Audit Procedures Report: Australia Bank Limited Financial Statements

This report presents a substantive audit program developed for the financial report of Australia Bank Limited for the period ending September 30, 2017. The audit focused on the statement of financial position, income statement, statement of comprehensive income, statement of changes in equity, cash flow statement, and related notes. The report identifies inherent and control risks, and outlines the methods used to mitigate these risks, including collecting substantial evidence, assigning audit tasks, applying professional skepticism, reviewing management information, and exercising independent judgment. Analytical procedures on the balance sheet are detailed, along with key matters such as the recognition of conduct costs, asset valuation, credit, deposits, and account activity. The report also examines different material balances, including trading derivatives, payables, cash, and liquid assets, and discusses the assertions related to these balances. The team ensured completeness, accuracy, and proper cut-off procedures. The report concludes with a discussion on how to treat material significant matters, such as cash and liquid assets, revenue, and control tests on financial information, including treasury derivatives, payables, current tax liability, loans, advances, receivables, disbursements, bonds, notes, and subordinated debts. The report provides detailed references to support the analysis and findings.

GROUP
ASSIGNMENT
Audit Program For Australia Bank
Limited Company

Introduction
The team developed a substantive audit procedures for the
financial report of Australia bank Limited for the period ended
30 September 2017
The team focused on;
 Statement of financial position
 Income statement
 Statement of comprehensive income
 Statement of changes in equity
 Cash flow statement for year
 Summary of the notes to the financial statements
 The declaration by the Director

Key Business
Risks
Inherent risk
 Occurs when auditors fail to detect material
misstatement of financial statements.
Control risk
 This is a risk that the internal control of the
organization fails to detect material
misstatements.
Detection risk
 A risk that the auditors fails to detect a material
misstatement.
•Inherent risks
•Control risk
•Detection risk

How the Group Reduced
Risks.
 Collecting substantial evidence
 Proper assignment of audit tasks to the members
 Applying professional skepticism while conducting
the audit
 Reviewing of the audit information from the
management of the company
 Practicing independent judgment.

Analytical Procedures on
the Balance Sheet
Type of financial ratio Calculation Ratio
Current ratio Current Assets/ Current
liabilities
813,399/716847
1.14
Debt to Equity ratio Total debt/ Total equity
764847m/48,552m
15.75
Operating margin ratio Operating income/Sales
6719m/9634m
0.70
Ratio of gross margin Gross profit/Sales
2286m/26724
0.10

Accounts Identified as key
Matters
 The decisions to
recognize conduct
costs
 Amount of credit for
the company
 The amount of
deposits for the
depositors
 Amount of loan for
the company
 The value of assets
owned by the
company
 The number of
accounts the
company opened in
the current year
 The availability of the
company’s
information in the
treasury

Different Material
Balances
Balances
 Cash and liquid
assets
 Revenues
 Trading securities
 Loans and advances
 Receivables
 Trading derivatives
 Payables
 Current tax liabilities
 Disbursements
 Bonds, notes and
subordinated debts

Material Account Balances
and Assertions
Assets Assertions
Cash and liquid
assets
Accuracy
Timely
Revenues Accuracy
Cut off
Trading
securities
Accuracy
Cut off
Loans and
advances
Occurrence
Cut off
Receivables Accuracy
Classification
Liabilities Assertions
Trading
derivatives
Accuracy
Cut off
Payables Occurrence
Completeness
Current tax
liabilities
Occurrence
Cut off
Disbursements Classification
Accuracy
Bonds, notes and
subordinated
debts
Accuracy
Cut off

Description of the
Assertions
Classification The team
assembled
evidence of the
same kind and
put together for
auditing.
Completeness This was to
ensure that the
processes for the
period were
complete. The
balances for the
period where
ascertained by
the team.
Accuracy The team
ensured that
the amounts
which were
and figures
were allocated
correctly and
fairly.
Cut off The team
ensured that
the amount
recorded on
the balances
were recorded
in the correct
period.

How to Treat Material
Significant Matters
 Cash and liquid assets. The team ensured that the
cash balances recorded in the statement of financial
position reflected a true and fair view of the financial
statements
 The revenue reported in the income statement of the
company was of material significance to the group
 The team performed test control on the accuracy and
cut off of the company financial information.
 The team focused on the control on the treasury
derivation like the SWAPs, futures and forwards.
 The team also focused on the payables and current
tax liability of the company. This information was
necessary to ensure that the company in paying off
its debts.

CONT.
 The team performed test control on the accuracy
and cut off of the company financial information.
 The control tests was done to determine whether
the information was the accuracy and cut offs on
the underlying information.
 The team also focused on the payables and
current tax liability of the company. This
information was necessary to ensure that the
company in paying off its debts
 The team did more assertions on; loans and
advances, receivables, disbursements, bonds,
notes and subordinated debts.

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END