Developing Audit Program: Huon Aquaculture Group Limited - HA3032

This report provides a comprehensive analysis of an audit program developed for Huon Aquaculture Group Limited, a vertically integrated salmon producer. The assignment focuses on identifying and understanding the business risks faced by the company, including agricultural, environmental, social, market, safety, and economic risks. The audit risk determination is calculated using the formula: Audit risk = Control risk * Detection risk * Inherent risk. The report details the identification of material account balances, the determination of materiality based on the perception of financial statement users and qualitative aspects, and the implementation of analytical procedures. The conclusion highlights the significantly higher level of inherent risk compared to detection and control risks, emphasizing the auditor's professional judgment in assessing account balances and setting accurate thresholds. The total audit risk of Huon Aquaculture Group Limited is determined to be low, supported by references to relevant literature on audit procedures and risk management.

DEVELOPING AN AUDIT
PROGRAM
OF
HUON AQUACULTURE
GROUP LIMITED

BUSINESS RISK IDENTIFICATION AND
UNDERSTANDING THE ENTITY
 Aquaculture group limited is the family owned business and
vertically integrated producer of salmon in Australia
(investors.huonaqua.com.au, 2019).
 Huon is also engaged in selling a range of value added products
with the focus on producing high quality fish using the
methodology exhibiting excellent characteristics.
 Huon has been fortunate enough for farm in the healthy
environment of Tasmania.

 Agricultural risk
 Environmental risk
 Social and market risk
 Safety risk
 Economic risk

AUDIT RISK DETERMINATION
Computation of audit risk of Huon is done by the
following formula:
Audit risk= Control risk * detection risk* Inherent risk
 Inherent risk- High
 Control risk- Medium
 Detection risk- Low

PERFORMING ANALYTICAL PROCEDURES OF THE
STATEMENT OF FINANCIAL POSITION:

MATERIAL ACCOUNTS BALANCES IDENTIFICATION
 Inventories transaction
 Biological assets
 Salaries
 Trade receivable account
 Property plant and equipment
 Goodwill
 Disclosures of related party

 In the planning stage, the materiality was based on
the information that is available at the stage of
evaluation.
 The sufficiency of the audit procedures is
reevaluated by the auditor when evaluation of audit
findings can be done by using significantly lower
materiality levels (Graham et al., 2018).
 To anticipate all the circumstances would have
influence on the materiality in evaluating the finding
and completing the audit is not regarded as ordinarily
feasible for the auditors (Bananuka et al. 2017).

DETERMINING MATERIALITY
 The perception of the financial statements user influences the
materiality.
 A threshold is applied by considering the qualitative aspects that helps
in determining the extent, nature, timing and scope of audit and
thereby evaluating the impact of materiality on the financial statements
(Lessambo, 2018).
 The total materiality of the consolidated financial statements of the
group is determined by making the approximation of earning before
interest tax, amortization and depreciation at the fair value that is
adjusted for the biological assets at the average of two financial years.

CONCLUSION:
 The analysis of the business risk faced by Huon Aquaculture
limited indicate that they have significantly higher level of
inherent risk as against the detection and control risk.
 The audit plan incorporates the implementation of analytical
procedures for assessing the accounts balance that are
material
 The professional judgment concerning such accounts balances
have been done by the auditor by identifying accurate
threshold.
 The total audit risk of Huon Aquaculture group limited is low.

REFERENCES:
 Christopher Westland, J. (2017). An empirical investigation of analytical
procedures using mixture distributions. Intelligent Systems in Accounting,
Finance and Management, 24(4), 111-124.
 Graham, L., Bedard, J. C., & Dutta, S. (2018). Managing group audit risk in a
multicomponent audit setting. International Journal of Auditing, 22(1), 40-54.
 Investors.huonaqua.com.au. (2019). Retrieved 21 May 2019, from
http://investors.huonaqua.com.au/FormBuilder/_Resource/_module/y8hXOlgfx
0a4WjSUgjZk7A/docs/Reports/Annual/HUON_Annual_Report_FY2017.pdf
 Lessambo, F. I. (2018). Financial Statements’ Audit. In Auditing, Assurance
Services, and Forensics (pp. 289-307). Palgrave Macmillan, Cham.
 Lusk, E. J. (2017). Analytic Procedures: A holdback-vetting forecasting
model. Applied Finance and Accounting, 3(1), 65-74.