Developing an Audit Program for Cygnus Gold Limited - HA3032 Auditing

This project focuses on developing an audit program for Cygnus Gold Limited, an exploration company. The assignment includes understanding the nature of the entity, identifying risks such as liquidity, currency, market, and interest rate risks. The audit risk is determined using the audit risk model, considering inherent, control, and detection risks. Analytical procedures are used to evaluate the financial position, identifying material account balances like trade payables, revenue, and property, plant, and equipment. Relevant assertions such as completeness, occurrence, valuation, and understandability are assessed. Material misstatements are evaluated, considering the impact of new accounting standards and discounting provisions. The conclusion highlights the overall low audit risk and identifies key material account balances. The audit program developed assists in identifying these material account balances for Cygnus Gold Limited. References include sources such as CPA Australia and Cygnus Gold Limited reports.

DEVELOPING AN AUDIT
PROGRAM
of
Cygnus Gold limited

UNDERSTANDING THE
NATURE OF ENTITY
 Cygnus is an exploration company that focuses on the
development of base metals and gold deposits
 It is in the discovery of base metals deposits and gold within the
Terrane of Southwest in the Wheatbelt region of Western
Australia
 The exploration of two joint ventures with Gold resources limited
and significant earn in agreements is managed by the company
(Cygnusgold.com 2019).

IDENTIFICATION OF RISKS FACED
BY CYGNUS GOLD LIMITED
 Liquidity risk
 Currency risk
 Market risk
 Interest rate risk

DETERMINATION OF
AUDIT RISK
Audit risk model is used for the computation of audit risk
faced by Cygnus gold limited. Following is the formula
Audit risk= Control risk * detection risk* Inherent risk
(Cpaaustralia.com.au 2019).
 Inherent risk- Medium
 Control risk- Medium
 Detection risk- Low

ANALYTICAL PROCEDURES FOR
EVALUATING THE FINANCIAL
POSITION:

IDENTIFICATION OF MATERIAL
ACCOUNTS BALANCES
 Trade payable
 Revenue
 Income tax
 Property plant and equipment
 Subscription receivables
 Account receivable
 Accumulated losses

IDENTIFICATION OF
RELEVANT ASSERTIONS:
 Completeness and occurrence
 Occurrence
 Valuation and existence
 Valuation and right and obligations
 Accuracy
 Completeness and occurrence
 Understandability
 Classification

ASSESSMENT OF MATERIAL
MISSTATEMENTS
 Materiality is also influenced by the perception of the users of the financial
statements (Griffith et al. 2015).
 The material revenue has not been derived by the company after the
implementation of new standard that is AASB 15 revenue from the contracts.
 The impact of discounting is considered immaterial and there has been
omission of discounting factor (Maroun 2017).
 Discounting of provisions are done at their present value as the time
value is considered material.

Conclusion:
 The overall audit risk of the company is low and therefore, the
risk rating which is applicable to the company is low.
 The material account balances that have been identified is in
relation to revenue account, trade payables, assets such as current
asset and plant, equipment and property.
 The audit program developed helps in identification of material
accounts balance of Cygnus gold limited.

References:
 Cpaaustralia.com.au., 2019. CPA Australia. [online] Available at:
https://www.cpaaustralia.com.au/ [Accessed 11 Sep. 2019].
 Cygnus Gold Limited., 2019. Reports — Cygnus Gold Limited. [online]
Available at: https://www.cygnusgold.com/reports [Accessed 11 Sep. 2019].
 Griffith, E.E., Hammersley, J.S. and Kadous, K., 2015. Audits of complex
estimates as verification of management numbers: How institutional pressures
shape practice. Contemporary Accounting Research, 32(3), pp.833-863.
 Maroun, W., 2017. Assuring the integrated report: Insights and
recommendations from auditors and preparers. The British Accounting
Review, 49(3), pp.329-346.
 Pcaobus.org., 2019. AU 350 Audit Sampling. [online] Available at:
https://pcaobus.org/Standards/Archived/PreReorgStandards/Pages/AU350.aspx
[Accessed 11 Sep. 2019].