Auditing and Assurance in Australia-Free-Samples for Students

Questions: 1.Based on the background information contained in the case, explain whether it will be necessary to use the work of an expert in the audit of DIPL. 2.Referring to the background information contained in the case, identify five factors that would influence your determination of the preliminary figure for overall materiality for the 2017 audit of DIPL. Answers: 1.Assessing whether there is need to use the services of an expert in the audit of Double Ink Printers Limited In this particular question, it is needed to evaluate whether there is a need to use the services of an expert in the audit of Double Ink Printers Limited (Soh Martinov-Bennie, 2015). As per the guidelines of International Auditing and Assurance Standards Board, it is noted that there is need of an expert in auditing of financial statement of business enterprise. Several aspects need to be taken into account by auditors before examining material misstated figures at the time of planning for audit activities. Information should be present with the users and they should use it as evidence at the time of planning for audit as it forms significant part of expert work. It is the responsibility of the professionals and expert to have necessary information and knowledge so that they can review as well as guide the work efficiently. A proficient expert need to understand several matters and perform their job diligently to avoid further confusion and error in audit practices and list of this matter are mentioned below with proper justification: In situation when there is a need to value any of the complicated financial tools, Plant Equipment as well as acquired assets and any other things that is needed at the time looking at the normal course of business (Simnett, Carson Vanstraelen, 2016). These experts need to take decisions when business enterprise are required to value complex financial statements as well as impairment of assets and liabilities at the time of acquiring assets in business combination. Assessing unusual as well as complex issues of tax compliance In situation when actuarial liabilities is calculated in association with employee benefits plan as well as insurance contracts Interpreting different attributes such as regulations as well as contracts and laws Estimating gas as well as oil reserves (Simnett Huggins, 2015) Both clean-up costs as well as environmental liabilities is valued within specified time frame Issues faced by DIPL Need for an expert to carry out auditing activities Inventory obsolescence It is noted that the existing of allowance inventory obsolescence that is taken into consideration for covering an estimated value because of effects from storage hazards (Rahim Idowu, 2015). After viewing the case study of DIPL, it is seen that there is an occurrence of inventory allowance for obsolescence. It is due to storage vulnerability influence where there is decrease in value. Furthermore, payment of stock is performed at applicable currency of given country. The Board members together decided that allowance for inventory obsolescence as it need to written back at the same time. Therefore, the auditor of DIPL needs expert service for approximating value of obsolescence. It is due to value of the obsolescence of inventory that need to be checked within stipulated time frame. Depreciation of fixed assets The depreciation method used was straight-line depreciation method for allocating the cost for estimated useful lives of assets. In addition, an expert service is needed for measuring the impairment of assets along with depreciation. An expert will properly carry out the activities efficiently at the time of performing auditing practices (Moroney et al., 2014). 2.In this question, it is needed to explain the facts influencing calculation of preliminary figures on overall materiality. In order to perform this, materiality concept need to be known as it is one of the significant attributes that concern about faithful representation in the financial statements as in compliance with accounting standard (Moroney Trotman, 2016). After viewing the case study of DIPL, it is noted that the preliminary materiality figures are widely affected by major five factors that are mentioned below with proper justification. Identification of factors Underlying reasons behind finding relevance of several factors at the time of calculating or computing preliminary figures on overall materiality How the factors affect the preliminary figures for understanding the materiality in the planning process of audit activities Materiality concept that affect by fraud risk By evaluating the case, it is noted that the entire materiality of financial assertions of Double Ink Printers Limited can be negatively affected after identifying the critical factors like fraud risk (Knechel Salterio, 2016). At the time of preparing financial statements of DIPL, it is quite possible that the results may come with error or material misstated figures. In that case, misrepresenting the factors will directly result to some accounting projections that are actually irrational. At the time of applying basic accounting policies, it is needed to classify as well as value the statements that contain error disclosure of accounting information (Junior, Best Cotter, 2014) While evaluating the planning process, it is noted that the procedures used by implementing machines within business enterprise failed to satisfy the information technology manager (Hardy, 2014). The staff member at DIPL was under pressure, as they had to install the system for examining and reconciling purpose. after preliminary testing, it is detected that some of the transactions were not allocated within correct time frame Environmental aspects that affect materiality attributes After viewing the case study of DIPL, it is noted that several transactions were not taken into account at the time of preparing financial statements that took place may be because of mistake or human error. It may happen that the employees of Double Ink Printers Limited did the mistakes deliberately (Cohen Simnett, 2014). Effective planning pertains to attributes such as sales and marketing as it is inconsistent by nature. Even diverse macro as well as micro intentions was not evaluated by the Business Corporation It is noted that the transparency of DIPL financial statement largely affect by complexities in the process of appointing CEO of business enterprise. Materiality of financial statement affect by the factor if the decision maker does not have proper knowledge about the factors that influences business. After viewing the case study of DIPL, it is noted that DIPL failed to adopt proper method for presenting financial accounting as stated by macro as well as micro environmental factors after omitted figures. In addition, it is noted that financial report of DIPL can be affected properly because of high level of materiality as well as creating an impact on the audit planning process. Accounting policies that affect materiality attributes After viewing the case study of DIPL, it is noted that the valuation process of various types of raw materials as well as inputs used in the business was purely based on mechanism of average cost and even this was not measured in their accounting content. There was inappropriate use of valuation method where it implements average cost mechanism and increases the current cost. Impacts level several factors of materiality, as it is prevalent to inherent risk in business enterprise. It is noted that the administration of DIPL does not have any objectivity along with integrity. As a result, it is known that the produced result is likely to be material as well as influencing the decision. It is important to present financial statement with appropriate financial information as it is potentially be materially altered because of occurrence of fraudulent activities as it is driven by extreme pressure from employees (Carson, Fargher Zhang, 2016) It is noted that valuation of inventory process used for computing raw material was not suitable. The entire functional process of accounting was directly influenced by unsuitable as well as impractical assumptions and mechanism valuation. Factors relating with new process of accounts registration It is noted that the materiality of financial information of DIPL directly affected process for maintaining reorders of cash receipt by cashier of Business Corporation. It is the responsibility of the accountant to reconcile as well as prepare the accounts more efficiently at the ending period. Furthermore, materiality has the possibility to get influenced based on generation of revenue in a way by keeping into account other factors such as marketing as well as publishing and printing There are several factors that directly influences level of materiality and the accounting process need to be adopted by DIPL. The administration of DIPL needs to estimate as well as record raw materials in an effective way. It is needed to analyze raw materials that require assistance from the accounting process (Becker, Stead Stead, 2016). The entire pricess of maintaining records as well as details directly influences usage of electronic system for making transactions. It is because of improper recording of data as well as incapability of reconciling statements, it adversely lead to fall down of business activities further. This activity will influence the overall financial statement preparation because of existence of materiality of statement to solve several issues. Challenging CEO selection procedure After viewing the case study of DIPL, it is noted that appointing and selecting CEO of Business Corporation is quite complicated. In addition, there are even risk-associated links with the appointment process of accounting firms as well as transition power of CEO and William Jackson undertakes commencing of various activities as it. It is noted that the transparency of financial information as well as other factors of Business Corporation would affect complicated appointment of Chief Executive Officer. In addition, it would turn impact the decision maker negatively and materiality of the statement would be hugely affected It need complicated process of hiring as well as appointing Chief Executive Office within Business Corporation as it impact level of materiality. In addition, it is needed by business enterprise for employing transparent as well as filleted approach for appointing Chief Executive Officer. Reference List Becker, L. L., Stead, J. 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