Auditing Assignment: DHL Audit Risk, Planning, Controls, Testing

This report analyzes the audit of Dudley Health Limited (DHL), focusing on the risks associated with its subsidiaries: St Neville's hospital, Acuity Vision clinics, and Pellegrino Shores retirement village. The assignment begins with a memorandum advising on auditing assertions, particularly those affected by fraud at Pellegrino Shores, where a senior staff member engaged in unethical practices. The report discusses the impact of fraud on financial reporting, business risk, and the assessment of material misstatements. It addresses audit risk, key questions for internal audit, and the justification for an audit strategy focusing on patient revenue at St Neville’s. The report also examines key account balances, associated assertions, implications for the control environment, and customer payment testing procedures. It details the types of tests, key assertions, and additional audit procedures, providing a comprehensive overview of the audit process and its implications for DHL's financial statements.

0Reference List
Running head: Auditing
Auditing
Name of the Student-
Name of the University-
Author’s note-

1Auditing
Memorandum
To: Jek Porkins( Audit Senior, DHL assignment)
From: Sam Gomez ( Audit Manager, Samway Baker Fitzgerald )
Subject: Advise on auditing assertions.
Dear Jek Porkins,
The memorandum is prepared on the context to assist him about the business risk impact
and including the accounts in related to the audit assertions which is most likely affected by
fraud at Pellegrino Shores. The scenario happened during the last month at the mentioned
organization where a senior staff manager was being dismissed when it was found that she was
using illegal approaches for making her presence bigger than the present council makes. The
manager was aligned to working with collusion with quite bigger number of residents in order to
reduce the fees whereas lastly she used to gather payments from them secretly in return. This is
considered as the most unethical form of utilizing her resources. This is considered as the
internal factors regarding the financial reporting. Technology helped to accumulate by capturing
the accounting estimation control in order to achieve financial targets where they captured the
fraudulent practiced by the senior manager. This mainly affects the company framework where
the sales if the company gradually falls and they also fail to inherit the production of material
misstatements considers to focus on the company-specific factors in term of judging the risk
assessment (Schmitt et al., 2019). Fraud is usually considered as the serious problem in relation
to the modern business. The company would be affected by possessing loss bigger than $1
million. Although the business underwent through indirect fraud but still it is one of the costliest
fraud for the business. It is accumulated to consider that they will be losing around 5% of its

2Auditing
revenue to the fraudulent scenario they had been gone through. It is said that more than half of
the organization do not recover after associating with fraudulent cases (Demontis et al., 2018).
Considering the accounting assertions in relation to the company analysis, excess
negative returns and repairment of losses are mainly the attribute of losses related to the
organization, which is considered as the accused firm. Legal sanctions are also applicable for the
analysis of the company. The company is rather obliged to pay the related amount of money,
which is being charged, to them. Penalty which is imposed by the market is considered to be
explained by them that firm might be related to non-reliable in the future conditions of the
organization. The revision of costs, which are associated within the company, might also affect
the terms of trade they undergo during the future period of the business. Cost and operations
considering within the business in terms of production manufactured by them, negative changes
in relation to the accumulating figures where input price of the company and including output
price of the company will lead to reduce the earnings that are earned by them. The later
consequences attributed where market value will get much lower, clients would gradually
consider to avoid this company and they will be lowered in this competition (Smith & Liehr,.
2018. Reputation is mainly related to relying upon implicit contracts maintained by the firm. It is
also identified that this company is exposed higher degree of growth and opportunities in the
market and while ensuring to gain much more income the senior opted to choose a shortcut path
to gain the wealth in quick span of time.
Analyzing the accused of commitment the company first underwent through repairmen
losses, while comparing the legal sections. Reputational losses and other direct losses, which are
attributed in terms of common stock values, are also incurred by the company, which resulted to
1.34 percent of loss.

3Auditing
A. Associated audit risk
Audit risk is mainly signified as the signified financial statements which are materially
incorrect on the task of fitting the acknowledgement derived by giving a though of the audit
opinions that is being stated where financial reports are as free of any of the material
misstatements. However, the purpose of the audit standard is to reduce the amount of risk related
through testing considered in the significance of adequate progress and bringing up with efficient
and sufficient evidence. In context of the selected company, it is referred for being carrying
liability through switchover of different sort of revenue system in relation to acknowledge the
combination of these two (Rana & Chopra,. 2019). By considering the sequence of making
queries by the auditors while considering general ledger and verifying the supporting documents,
changes accumulated in considering changes in topic of the accounting principle and standards
which they switchover. After the post switchover, it is usually quite difficult to maintain the
audited principal and maintenance of financial statements. However, there are concepts which
mainly accumulates the positioning of the current scenario of the company, there are mainly
accumulated risk of material assessment. It is a general concept where financial reports are
materially incorrect before the audit is performed. It happened due to rapid changes and
switchover of business for the focus of betterment in business and in order to expand their
existence in the world market. Different accumulation of reforms mainly undertaken in the
relation of maintaining the cultural diversity to be established in the business. Hence, due to
insufficient data auditors will not be able to measure the actual performance of the business,
which will result to, fraudulent in the organization, which is very hard to recover (Short,. 2018).

4Auditing
B. Two key questions to ask internal audit
The main two questions, which are required to interrogate the auditors, are consigned to
the switchover issues. The main possible feedback, which they would be receiving, is about the
type of benefits that will help them to implement the business much stronger than the past.
Earlier St Neville’s used to deal with homegrown patient revenue which mainly consisted of
billing system that produces the invoice to charge patient for services which has been provided
by consideration through accommodation, medications and also the medical services (Arnold,.
2018). It is to be questioned to them whether the new system quite betters enough to provide this
structure of benefits. The later software is named as patent database, which is mainly a master
file that contains personal database of patients who are admitted in the hospital and others who
are securing services in the hospital. The details of staying, services incurred and also medical
insurance benefits provided to them. Rates database is a master file which is being used by the
company in order to show all sort of communications through billing rates. It is the rate that is
inherited by the company to undergo with the analysis figure and understand that how much the
company is meeting their targets effectively. Rebate discounts provided by them to the customers
in order to improvise their existence reality by encouraging the sales to increase significantly.
Governments also come forward in order to assist them with proper with acknowledging proper
source of benefits.
C. Justification for audit strategy
Proper source of justification, which is needed to endorse, is that enabling advancement
of the resources used in St Neville’s. Suppose the billing software must be upgraded to enable

5Auditing
better performances with reducing the occurrence of faults. It is also helpful in considering the
value of customers. Billing system with considering the data loading system must be embedded
effectively (Furr & Funder,. 2018). The focus they must possess shall reflect upon effective
communication. The communication shall fix up justifying statements issued to financial
statements. Those are the key factors of attribute that must be acknowledged with enabling
effective resolution to satisfy the clients. These are the audit strategy which are required to
improvise during the audit of patient revenue at St. Neville’s (Ericsson et al., 2018).
A. Key account balance and associated assertions
In the context of preparing the financial statements, management prepare to make
implicit and explicit type with considering recognition, measurement, presentation of the assets,
liabilities, equity, income and expenses of the company by going with disclosure according to
financial framework of the company (Meng et al,. 2018).
Occurrence of assertions, which mainly considers transactions, which is recognized in financial
statements that is being occurred and it is also related to the entity. In key account balance,
salaries and expenses, which are usually incurred during the period with mainly, considering the
aspect of the selected entity. All the transactions which were mainly supposed to record are
finally been recorded in the financial statements. However, it also maintains accuracy level
perfectly (Laurence,. 2018). The transactions are recorded accurately at appropriate amount
effectively.
B. Implications for control environment
According to (Acuity Vision.com 2019), performs its business functions with applying
their own range of supply of medical facility in recognition of the demand in market. The

6Auditing
company is focused to distribute their products through distribution team of the company. They
are quite efficient in terms of performing their tasks quite effectively (Takanen et al,. 2018).
However, the main problem is associated within eth company where the employees are getting
low base salary inspire of giving out the best performance in associating with the helping form in
generating more amount of revenue for the company. Relating to the given situation it would be
better for the company in terms of satisfying the employees by offering better package of salary.
This will help the managers to gain their momentum quite effectively and on the other hand,
employees will give their best performances (Ericsson et al,. 2018) The company shall modify
leaves and holidays so that work life balance will enact in proper way. Concept of incentives
shall be applied by the company which will boost the sales team to derive better results through
generic and systematic sort of innovations while selling the product.
C. Customer payment testing
It is the technique which is processed by the company who appoints merchants in order to
handle transactions relating through various channels. Customers of this company are allowed to
pay through credit card and debit card while making adjustments with different banks (Lundgren
& McMakin,. 2018). The acquiring bank is the financial institution which mainly maintains the
account of the merchant bank account and then enable merchants to accept the attribute and
processing the transaction on their entity (Ewert & Wagenhofer,. 2019).
Issuing bank is the financial institution that is referred in issuing credit card. Customers
whenever uses card for making purchase products of the company then the issuing bank
approves or either they decline the transactions which are mainly based on the cardholder

7Auditing
account standing and then also by applying the information to acquiring bank (Zamboni &
Litschig,. 2018).
Hence, it can concluded that the customer payment transaction is generally included with
optimum usage focusing to implement constructive resolution of user –friendly software through
which clients can easily transact without any barriers. Ultimate user satisfaction of the clients
helps the company to generate better revenue (Shi, Ausloos & Zhu,. 2018).
Test Type of test Key
assertions
Reasonableness
of conclusion
Additional
audit
procedure
1. a) Type of test
is referred as
test of control.
It is an auditing
procedure
which is mainly
associated in
testing the
effectiveness of
control that is
used in the
b)Key
assertions
from this
concept
explains that
an amount of
15 suppliers
from the
listing of
trade
creditors
c) It can be
concluded that
testing of this
degree helped
to analyze the
optimal
outcome of the
procedure
which mainly
enable to list
the proper
d) Inspection
of the data is
efficiently
required by
company in
order to
maintaining
data
redundancy,
observation
and

8Auditing
reference by
client entity in
order to prevent
or detection of
detecting
material
misstatements.
associating
from the
year-end.
However,
two creditors
considering
out of 15
examined the
balance was
eventually
overstated.
Hence, it can
be stated
optimal
usage of the
testing
usually
enable the
company to
neutralize
the degree of
errors within
the
efficiency of
controlling the
process which
is being
manufacture
focusing to the
client entity.
Ultimate usage
of testing
allows the
company
which
significantly
overstate the
outcome of the
company.
confirmation
of the
procedure is
gently
required in
order to
explain the
combination
maintained
by the
organization
to
successfully
implement
auditing
procedure.

9Auditing
organization.
2. a) substantive
test is
performed in
the second case
which usually
incurs an
auditing
procedure that
undergoes with
examining
financial
statements and
also supports
documentation
to verify that
whether there is
any error or not.
These are
usually the
evidence test in
order to support
assertion of the
b) There are
20 supplier
invoices
which are
mainly
aligned from
the list of
credit trade
creditors
during the
year-ending
process.
Pricing and
discounting
terms are
usually
inherited
with the
belonging of
authorization
in context of
the purchase
c) It can be
concluded in
the context of
the selected
topic that it
generally helps
in regard to
support the
financial
viability to
evidence the
support
function that is
asserted as
complete,
valid, accurate
procedure of
the testing.
d) There is
no such
additional
requirement
needed in
auditing
procedure
required to
exhibit the
performance.

10Auditing
financial
records.
manager.
Key Assertion:
Pellegrino Shoes defer to employ the significant impact employing through the number of
casual learning attributed through units of casual nursing, administrative staff. It is the
problematic scenario where the company is faces losses due to improper distributing of working
culture. Inefficient employees do not possess quality of embedding resources which is mainly
required to create awareness within the employees. Internal control within the company is
introduced by the internal management which ultimately help out the organization to promote the
opportunities by reforming the polices and structure within the company. The reformations are
needed with responding to the changes occurred in the market (di Prampero & Osgnach,. 2019).
Following the market policy helps them to update the structure where it can co-up with the
appropriate recommendations. The main source of risk that is present in the current scenario
where payment in regard to night shift and applying the solution procedure in reference to bring
out the best initiative in order to balance the structure of the organization (Edwards, Magee &
Bassetti,. 2018).

11Auditing
Reference List
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(2019). Discovery of the first genome-wide significant risk loci for attention
deficit/hyperactivity disorder. Nature genetics, 51(1), 63.
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water. In Muscle and Exercise Physiology (pp. 183-213). Academic Press.
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press.
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handbook of expertise and expert performance. Cambridge University Press.
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handbook Laurence, R. (2018). Animal Biology.
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communicating environmental, safety, and health risks. John Wiley & Sons.

12Auditing
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Company.
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