Auditing & Assurance Assignment - Audit strategy
In this assignment you are assumed to be an auditor who has just been appointed by your auditing firm to perform the audit at a particular client. You are in the process of understanding the client and produce part of an audit strategy to help plan the audit, in accordance with the guidance on Australian Standard on Auditing (ASA) 315 (paragraph A25 to A49).
Choosing a client: The client is chosen by your group.
The client must be (and is highly suggested to be) a public company which has its shares listed on the Australian Securities Exchange (choose company - BELLAMY'S AUSTRALIA LIMITED). If you would like to choose any company in your own country, please discuss with your lecturer before making the decision. Be aware of the fact that the company that is not on the list must also have information which can be freely publicly accessible via internet. If your chosen client is neither on the list nor approved by your lecturer, your group assignment will NOT be marked.
The main document of the chosen client that you are going to focus on is its annual report for the most recent year. Relevant information available on the internet/newspaper or other sources is also helpful.
Please note that in this annual report, the financial reports might have been audited. However, to make things simple, please consider this as unaudited financial reports (i.e. the report that have NOT been audited), and therefore, the auditor's report attached (if any) to the annual report is considered irrelevant.
Developing an audit strategy:
Below are the issues and topics that I would like you to address in your assignment:
1. Assignment format
- Assignment cover sheet with all names listed and declaration signed.
- The assessment must be in one single Microsoft Word document and should be written in 12 point font size and should use 1.2 line spacing between each line.
2. Assignment content
2.1 The client
- Name
- Address
- Year of establishment
- Field of operations
- Period of financial report period under consideration
- Type of financial report (consolidated or single)
2.2. Industry, regulatory and other external factor
- Economic condition (upturn or downturn), overall and within the sector
- Law and Regulations applicable to the client
- Level of competition
- Name of main competitors
- Level of government's support
- Level of demand for goods or services provided
- Is there any current or potential significant barriers to entering the client's industry or market
2.3 Nature of the entity
- Its operations (i.e. area or types of products or services)
- Major customers
- Is the client heavily dependent on any specific customers or class of customers
- Major suppliers,
- Ownership's structure and details about corporate governance to some extent (Board of Directors, audit committee, etc.)
- Operational structure (any branches within and outside Australia, location of warehouses, etc.)
2.4 Accounting policy
- Main accounting policies (at least policies about property, plant & equipment (PPE) (e.g. cost or revaluation model), or inventory (perpetual or periodic, FIFO, average etc.) is provided.
- Any changes in the year compared to prior years
- Any impact as a result of the changes in accounting standards
2.5 Related parties
- Controlled entities
- Non-controlled entities
2.6 Preliminary analytical procedures
- Provide at least 3 ratios (using formulas provided by the text book or lecture notes) for the current and prior years.
- Any comments on the ratios
2.7 Objectives, strategies and related business risks
- Identify the objectives or strategies and related business risks (any plan to develop new products or services, or to expand the business locations, use of information technology)
2.8 Measurement and review of financial performance
- Identify the measurement and review of financial performance (e.g. Director's remuneration, employees' performance measure and incentives, etc.).
Attachment:- Assignment File.rar