Audit Report: Ingham Limited, Financial Analysis and Risk Assessment

The assignment is an audit report prepared for Ingham Limited, focusing on financial analysis and risk assessment. The report begins by identifying and analyzing the business risks inherent in the company. It then performs a financial analysis using ratio analysis, examining trends and performance indicators. The report addresses materiality, identifying key accounts and their significance. Audit assertions, including existence, completeness, rights and obligations, and valuation, are discussed in relation to the material accounts. The report also outlines sampling methods, such as judgmental, selective, and random sampling, used in the audit process. The conclusion summarizes the key findings, including the identification of business risks, the evaluation of financial performance, the assessment of material accounts, the establishment of audit assertions, and the development of a sampling plan. The report references relevant auditing standards and resources.

HA3032 Auditing

 Ingham limited is the company for which the report will be
prepared.
 All the misstatements which are involved will be taken into
account.
 The calculations will be made by which the analysis of the
ratios will be made.
 Key assertions will be accounted for the material accounts.
Introduction

Audit risk
The main risks which are involved in the business and will be
incorporated in the audit process are as provided:
 Inherent risk
 Control risk
 Detection risk

Financial analysis
The ratios are calculated and by that the performance in relation to
the company will ne analyzed which are presented below:
Ratio Formula 2016 2017 2018
Debt ratio Total liabilities/total
assets
1.00 0.80 0.77
Total asset
turnover ratio
Revenue / Total
assets
2.44 2.26 2.08
Net profit ratio Yearly Income/Sales
*100
1.09% 2.44% 4.83%
Debt to equity Total debts/ Equity
capital
-789.67 3.96 3.37

Materiality
Material accounts are those which affect the business on largest scale
and due to that they shall be identified. For their determination
certain factors are considered which are:
 Size of the transaction
 Nature of the company
 Other relevant business factors

Material accounts
There are various material accounts which have been identified and includes:
 Cash and cash equivalents
 Receivables
 biological assets
 Derivative financial instrument
 Property
 Trade and other payables
 Interest-bearing loans
 Provisions
 Financial instrument

Audit assertions and audit evidence
Audit assertions are the components on the basis of which the
various account balances will be evaluated. Some of them which
are used includes:
 Existence
 Completeness
 Right and obligation
 Valuation

Sampling
Sampling is the process in which a part of the population is selected
to evaluate the available information. This can be done by using
various styles of sampling models available. Some of them which
are used for Ingham limited are:
 Judgemental sampling
 Selective sampling
 Random sampling method

 Ingham limited involves various business risks and they have been
identified.
 Analytical procedure has been performed for evaluation of position
and performance.
 Material accounts are identified and proper assessment of them is
made.
 Audit assertions for the accounts have been provided.
 Sampling plan has also been made.
Conclusion

References
 ASA 320. (2009) Materiality in Planning and Performing an Audit.
[Online] Available at:
https://www.legislation.gov.au/details/f2009l04080 [Accessed 12
Sep. 2019]
 Freedman, J. (2018) Audit Procedures to Ensure the Existence of
Assets. [online] Available at: https://smallbusiness.chron.com/audit-
procedures-ensure-existence-assets-58809.html [Accessed 12 Sep.
2019].
 Nuhu, M. (2014) Role of Ratio Analysis in Business Decisions: A
Case Study NBC Maiduguri Plant. Journal of Educational and
Social Research, 4(5), 105.