Comprehensive Audit Report: BWP Trust Company Financial Analysis 2018

This report provides a comprehensive analysis of the audit of BWP Trust Company, focusing on the year 2018. The report begins by determining the level of materiality used in the audit, emphasizing its significance in ensuring the accuracy and fairness of financial statements. It delves into the application of materiality principles, considering qualitative aspects like investment property valuation and the judgments made by management. The report then moves on to a preliminary analytical review, assessing the company's financial health through liquidity, activity, efficiency, and profitability ratios. It highlights key trends and potential risks, such as decreasing liquidity and falling profitability ratios. The analysis continues with a review of the cash flow statement, examining operational, investing, and financing activities. Finally, the report concludes with a review of the audit report, summarizing the auditor's opinion on the financial statements and highlighting key findings. The report also includes draft notes and disclosures, providing insights into accounting estimates and judgments made by BWP Trust Company.

Running head: AUDIT AND ETHICS
Audit and Ethics
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Part 1................................................................................................................................................2
Materiality Principles Application in the context of Auditing....................................................2
Draft Notes and Disclosures........................................................................................................4
Part 2................................................................................................................................................5
Preliminary Analytical Review....................................................................................................5
Part 3................................................................................................................................................7
Cash Flows Statement Analysis...................................................................................................7
Audit Report Review...................................................................................................................9
References......................................................................................................................................10

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Part 1
Materiality Principles Application in the context of Auditing
Materiality in the context of Audit shows or represents the Opinion of Auditors in the
context of Annual statements preparation whether they are free from all accounting and auditing
errors. Materiality shows that the Annual report of BWP Trust Company are well prepared and
applicable in compliance and adherence with the presented Annual Reporting Framework such
as IFRS. BWP Trust Company taken into consideration for the reviewing and analysing is the
BWP Trust Company that is operating in the Australian Region as a Real Estate Investment
Trust Company (Lai, Melloni & Stacchezzini, 2017).
In terms of materiality the concept states that the auditor of BWP Trust Company should
take appropriate steps in order to determine whether the Annual statement presented by BWP
Trust Company matches with the Corporation Act upon which the Annual statement of BWP
Trust Company were prepared. There are various items in the presented Annual statement of the
BWP Trust Company and the same has been classified in accordance with the accounting
policies and judgements used by the management for the purpose of classifying and reporting the
expenses or income (Boiral et al., 2019). Materiality in the context of Auditing plays an
important role when there are various judgements and assumptions made by a company for the
purpose of preparing and presenting the Annual statement of BWP Trust Company for the
Annual year. In this context it is important the Auditors review the Annual statement of BWP
Trust Company whereby it should reflect a true and fair view of the Annual Position of the BWP
Trust Company for the time period taken into consideration (Chen & Tsay, 2017). It is the key
responsibility of the Auditor to obtain reasonable assurance and materiality about whether the

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Annual Report as a whole is considerable free from material misstatement that could affect the
quality of Annual information presented. The ability of usage and application of Annual
information for the purpose of analysing the stakeholders of BWP Trust Company should be
present. Misstatements can generally arise from fraud or errors whereby the same is considered
material if the same on an individual or an aggregate basis could affect the Annual performance.
The presented qualitative materiality items that are considered in the Annual statement of BWP
Trust Company is the estimates and judgements made for the purpose of valuation of the
Investment Property that was valued at $2.358 million for BWP Trust Company (Ribera, 2017).
The judgement required for the purpose of assessing the choosing and selecting the capitalisation
of income valuation process and method as the only primary source of valuation methodology
for the RWP Trust’s investment properties under the various presented accounting standards
(Wee et al., 2016).
For arriving at the estimate of auditing planning materiality RWP auditor’s would be
considering various estimates and the highest value that is shown in the Annual statement of
BWP Trust Company that the auditor would be making for the purpose of calculation of
planning overall materiality of the business. The auditor has applied various judgements that can
be better used for the calculating an overall estimated figure of the planning materiality in the
business that is being considered for the purpose of business evaluation (González-Díaz &
García-Fernández, 2016). A total of 2% would be taken into consideration of the purpose of
planning the overall accurate estimates of planning materiality in the business. Planning
materiality can be well computed as presented below:
Planning Materiality = Total Assets of Company * Estimated Percentage
=$ 2,369,529*2%

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=$ 47,390
The amount derived in the above equation will be considered in evaluating he
performance materiality. The computed figure would be helping the auditor BWP Trust
Company in assessing the various items presented in the Annual statements of BWP Trust
Company (Swart, 2018).
Draft Notes and Disclosures
The draft notes that are presented by BWP Trust Company are prepared and presented by
BWP Trust Company in accordance with the various accounting estimates that are used by BWP
Trust Company for the purpose of the computation of the overall materiality and the value of the
assets (Baldacchino, Tabone & Demanuele, 2017).
Investment Properties: The investment property is measured at cost value and is then
subsequently measured at the cost and subsequent fair value recognising any changes in the
profit and loss account. The key judgement that has been made by the management of BWP
Trust Company is that the valuation of BWP Trust Company would be done at the end of the
each balance date thereby assessing the fair value with the help of generally accepted valuation
criteria, methodology and assumptions taken into considerations.
Financial Instruments: The key judgements that has been applied for the purpose of the
valuation of the Financial instruments is with the help of the current interest rate thereby using
the applicable or the current interest rate for the purpose of discounting the cash flows associated
or flowing to BWP Trust Company.

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Part 2
Preliminary Analytical Review
The key Preliminary Analytical Review that BWP Trust Company can deploy is the
application of Annual ratio that can be well utilized for the purpose of identifying any risks in the
business. The compliance procedures where various aspects of BWP Trust Company including
the profitability, liquidity and leverage position of BWP Trust Company would be assessed.
Liquidity Ratio: The liquidity ratio for BWP Trust Company explains the coverage of the
current assets of BWP Trust Company in contrast to the current liabilities of BWP Trust
Company. The current ratio for BWP Trust Company has been decreasing at a very poor rate
improving the chances of liquidity crisis that BWP Trust Company might have during the
Annual year. During the year 2018, it was found that the current ratio for BWP Trust Company
has decreased consistently from 0.71 times in year 2017 to around 0.32 times in the year 2018
due to classification of interest bearing loans and borrowings in the current liabilities. The
auditor of BWP Trust Company should take preemptive and necessary actions for the purpose of
evaluation of the liquidity of BWP Trust Company (Reports, 2019).
Activity Ratio: The activity ratio for BWP Trust Company shows the various activities
undertaken by BWP Trust Company and the same was evaluated with the help of the receivables
turnover ratio. The receivables turnover ratio for BWP Trust Company has consistently increased
for BWP Trust Company in the trend period taken into consideration stating that BWP Trust
Company’s ability in collecting the accounts receivables from the debtors of BWP Trust
Company has increased consistently over the due course period which is good for BWP Trust
Company.

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Efficiency Ratio: The Efficiency Ratio for BWP Trust Company states the efficiency shown by
the management of BWP Trust Company in utilizing and operating the assets of BWP Trust
Company. The fixed asset turnover ratio for BWP Trust Company has fallen in the trend period
due to higher increase in the base value that is asset value in consideration to the total sales of
BWP Trust Company (Williams & Dobelman, 2017). The same applies for the total asset
turnover ratio for BWP Trust Company. It is recommended that the auditors of BWP Trust
Company takes preemptive actions and measures in order to better assess and evaluate the
Annual position of BWP Trust Company for the defined period of time period.
Profitability Ratio: The profitability ratio can be well evaluated in order to define the return
generated by BWP Trust Company in the form of net income generated by BWP Trust Company
for the trend period taken into consideration (Robinson et al., 2015). The return on assets for
BWP Trust Company has fallen in the trend period of 2015-2018 due to the fall in the
profitability of BWP Trust Company and the consistent increase in the total assets of BWP Trust
Company. On the other hand, the return on equity for BWP Trust Company has also fallen
significantly under the trend period due to the consistent rise in the equity value as contrasted to
the decrease of the net profitability of BWP Trust Company. The net profit ratio for BWP Trust
Company also saw a marginal decrease in the trend period. It is equally important for the
auditors of BWP Trust Company to analyze the various aspects and reason behind the
subsequent fall in the revenue baser and the overall profitability of BWP Trust Company for the
trend-period taken into consideration for BWP Trust Company (Lakshmi, Martin & Venkatesan,
2015).
Leverage and Coverage Ratio: The leverage and coverage ratio taken into consideration for
BWP Trust Company shows the overall Annual position of the debt when contrasted to the

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equity and assets value in BWP Trust Company. The debt to equity ratio for BWP Trust
Company ratio has consistently fallen for BWP Trust Company showing that BWP Trust
Company is decreasing the usage and application of debt financing in the business in order to
reduce the associated Annual risk and the high amount of interest cost that is paid by BWP Trust
Company. However, well in terms of coverage ratio for BWP Trust Company it can be well
stated that the total debt to total assets ratio for BWP Trust Company has fallen on the other hand
for BWP Trust Company in the trend period stating that BWP Trust Company is increasing the
value of assets of BWP Trust Company in contrast to the debt position of BWP Trust Company
for better coverage and managed Annual exposures that BWP Trust Company has in the Annual
statement of BWP Trust Company.
Part 3
Cash Flows Statement Analysis
The cash flow statement of BWP Trust Company shows the various aspects of BWP
Trust Company including the operational activities carried out by BWP Trust Company
suggesting the cash inflows sources and expenses that BWP Trust Company has incurred. N the
other hand, the investing portions relates to the various purchase and sales of non-current assets
of BWP Trust Company. Finally the financing activities carried out in the form of procurement
and repayment of finance is well done with the help of financing activities (Annual Report,
2018). The cash flow statement of BWP Trust Company is provided below:

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The maximum cash flow that is generated by the business is from the operational
activity of BWP Trust Company where BWP Trust Company has generated around $112,776
million of amount for the year 2018 and the same was marginally higher than the year 2017. In
the operational activity the primarily cash inflow for BWP Trust Company was in the form of
rent received and expenses in the field of payment to suppliers and finance costs that are incurred
by BWP Trust Company.
On the other hand, cash inflow in the investing section of BWP Trust Company was
through receipts from sale of investment properties amount to and cash outflow from purchase or

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payment of investment properties. The cash inflows from the investment activities amounted to
around $12,840 which saw a massive increase from the last year figure which was $973.
The financing activities saw a repayment of borrowings and distributions that were
paid out by BWP Trust Company which BWP Trust Company has paid out in the trend period.
Repayment of borrowings was done in order to strategize the operations of BWP Trust Company
by giving more focus on equity financing and removing the Annual risk of BWP Trust Company
for the trend period.
Audit Report Review
The Audit Report Presented by BWP Trust Company states that the Annual report of
BWP Trust Company gives a true and a fair view about the Annual position of BWP Trust
Company and for the Annual performance for BWP Trust Company in the trend period analyzed.
Base for Opinion: The Audit of the Annual statement of BWP Trust Company was done with
the help of Australian Accounting Standards for providing the basis of opinion (Annual report,
2016).
Important Audit Matters: Valuation of the presented Investment Properties and Valuation of
Annual Instruments and Assets along with the various assumption and accounting estimates that
were used by BWP Trust Company for the purpose of assessing the fair value in reaction to
BWP Trust Company. The presented annual reports also complied with all the relevant
applicable accounting standards and the Corporation Act 2001. Compliance with the various
accounting standards shows that that the auditor has issued an unqualified audit report to BWP
Trust Company signifying that the information contained in the annual report is material enough
for the purpose of assessment.

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References
Annual report (2016). Bwptrust.com.au. Retrieved 25 August 2019, from
https://www.bwptrust.com.au/site/content/annualreport/2016/files/assets/common/
downloads/2016%20Online%20Annual%20Report.pdf
Annual Report (2018). Bwptrust.com.au. Retrieved 25 August 2019, from
https://www.bwptrust.com.au/site/PDF/1690_0/2018AnnualReport
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533-552.

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