The 5% materiality level has been chosen because the auditing works is for a profit
company and can influence the decisions of stakeholders. Therefore, the MYOB audit will use
5% materiality level of profit from operating before tax to declare significant of a balances when
making opinion on the Company’s financial statements.
Significant Accounts in MYOB Financial Statements
The following are accounts that can go wrong in MYOB financial statement;
Inventory account: The inventory account is in the risk of misstatement arising from
underestimation or overestimation. The inventory account can be wrongly valuated or calculated
when being recorded to the financial statements (Soh, and Martinov-Bennie, 2011).
Cash account: This account is at a risk of misappropriation. Transactions by cash can
easily be misappropriated from the company by individuals in handling the cash compared to
credit or online transactions.
Property, equipment, and plant account: This account is faced with several risks to
misstatements. The account is affected by valuation as a result of depreciation. This means that
the account can be valued using a subjective method that can lead to understatement of the
account (Elder, Beasley, and Arens, 2011).
Receivable account: This account is at a risk of understatement for allowable from
doubtful account. This means that there is a problem in valuing the debtors’ accounts either by
closing the account or allowing for write off (Legoria, Melendrez, and Reynolds, 2013).

Expenses accounts: This account has a risk of being misappropriated. The entry of the
financial data in this account can be easily be omitted or an error in entry that can result to the
account being misappropriated. The expense account is also complex due to the large number of
entry (Keune, and Johnstone, 2012).
Auditing Budget
The budget allocation for the audit is $400000 as indicated in the engagement letter.
Conclusion
The auditing plan above of MYOB Group Ltd will therefore be success following the analysis in
the plan. The plan has discussed the MYOB Group Ltd that enables understanding of the
business, the industry of operation, challenges, and products produced by the business. The plan
also defines the objectives and the scope of the audit creating focus and direction of the audit
work. Lastly, the audit report sets the materiality level and significant account in MYOB
financial statements. Therefore, the audit plan will enable the management of the audit work in
MYOB for 2016 financial year.

References
Arens, A.A., Best, P., Shailer, G., Fiedler, B., Elder, R.J. and Beasley, M., 2007. Auditing and
assurance services in Australia: an integrated approach. Pearson Education Australia.
Christopher, J., Sarens, G. and Leung, P., 2009. A critical analysis of the independence of the
internal audit function: evidence from Australia. Accounting, Auditing & Accountability Journal,
22(2), pp.200-220.
Elder, R.J., Beasley, M.S. and Arens, A.A., 2011. Auditing and Assurance services. Pearson
Higher Ed.
Keune, M.B. and Johnstone, K.M., 2012. Materiality judgments and the resolution of detected
misstatements: The role of managers, auditors, and audit committees. The Accounting Review,
87(5), pp.1641-1677.
Legoria, J., Melendrez, K.D. and Reynolds, J.K., 2013. Qualitative audit materiality and earnings
management. Review of Accounting Studies, 18(2), pp.414-442.
Soh, D.S. and Martinov-Bennie, N., 2011. The internal audit function: Perceptions of internal
audit roles, effectiveness and evaluation. Managerial Auditing Journal, 26(7), pp.605-622.
Shah, M., 2012. Ten years of external quality audit in Australia: evaluating its effectiveness and
success. Assessment & Evaluation in Higher Education, 37(6), pp.761-772.