Detailed Audit Program for Mako Gold Limited Financial Review

This report details the development of an audit program tailored for Mako Gold Limited, an Australian mining company. It begins with an overview of the industry and the company, followed by the identification of key business risks, including credit, liquidity, and market risks. The report then outlines the audit risk model, encompassing inherent, control, and detection risks. Analytical procedures are described, and material account balances are identified, along with their respective assertions. The audit program itself is presented, including a sampling plan for material account balances. The report concludes by emphasizing the impact of internal controls, legal compliance, and analytical procedures on audit program development. The report references relevant books, journal articles, and online resources, including Mako Gold Limited's annual reports.

DEVELOPING AN AUDIT PROGRAM FOR
MAKO GOLD LIMITED

Cover Content
 Introduction
 Industry and Company Overview
 Identifying Key Business Risks
 Audit Risk Model
 Analytical Procedures
 Material Account Balance Identification
 Assertions Identified
 Audit Program
 Sampling Plan for Material Account Balances
 Conclusion
 References

Introduction
• Developing an audit program is said to be related to the creation of a framework
in such a manner which not only enumerates the activities that have been
undertaken, conclusions drawn from them with supporting justifications but also
provides adequate information to an outside auditor regarding the same.

Industry and Company Overview
• The Australian Mining industry accounts for 7% of its total GDP. There has been
an increased focus upon the exploration and production of gold in recent years
due to recent price hikes in gold.
• Mako Gold Limited (ASX:MKG) is a public company that was established in
June 2015 headquartered in Brisbane, Queensland.

Identifying Key Business Risks
• A business risk is one which hinders the achievement of a business goal. For
Mako Gold Limited, its lead auditor, BDO Audit Ply Ltd., identifies the key
business risks which are largely related to use of financial instruments.
• For instance, the Burkina Faso permits are subjected to a three year option
agreement with a 100% ownership.

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Credit Risk Liquidity Risk Market Risk
Arises from Accounts
Receivables, Deposits in
banks and other financial
institutions.
Arises from cash-flows for
Mako Gold Limited in relation
to the execution of exploration
activities.
Arises from Interest and
Exchange Rate risk for Mako
Gold who utilises Foreign
Currency Translation
accounts.

Audit Risk Model
Inherent Risk (IR) Control Risk (CR) Detection Risk (DR)
A type of risk of material misstatement that is
likely to arise due to omission of any result or
item which is a direct product of uncontrollable
factors that may be overlooked while carrying out
an audit.
A risk arising from subsequent failure of internal controls to
detect material misstatements.
A risk arising when the audit procedures undertaken by
the auditors fail to detect a material misstatement.
Cash Balances Communication of Financial Results Audit procedures
Misappropriation, Theft and Fraud. Lack of segregation of duties Sampling or non-sampling error

Analytical Procedures
• For carrying our Analytical Procedures, the financial statements stating the
position and performance of Mako Gold Limited have been taken into account so
as to perform an analytical procedure on them.

Material Account Balance Identification
• In order to ascertain whether or not a
particular account balance is of
material nature, it is important to first
analyse its nature and amount in a
consolidated manner. The materiality
of the account balances of Mako Gold
Limited, five of each material account
balances relating to both assets and
liabilities have been identified.

Assertions Identified
Assets Assertions Identified Rationale
Cash and Cash
Equivalents
Accuracy The balances have been recorded at their related quantities with no exclusion of any such items while preparing the
financial statements.
Trade and other
receivables
Existence No inclusion of any fictitious parties has been made and the closing balance depicts the actual amount of debtors
existing at the time of final accounts preparation.
Short-term
investments
Completeness Disclosure is provided in the notes to financial statements in a comprehensive manner.
Exploration and
Evaluation Assets
Valuation The assets relating to exploration activities conducted by Mako Gold have been in accordance with Accounting Standard
AASB 6 “Exploration for and Evaluation of Mineral Resources”.
Other Current Assets Existence Such assets recognised in the balance sheet exist at the end of the accounting year of Mako Gold Limited.

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Liabilities
Trade Creditors Existence Such liabilities, as recognised in the balance sheet, exist at the end of the accounting year of Mako
Gold Limited and there is no inclusion of fictitious accounts of trade creditors.
Provisions Accuracy and Valuation The balances of provisions do not have a misappropriation and do not consider any overstated
amounts at the end of the period.
Other payables and
accruals
Cut-Off Transactions relating to payables and accruals have been identified correctly in relation to their
relevant accounting period.
Unsecured
Borrowings
Completeness Disclosure is provided in fullness with a comprehensive breakdown of liability and subsequent
interest payments regarding the same within the 'note to financial statements' section.
Shareholder's Equity Valuation The equity value has been appropriately calculated by taking into account all the changes relating to it
that pertain to their respective accounting periods.

Audit Program