Ooredoo Audit Case Study: Financial Statement Analysis and Assurance

This case study evaluates the auditing of Ooredoo's financial statements, referencing the 2017 financial year audit conducted by KPMG. It discusses the functions and responsibilities of external auditors, emphasizing the principle of assurance and the differences between auditor's reports and audit committee reports. The study identifies and explains audit risks associated with conducting the audit, including the auditors' views on the going concern assumption of Ooredoo and their responsibilities in detecting fraud, errors, and material misstatements. It also addresses the societal demand for audits and evaluates Ooredoo's performance based on the audit findings, concluding with observations on inherent risks related to revenue accuracy and the application of accounting standards.

Running head: AUDITING
Case study
Name of the student
Name of the University
Authors note

1AUDITING
Introduction:
The report is prepared to evaluate the auditing of the financial statements of Ooredoo by
making reference to the financial statements. Report below discusses about the functions and
responsibility of external auditors of company and the assurance of the principles of audit. An
elaborate discussion is made between the difference of auditor’s report and audit committee.
Some risks associated with conducting audit have been ascertained and the same has been
explained.
Discussion:
Functions of external auditors of Ooredoo:
The external auditors of company for the financial year ending 2017 were KPMG.
Function of auditor is to provide an independent opinion on the integrity of the financial
statement along with providing additional services related to audit. They are required to provide
reasonable assurance that the financial statements have been prepared according to the
framework of accounting and are free from material misstatements.
Brief explanation on principle of assurance in relation to Ooredoo:
Reasonable assurance given by auditors in relation to financial statement is a high level
of assurance which does not act as guarantee that audit will help in detecting existence of
material misstatement and has been conducted according to the International auditing standard.
An auditor is required to give independent assurance about the fact that management of
entity has produced reliable financial information. The objective of auditors of Ooredoo is to

2AUDITING
obtain reasonable assurance that the financial statements have not been materially misstated and
is free from frauds and errors (Boyle et al. 2015).
Difference between the audit committee report and auditor’s report:
The report prepared by audit committee provides oversight along with serving as a
balance and check on the financial reporting system of company. Information on the review of
financial statements is provided in the report prepared by audit committee. It presents review on
the different aspects such as review of financial results, review of key audit matters, internal
control system, financial reporting, and accounting and internal audit functions. Report prepared
by audit committee presents the arrangement of risk management and status of internal control
(Bailey et al. 2017).
Auditors report is the evaluation of the reliability and validity of the opinion of auditors
regarding the financial statements of organization. Such report helps in expressing an opinion
about the compliance of company with the standard practices of accounting. Such report helps in
certifying the validity of financial statements of company.
Explanation of audit risk and its evidence:
Audit risk is the risk associated with the opinion of the auditors regarding the financial
statements of company. Such risk indicates that the inappropriate audit opinion has been
expressed by auditors because of their failure to detect the materiality in the financial statements.
Audit evidence on other hand is the information that has been used by auditors of Ooredoo for
arriving at conclusions by auditors on which the audit opinions are based. Such evidence
incorporates the information that is included in the accounting records and other resources such
as procedure of controlling quality and previous audits for continuance and client acceptance.

3AUDITING
Auditors can reduce the audit risk by performing and planning audit in the way that helps
in obtaining reasonable assurance about the financial statements that they are not materiality
misstated. It is required by auditors to reduce audit risk to an appropriate level by the application
of due professional care that also requires obtaining sufficient audit evidence.
Auditors view on the assumptions of going concern of Ooredoo:
Regarding the going concern, it is assumed by the auditors of Ooredoo that it sufficient
resources to continue business for the foreseeable future. Furthermore, it is also assumed that
there do not exists any material uncertainties known to the management that might cast
considerable doubt upon the ability of company to continue as going concern (Earley et al.
2016). Hence, the preparation of financial statements is done on the going concern basis.
Responsibility of auditors in detection of fraud and errors and material misstatement:
The auditor of Ooredoo has found that the continuation and operations of company is not
impacted by any material events. It is the responsibility of auditors that a professional skepticism
should be maintained throughout the audit. Auditors should well understood that non detection of
the fraud conducted by management is greater that the fraud conducted by employees and they
should be known with the risks associated with the non detection of fraudulent activities (Chan
and Vasarhelyi 2018).
The audit engagement of Ooredoo should be carried out in line with the standards of
International standards as they contain the essential procedures and principles. However, an
absolute certification cannot be obtained by auditors regarding the detection of errors of financial
statements.

4AUDITING
Reasons for demanding of audit by society:
Auditing helps in monitoring the compliance of company with regulations and laws by
assessing the systems which is suspects by making a report on several ways that miss the picture.
It can be seen from the annual report of Ooredoo that conducting audit would help in bringing
the need of accountability in relations to the financial and other matters to the functioning of
organization. Many organizations suffer from agency problems and it makes a contribution to the
understanding of demand of auditing (Louwers et al. 2015).
Evaluation of performance of Ooredoo based on understanding of audit:
Ooredoo witnesses strong financial performance during current year through
consolidation and perseverance of investments. The operating results of business are monitored
by the management for the purpose of decision making in association with the performance
assessment and allocation of resources (Ooredoo.om. 2018).
Conclusion:
From the above report prepared, it has been found that the there is inherent risk
associated with the record of accuracy of revenue due to the processing of large volume of data
and billing system of telecom. A number of key judgments and estimate are involved in the
application of several standards. In addition to this, auditors have not expressed any opinion on
the consolidated and separate financial statements and have not concluded any form of assurance
thereon.

5AUDITING
References:
Bailey, C., Collins, D.L. and Abbott, L.J., 2017. The Impact of Enterprise Risk Management on
the Audit Process: Evidence from Audit Fees and Audit Delay. Auditing: A Journal of Practice
& Theory, 37(3), pp.25-46.
Boyle, D.M., DeZoort, F.T. and Hermanson, D.R., 2015. The effects of internal audit report type
and reporting relationship on internal auditors' risk judgments. Accounting Horizons, 29(3),
pp.695-718.
Brasel, K., Doxey, M.M., Grenier, J.H. and Reffett, A., 2016. Risk disclosure preceding negative
outcomes: The effects of reporting critical audit matters on judgments of auditor liability. The
Accounting Review, 91(5), pp.1345-1362.
Chan, D.Y. and Vasarhelyi, M.A., 2018. Innovation and practice of continuous auditing.
In Continuous Auditing: Theory and Application (pp. 271-283). Emerald Publishing Limited.
Earley, C.E., Hooks, K.L., Joe, J.R., Polinski, P.W., Rezaee, Z., Roush, P.B., Sanderson, K.A.
and Wu, Y.J., 2016. The Auditing Standards Committee of the Auditing Section of the American
Accounting Association's Response to the International Auditing and Assurance Standard's
Board's Invitation to Comment: Enhancing Audit Quality in the Public Interest. Current Issues in
Auditing, 11(1), pp.C1-C25.

6AUDITING
Hines, C.S., Masli, A., Mauldin, E.G. and Peters, G.F., 2015. Board risk committees and audit
pricing. Auditing: A Journal of Practice & Theory, 34(4), pp.59-84.
Louwers, T.J., Ramsay, R.J., Sinason, D.H., Strawser, J.R. and Thibodeau, J.C., 2015. Auditing
& assurance services. McGraw-Hill Education.
Ooredoo.om. (2018). [online] Available at: https://www.ooredoo.om/Portals/0/pdf/IR/Annual-
Report-2017-english.pdf [Accessed 12 Nov. 2018].