MA611-Auditing

Task

For your approved company, having, as a minimum (see below), obtained the last two annual reports from your company’s website, complete the following requirements;

1. Results of Analytical Procedures Apply analytical procedures (simple comparisons and ratio analysis) to the financial report information of your company for the last three financial years. Explain how the results of your analytical procedures would influence your audit planning decisions for the audit for the last financial year. 

2. Risk of Material Misstatement (Inherent Risk) at the Financial Report Level

Discuss fully your company’s inherent risk at the financial report level for the five factors discussed in Gay and Simnett (2015, pages 253-254; or 2018, pages 232-234);

a. Integrity of management (i.e., the directors),

b. Management (i.e., Director) experience, knowledge and changes during the period,

c. Unusual pressure on management (i.e., the directors),

d. Nature of the entity’s business, and

e. Factors affecting the industry in which the entity operates.

3. Risk of Material Misstatement (Inherent Risk) at the Assertion Level  From your risk assessment (i.e., Requirements 1 and 2), identify three (3) specific account balances (not account classifications!) that you consider at significant risk of material misstatement. For each of the three account balances you identify:

a) Explain why the account balance is at significant risk of material misstatement 

b) Explain the key assertion at risk of not being valid. 

c) Detail one (1) relevant substantive audit procedure to address the assertion at risk as identified in b) above and

d) Detail one (1) relevant practical internal control that would mitigate the risk in relation to the assertion at risk as identified in b) above.