ACCT20075: Auditing & Assurance Report for Technology One Company

This report provides an audit and assurance analysis of Technology One Company, focusing on materiality, analytical review, and audit procedures as per the ACCT20075 course requirements. It assesses the company's financial statements, including the statement of cash flow, and reviews the auditor's report, highlighting key financial ratios, business risks, and audit assertions. The analysis covers the company's revenue growth, business expansion strategies, and potential financial risks, such as high cash outflow from investing and financial activities. The report concludes that Technology One's financial performance is generally positive, but emphasizes the need for balanced financial leverage and harmonization of reporting frameworks. Desklib offers a wide array of similar solved assignments and past papers to aid students in their studies.

TEchnologey one (TNE) Company
Auditing reporting and assurance
Auditing and assurance
Name of the Author
University Name-

Table of Contents
INTRODUCTION.................................................................................................................................2
Answer to section-1...............................................................................................................................2
Answer to section- 2..............................................................................................................................3
Answer to section- 3..............................................................................................................................7
REVIEW OF STATEMENT OF CASH FLOW...............................................................................7
REVIEW OF AUDIT REPORT........................................................................................................8
Conclusion.............................................................................................................................................8
REFERENCES......................................................................................................................................9
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INTRODUCTION
Auditing and assurance is the key aspect of strengthen the true and fair view of the
assets and liabilities recorded in the financial statements of company. The main objective of
the audit and assurance program is to increase the transparency of reported financial
statements of organization. In this report, different three sections have been answered by
undertaking the proper methods and auditing assertion test. The audit and assurance program
have been undertaken for the company Technology one which has been operating its business
on international level. In the starting Materiality concept have been explained after that
review of the financial statement of Technology one and audit assertion test have been
analyzed. Afterward, in the end, analysis of the cash flow statement, financial and non-
financial activities of the company have been taken into consideration to determine the
highest and lowest activity of the cash flow.
Answer to section-1
Materiality could be defined as evaluating the quantifiable financial data to identify
the internet risk such as misstatement, omission and errors in the prepared financial
statements of company. As per ASA 320 , the concept of materiality is discussed with
reference to the preparation and presentation of the financial report which analaysi the
ommmision and problems in the financial statements. In this regard, the misstatements are
considered to be material if they individually or in the aggregate impact the decision taken by
the users with regards to financial statements. Materiality in planning and performing audit
focuses on the auditor’s responsibilities to determine the materiality for the financial
statements. Each and every auditor while auditing the financial statement of company set the
materiality level to analysis the inherent risk and viability of the prepared financial
statements. This set materiality level is determined on the basis of performance materiality
concepts which emphasis upon the viability of the set parameters in the particular time
period. For instance, performance materiality may be fixed such as 1% of the revenue, 10%
of revenue, .5% of revenue and 5% to 10% of revenue. This will allow auditors to determine
the viability of the overall turnover shown in the financial statements while preparing the
audit report without any disclaimer. It is analyzed that there could other parameters as well
which could be used by auditors while setting the performance parameters such as net
income, gross profit and total turnover of company (Jelinek, 2015).
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After analysing the annual report of company, it is analyzed that Technology one
company increased its revenue to AUD $ 271.61 million in 2017 which is 15% higher as
compared to last year data. However, the figured detailed given have been adjusted for the
tax computation. The overall turnover could be used to set up the materiality level which
could be between AUD 25 million to 30 million. The main disclosure made by the
Technology one company is related to its business expansion in other market segment and
diversified business functioning. It will allow organization to strengthen its overall sales. In
addition to this, merger strategy has also allowed company to increase its overall market
share in given time period (Mock, Ragothaman, & Srivastava, 2018).
Answer to section- 2
Audit and assurance process checks the viability of the financial statements and errors
and issues in the books of account of company. The preliminary analytical review is the
beginning stage which is adopted by the auditors reviews the reporting financial statements.
In ASA 450 , the auditors evaluate the effect of misstatements on the audit and the impact of
uncorrected misstatements on the financial statements.. As per ASA 1031It also influences
the discharge of accountability by the governing authority or the management As per the
ASA 300, it is analyzd that review of thefinanical statemetn by the auditros is very much
required to assess the risk asociated with the finanical statements. This analysis allows
auditros to identify the relation between the financial and non-finanical information
(Louwers, et al. 2015).
KEY RATIOS 2014 2015 2016 2017
CURRENT
RATIO
1.1 1.56 1.25 1.65
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FINANCIAL
LEVERAGE
1.25 1.52 1.82 1.98
NET MARGIN
(%)
20.2 32.5 45.5 47.5
RETURN ON
ASSETS (%)
18.1 18.2 6.01 14.15
RETURN ON
EQUITY (%)
27.20 15.32 9.49 21.31
RETURN ON
INVESTED
CAPITAL (%)
23.86 13.80 9.25 17.17
RECEIVABLES
TURNOVER
2.57 2.89 2.66 4.60
FIXED ASSETS
TURNOVER
39.33 49.96 47.32 39.74
After analysing all the details and financial performance of company, it could be
inferred that company has consistently increasing its overall profitability and increasing the
overall outcomes in determined approach. It is analyzed that company needs to increase its
investment its operating assets which would be helpful in meeting the client’s demand in long
run. However, company has kept high financial leverage due to the increased debt funding
which might be negative indicator for the Technology one company if it has to face issue due
to the sluggish market condition (Pratt, & Peters, 2017). It has to establish the equilibrium
between the organizations’s cost of capital and financial leverage. The conditions of the
industry and amounts may affect the trends of earning. It can affect its capability of going
concern.
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Business key risk AUDIT ASSERTION AUDIT PROCEDURE
FIXED ASSETS Existence This existence test will be
used to assess the true and
fair view of the financial
statement of company. It will
manage the misstatement
omission and fault in the
prepared financial
statement. .
Liquidity risk Obligation and right of
auditors
The auditor shall insect the
roles and responsibilities of
the Liquidity Risk
Management Division and
Funds Management Division
and review if the liquidity
risk management system is
functioning efficiently.
Auditors needs to assess
whether on the reporting
time, company has that much
level of liquidity capital in its
business or not (Bik, &
Hooghiemstra, 2018).
.
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SALES OR TURNOVER Occurrence Company might record the
falsified sales in tis books of
account which may result to
misleading data to
stakeholders. They should
also analyse the supporting
goods dispatched notes and
orders to the consumers It
means that the disclosures of
transactions are easy to
understand. They are also
required to validate the
formulas used for calculation
and correlate them to the
regulatory guidelines. They
should validate the
computation of liquidity
coverage ratios
.
Account payables COMPLETENESS They should analyse the
report of the items of
accounts payable not
matching with the machine
systems . They should also
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use the software to prepare
the role of debit to account
payable other than the
payment made to the
vendors. The role of auditors,
in this case, is to assess the
risks in the acquisition cycle.
They should focus on
payments made to the
vendors and review the files
of accounts payable
( Fuhrmann, Ott, Looks, &
Guenther, 2017).
Answer to section- 3
REVIEW OF STATEMENT OF CASH FLOW
The cash flow statement of Technology one company has reflected that company has
high cash outflow from its investing and financial activities. It is analyzed that investing
activities of the cash flow statement of company reflects AUD $ 113 million of cash outflow.
The cash outflow from the financial activities of company reflects cash outflow of AUD $
171 million. However, there are several primary financial activities of the Technology one
company such as sale or maturity of investments, proceeds from the convertible bonds, and
proceeds from the issue of shares and income from the consolidated funding. On the other
hand, primary cash payment of company would include purchase of property, net cash paid,
payment to shareholder to dividend and rest payment to stakeholders for the investment
purpose. There are other non-cash financial activity which needs to be managed such as
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investing in buying new assets, convertible bonds and hedge funding investment (Mala, &
Chand, 2015).
The main risk company is facing is related to going concern if it failed to manage the
proper flow of cash funding for its business. The financial activities of Technology one is
comparatively high which reflects that company might face issue related to increased cash
risk. The Auditors of company has also faced the issue related to the maternity level and cash
risk in its business.
The cash transactions in the cash flow statement of company include payment to
shareholders as dividend, issue of shares and payment for the investment. On the other hand,
non-cash transactions include depreciation, impairment loss and charge created on the assets
of company. This has shown that company might face issue related to the sustainable
business practice and may increase business risk which might negatively impact the business
growth of Technology Company (Legoria, Melendrez, & Reynolds, 2013).
REVIEW OF AUDIT REPORT
The opinion of the auditors for the financial statement of the Technology one company is
favourable. They centralize their visibility and policy setting regarding the risks of increasing
commodity price. Auditors of company have given in its report that it shall have counterparty
credit policies. Judgments regarding materiality are made in the context of surrounding
circumstances and they are influenced by the nature or size of the misstatements. The
determination of materiality is a matter of professional judgment and it is often influenced by
their perception. As the percentage of materiality varies from industry to industry, but it also
depends upon the perception of the auditors. Auditors have passed non-qualified audit report
which reflects that company has complied with the all applicable laws and regulations in
preparation of the financial statements. The unqualified audit report of the auditor reflects
that company has complied with the applicable rules and regulation in effective manner
(Choudhary, Merkley, & Schipper, 2018).
Conclusion
The annual report of technology one company has been assessed and it is analyzed
that auditors has set up their materiality performance ranging from 5% to 10% that reflects
the viability of the changes in its overall turnover. Auditing and assurance undertaken in this
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report reflects that audit process helps in of company The financial performance of company
is also increasing and strengthening the true and fair view of the assets and liabilities
recorded in the financial statements reflecting the positive indicator for the future growth and
business outcomes in long run. Now in the end, it could be inferred that company should
establish the harmonization in its domestic and international reporting frameworks for
preparing the financial statements.
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REFERENCES
Bik, O., & Hooghiemstra, R. (2018). Cultural Differences in Auditors' Compliance with
Audit Firm Policy on Fraud Risk Assessment Procedures. Auditing: A Journal of
Practice and Theory.
Choudhary, P., Merkley, K. J., & Schipper, K. (2018). Auditors’ Quantitative Materiality
Judgments: Properties and Implications for Financial Reporting Reliability. 28(2), 44-
82
Fuhrmann, S., Ott, C., Looks, E., & Guenther, T. W. (2017). The contents of assurance
statements for sustainability reports and information asymmetry. Accounting and
Business Research, 47(4), 369-400.
Jelinek, K. (2015). The auditing profession: Accounting for some things. Business
Horizons, 5(58), 483-484.
Legoria, J., Melendrez, K. D., & Reynolds, J. K. (2013). Qualitative audit materiality and
earnings management. Review of Accounting Studies, 18(2), 414-442.
Louwers, T. J., Ramsay, R. J., Sinason, D. H., Strawser, J. R., & Thibodeau, J. C.
(2015). Auditing & assurance services. McGraw-Hill Education.
Mala, R., & Chand, P. (2015). Judgment and Decision‐Making Research in Auditing and
Accounting: Future Research Implications of Person, Task, and Environment
Perspective. Accounting Perspectives, 14(1), 1-50.
Mock, T. J., Ragothaman, S. C., & Srivastava, R. P. (2018). Using Evidential Reasoning
Technology to Enhance the Audit Quality Assurance Inspection Process. Journal of
Emerging Technologies in Accounting, 15(1), 29-43.
Pratt, S., & Peters, E. (2017). Internal audit: Raising the bar in auditing financial crime
risk. Journal of Financial Compliance, 1(3), 237-244.
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