Auditing Theory: A Detailed Case Study of Boral Limited's Audit

This case study provides an analysis of Boral Limited's audit, focusing on the 2018 annual report. It examines key aspects such as the audit firm (KPMG), the type of audit opinion expressed, disagreements with management, and compliance with ASA 600 and ASA 705. The study also includes a comparison with a fictional entity (Lakeside Company) and analyzes financial data, including operating revenue, profit, equity, assets, and liabilities. Furthermore, it highlights the assurance and non-assurance fees paid to KPMG, providing a comprehensive overview of Boral Limited's auditing practices. Desklib is a platform where you can find similar solved assignments and study resources to aid your academic journey.

Running head: AUDITING THEORY AND PRACTICE
Auditing Theory and Practice
Name of the Student
Name of the University
Author’s Note

1AUDITING THEORY AND PRACTICE
Assessment Task 2(a) Template
Add Your Chosen Entity
Name here:
Boral Limited
Lakeside Company (12ed)
Insert the url (link) to
the entity annual report
site/location:
https://www.boral.com/sites/
corporate/files/media/
field_document/Boral-Annual-
Report-2018.pdf
N/A
Fictional Entity (case study)
1. Balance
date (year-end)
30 June 2018 31 December 2011
2. Date of the
audit report
29 August 2018 February 22, 2012 (based on
A&C engagement letter p.24)
3. Name of the
auditor (firm)
signing the
report
KPMG William King, partner King &
Company (for the Dec 2011
audit)
4. To whom the
audit report is
addressed
Shareholders of Boral Limited Shareholders (or Stockholders)
of Lakeside Company
5. Type of
audit opinion
expressed in
the audit
report (NOT the
wording)
Modified – Qualified Modified - Qualified
6.
Explanation(s)
for any
modification
(what was the
reason for any
modification)
Disagreement with used
estimates for supporting
carrying value of the acquisition
of Headwaters Inc.
Disagreement with the
finalization of Purchase Price
Allocation (PPA) for the
acquisition of Headwaters Inc.
The carrying value of the equity
accounted investment of Boral
Limited in the USG Boral JV
Disagreement with management
on asset (Store) valuation;
material but not pervasive

2AUDITING THEORY AND PRACTICE
and Meridian Brick JV.
The availability and
recoverability of US tax loss
assets.
7. Which ASA
does the audit
report comply
with?
ASA 600 ASA 705
For EACH of
the remaining
items please
show the
amounts
(indicating the
applicable
currency IF NOT
$A)
8. Assurance
(audit) fees
The total assurance fee for the
year 2018 is AUD$3,331,000
which consists of
AUD$1,466,000 for audit and
review of financial reports of
Australian business,
AUD$1,249,000 for the audit
and review of the financial
reports of the overseas firms and
AUD$616,000 for other
assurance services.
The fees were paid to KPMG.
Based on the engagement letter
(p.23) for the 2012 audit
estimate (no separate disclosure
for 2011 audit fee)
$US60,000 (estimate)
9. Non-
assurance (non-
audit) fees
NOTE: for 8 &
9, make the
effort to show
any breakdown
showing what
the fees were
for and who
The total non-assurance fee for
2018 is AUD$528,000 which
consists of AUD$256,000 for
taxation services of Australian
businesses, AUD$209,000 for
advisory services, AUD$16,000
for other services and
AUD$47,000 for taxation
services for KPMG overseas
Not Required (not disclosed)

3AUDITING THEORY AND PRACTICE
they were paid
to.
firms.
The fees were paid to KPMG.
10. The
industry (or
industries) the
chosen entity
operates in
Building and construction
materials
Retail & distribution
(wholesale) of consumer
electronics
11. Operating
revenue
AUD$5731.1 million (p. 80) $US10,754,000
(called “Net Sales” p.27)
12. Operating
profit before
tax
AUD$467.5 million (p. 80) $US408,000
(called “Income before Income
Taxes” p.27)
13. Operating
profit after
tax
AUD430.5 million (p. 80) $US244,000
(called “Net Income” p.27)
14. Equity AUD$5730.8 million (p. 82) $US924,000
(called “Total Stockholders’
Equity” p.28)
15. Total
assets
AUD$9510.3 million (p. 82) $US3,628,000
(p.28)
16. Total
liabilities
AUD$3779.5 (p. 82) $US2,704,000
(p.28)

4AUDITING THEORY AND PRACTICE
Bibliography
Boral.com., 2018. Annual Report 2018 [online] Available at:
https://www.boral.com/sites/corporate/files/media/field_document/Boral-Annual-Report-
2018.pdf [Accessed 23 Nov. 2018].
Auasb.gov.au., 2018. Auditor’s Responsibilities Statement [online] Available at:
https://www.auasb.gov.au/auditors_responsibilities/ar1.pdf [Accessed 23 Nov. 2018].