Get Instant Help From 5000+ Experts For
question

Writing: Get your essay and assignment written from scratch by PhD expert

Rewriting: Paraphrase or rewrite your friend's essay with similar meaning at reduced cost

Editing:Proofread your work by experts and improve grade at Lowest cost

And Improve Your Grades
myassignmenthelp.com
loader
Phone no. Missing!

Enter phone no. to receive critical updates and urgent messages !

Attach file

Error goes here

Files Missing!

Please upload all relevant files for quick & complete assistance.

Guaranteed Higher Grade!
Free Quote
wave

1. Apply the different phases of the audit to practical scenarios, working in teams in some instances

2. Evaluate the different audit opinions that could be expressed following the completion of an audit as they apply to different audit scenarios, working in teams in some instance

Inherent Risk

Justify Your

Assertion and Ledger

Audit Procedure/Task

Account(s) Impacted

Non-routine accounts or transactions

The non-routine transactions are seen to be present in various types of the estimates taken into consideration by the management. The example of the non- routine transaction for JB HiFi can be seen with the incidence for damage caused by fire or acquiring other company’s inherent risk during business combinations (Corbella et al. 2015).

Assertions

- “Accuracy”

- “Cut-off”

-“Classification”

- “Occurrence”

-“Completeness”

Ledger account impacted:

- Provision for bad and doubtful debts.

The treatment for such types of the transactions is based on the use of the various types of the information from beforehand which will be conducive in guiding about the occurrence of any such unforeseen event (Bell, Causholli and Knechel 2015).

Fair Value

In several occasions the accounting estimates are considered to be difficult to be ascertained and various types of the fair value consideration needs to be disclosed in the accounting statements (Litt et al. 2014).

Assertions

- “Accuracy”

- “Cut-off”

-“Classification”

- “Occurrence”

-“Completeness”

Ledger account impacted:

-Fixed Assets

-Current Assets

The auditors need to investigate and take interview on the decision makers of the firm and estimate the techniques which will be able to reduce this margin of error.

Material Misstatements

The risks in which the auditor expresses any sort of inappropriate audit opinion the financial statements are termed as materially misstated (Deng et al. 2014).

Assertions

- “Accuracy”

- “Cut-off”

-“Classification”

- “Occurrence”

-“Completeness”

Ledger account impacted:

-Cash on hand

-Retained earnings

The audit process is conducted in a way which will be able to reduce the audit risk to an acceptable level. The various types of the audit risk questions has been further observed to be stated as per the detection of the risks and controlling of the same (Robert Knechel et al. 2013).

Non-routine transactions and assertions

Common Wealth Bank

Inherent Risk

Justify Your

Assertion and Ledger

Audit Procedure/Task

Account(s) Impacted

Credit Risk

This risk for the bank is mainly ascertained for cases where the counter party has defaulted in meeting the obligations as per the terms of agreement. Some of the risk factors related to this are “unsteady income, low credit score, employment type and collateral assets”

Assertions

- “Accuracy”

- “Cut-off”

-“Classification”

- “Occurrence”

-“Completeness”

Ledger account impacted:

-Public borrowings account under liabilities.

The audit procedure is needed to prevent occurrence of such a risk with increasing the overall rate of interest for the borrowers.

Liquidity Risk

Risk arising from the lack of marketability of an investment may occur in case of carrying out day-to-day cash transactions. In this case the bank may be temporarily out of cash, this is concerned as the main liquidity risk to the bank.

Assertions

- “Accuracy”

- “Cut-off”

-“Classification”

- “Occurrence”

-“Completeness”

Ledger account impacted:

-Tier 1 capital

-Tier 2 Capital.

The audit procedure needs to ensure that the bank is having sufficient cash balance in its depository, before handing over excess cash.

Operational Risk

These risks may take place for to potential losses due to a human error. This may result in severe potential losses in internal processes. This definition is considered with legal risk, but excludes strategic and reputation risk.

Assertions

- “Accuracy”

- “Cut-off”

-“Classification”

- “Occurrence”

-“Completeness”

Ledger account impacted:

-Operating assets

-Operating Liabilities

Audit procedure includes monitoring of the potential security breached from beforehand to prevent instances of Human risk, IT/system risk and processes risk.

Profitability Ratio Analysis: -

JB Hi-Fi

Common Wealth Bank

Particulars

2017

2016

2017

2016

Revenue (A)

5628

3954.5

33293

33817

Net Profit/Loss after Tax (D)

172.4

152.2

9881

9445

Ordinary Equity(H)

853.5

405

63716

60564

Net Profit Margin (D/A)

3.06%

3.85%

29.68%

27.93%

Return on Equity (A/H))

20%

38%

16%

16%

As per the depictions made on Net Profit Margin Common Wealth Bank is discerned to be in a better position and less prone to risk. However, JB HiFi is in a much better position in terms of the return on equity.

Short-Term Liquidity Ratio Analysis: -

JB Hi-Fi

Common Wealth Bank

2017

2016

2017

2016

Total Current Assets (A)

1170.7

702.4

899583

838385

Receivables (D)

196.6

98

10037

11591

Cash and equivalents (B)

72.8

51.9

45850

23372

Total Current Liabilities (F)

885.8

446.8

580972

549471

Current Ratio (A/F)

1.32

1.57

1.55

1.53

Quick Ratio [(B+D)/F)

0.30

0.34

0.10

0.06

The current ratio of both JB HiFi and Common Wealth Bank is depicted with a fluctuating trend. It is seen that in 2017 the current ratio of JB HiFi decreased from 1.57 to 1.32 and quick ratio from 0.34 to 0.30. This shows that the company's ability to pay short-term and long-term obligations has decreased from 2016 to 2017. Similarly, Common Wealth Bank’ is in a slightly better position with an increase of current ration from 1.53 to 1.55 and quick ratio from 0.06 to 0.10.

Debt Equity Ratio

JB Hi-Fi

Common Wealth Bank

2017

2016

2017

2016

Total Liabilities (A)

1598.8

587.6

912658

872437

Total Assets (B)

2452.3

992.3

976374

933001

Debt Equity Ratio

0.65

0.59

0.93

0.94

The solvency ratio test is able to depict that JB Hi-Fi is in a comparatively better position than Common Wealth Bank. The high debt equity ratio of 0.93 in 2017 and 0.94 in 2016 has shown Common Wealth Bank is in a much greater risk to cover the long-term borrowings.

JB HiFi and Common Wealth Bank

Analytical

Justify Your

Assertion and Ledger

Audit Procedure/Task

Review –

Answer

Account(s) Impacted

Area of

Concern

Identified

Reliance on the financial ratios

This concern is seen to be having a substantial risk with the lack of productivity of their business operation as there needs to be less amount of the cash paid in terms of the debt obligations. In addition to this, the other aspect of the analysis for the financial ratio is identified to be based on lower amount of the liquidity ratios. The liquidity position as per the depiction of the current assets is also able to show that both the companies are in an inappropriate position to meet the short-term expenses (Lennox, Wu and Zhang 2014).

Assertions

- “Accuracy”

- “Cut-off”

- “Classification”

- “Occurrence”

- “Completeness”

Ledger account impacted:

-Cash in hand

-Retained earnings

-Current assets

-Current Liabilities

 (Huang et al. 2015).

The main form of the rectification measure in the sufficient procedure need to be considered with current assets and give special attention to the cash inflows and cash outflows in a year.

Differences in the fiscal years

This factor is observed with the various type the other concerns such as increasing selling expenditures (Ettredge, Fuerherm and Li 2014).

Assertions

- “Accuracy”

- “Cut-off”

- “Classification”

- “Occurrence”

- “Completeness”

Ledger account impacted:

-Cash in hand

-Retained earnings

(Rahmina and Agoes 2014).

The main form of the audit procedure task is identified to be regularly revising the deadlines which will be able to support the respective date of the different types of the accounts and the selection of the different types of the reporting aspect (Al-Rassas and Kamardin 2015).

Financial statement may not give the exact picture

In Australia there are several companies which are using varied accounting methods. On making the appropriate comparison it is often observed that the main form of the depiction of the comparison of the financial statement is able to put light on the different types the significant factors which is discerned to be related to the wrong assumptions (Kim, Lee and Lee 2015).

Assertions

- “Accuracy”

- “Cut-off”

- “Classification”

- “Occurrence”

- “Completeness”

Ledger account impacted:

-Revenue

-Intangible assets

-Leases (Bandyopadhyay, Chen and Yu 2014).

The audit procedure needs to ensure that the company can adhere to the respective exposure drafts has considered to be proposed on the date of the future issue of the amendments. It is further depicted that that the auditor’s needs to be particularly aware of the changes in the revenue measurement, PPE, leases and intangible assets.  The auditor’s needs to ensure that a particular technique is being maintained with the recognition of updated reports which will be able to ensure that the audit report is observed to be in compliance with other companies operating in the same area.

In case of JB HiFi the corporate governance report is clearly discerned to be stated under Director’s Report section. As per the CG report it is discerned that the various types of the concerns for the report is able to state on director’s commitment to ensure that the group’s business is observed to be complying with the highest standards of the CG reporting.  The management and the directors in general is able to state on the policies and the materially aspects of the practices which is inferred from the third edition of the reporting aspect. This also relates to the ASX corporate reporting and the council recommendations and the principles which seen to be related to the council as per the ASX review report. The various types of the other aspect of the corporate governance for the company is depicted to be stated with the reporting aspect related to the 2017 financial year and the same is considered to be following the ASX recommendations. In the same financial year, it is further depicted that the consideration for the CG reporting aspect is based on the principles as per the ASX recommendations. As per the reporting in the directors report it is stated that the CG statement is clearly observed to be effective from the beginning of 14 August 2017.

Fair value and ledger accounts

In case of common wealth bank, the consideration of the CG aspect is inferred to be stated in separate sections which is seen to be different from the director’s report. As per the company’s CG report it is considered that the various aspects of the CG are identified to be based on the different aspects of the reporting requirement which has shown high commitment with the corporate framework. This is further able to support long-term performance and the sustainability and protect the interests of the shareholder’s and other stakeholder’s. In addition to these measures the company is observed to regularly review the CG statements and additionally this is seen to be based on the several types the depiction of the regulation, market practices and the expectations of the stakeholders.

As per the declarations of the Corporate Governance aspect of the company is clearly stated in terms of financial regulations, general management exposure to the international operations, news media technology, financial acumen and various types the other aspects which are related to retail and corporate banking services. It has been further discerned that the significant aspect of the CG is regarded to be clearly defined with the financial acumen. Some of the other aspect of the CG reporting is stated in form of retail, corporate and investment banking strategies which is depicted on June 2017. Some of the main aspect of the risk management is identified with the inherent risk management which is identified to be essential for delivering the business objective and associating the key objectives with sound corporate governance strategy. As per the decisions taken by the board it is observed that the various strategies related to culture the investor relation program is seen with facilitating two-way communication and additionally foster the participation of the shareholders. The incorporation of the program for the management is further able to state on the significant aspect of communications and the periods which is determined to be related to the important facets of communications and continuous disclosure.

The presence of the audit committee for JB HiFi is considered to be evident with the presence of auditor’s independence declaration. In the audit committee declaration report, it has been clearly stated that the audit report is prepared in accordance with the guidelines stated in accordance with “section 307C of the Corporations Act 2001”. The main form of the audit partner of the company is stated with the various types the information which has been stated with the declaration of the information under the Corporations Act 2001. This is in relation to the conduction of the audit. Some of the other aspects of the auditor committee is discerned with the different types of the information which is matched with the applicable code of the professional conduct in relation to the conduction of the audit. As per the audit committee report it is also stated that the various type the other aspect of the report is related to provide a true and fair view of the group’s financial position as on 30th June 2017and financial performance in the year ended 2017. As per the accordance of AASB, the various types of the audit standards are in accordance to the independence requirements of Corporations Act 2001. The ethical requirement is further observed to be following the “APES 110 Code of Ethics” for the professional Accounting which is relevant with the auditing of the financial report in Australia.

Material misstatements and ledger accounts

The presence of the audit committee in the Common Wealth Bank is considered to be evident with the various type the depictions which has seen to made in terms of business areas. The Audit Committee is considered with the provision during the tenure of the non-audit services by PWC. The audit committee is further able to advice on the various types the provisions which has observed to be related to the independence requirements of the “Corporations Act 2001”. As per the advice of the board the consideration of the committee, the non-audit service is identified to be based on policy details which is depicted to prepared as per the non-audit services set with the CG statement. This can be further ensured with the CG statement and ensure the independence of the of the group’s external auditor. The consideration of the various type the audit provision is further seen to be based on the several types of the depictions which is stated with the non-audit service prepared by PWC. As per the annual report depiction of the company it is discerned that the board was satisfied with the various types of the provision for the non-audit services. 

The primary purpose of the audit committee is able to provide overall insight of the financial reporting process which is depicted to be related to the audit process. The audit process is also depicted to be prepared in compliance to the specific laws and regulations. The benefit of the audit process is observed with reporting issues which is seen to be significant with the accounting and reporting issues and recent regulatory and professional pronouncement which is seen with the pronouncement for the understanding of the impact of the financial statements. The understanding of the management is able to develop the internal interim financial information which is observed to be based on the understanding of the development of the various assessment which is considered to be made with the interim financial information. The main aspect for the benefit of the audit process to the society has been depicted with the fact that the result of the audit which has been further seen to be based on the several typed the depictions in association with true and fair representation of the significant material information.Some of the most noted benefit of the audit committee is observed with leveraging of the time, improvement the overall internal control, improving the financial management, clarifying the role and the responsibilities of the board of director and bringing the overall value to the audit dollar. The leveraging of the time aspect has been observed to be evident with the various type of the measures which is seen to be related to the selection of the appropriate personnel who are acquainted with knowledgeable about the financial perspectives. The internal control is identified to be conducive for the various type the measures which is related to the solving of the important objectives. The internal control is observed to be having dual signatures on the on the checks and the allocation of the duties. The appropriate designing is seen to be supported by every member of the company.

Common Wealth Bank and inherent risk

It has been observed that in general the internal control leads to greater efficiency and the process which results in wasting off the resources with more amount of the objectives and evaluations methods. The audit committee has been further able to determine the creditworthiness for the outsiders and target the success for the insiders.

In general, there has been no specific methods to define the audit quality and there has been considered with several types of the factors is directly related to affect the audit quality displaying the appropriate values for depicted values, ethics and attitudes. The audit quality has been further able to ensure high quality among the auditor, stakeholder and receive the useful information prepared on time. Some of the other quality of the audit quality has been evident with the factors such as business practices, regulations and laws, information systems, corporate governance, cultural facets and financial reporting timetable.

The high quality of the audit report has been considered to be supported by each member in the supply chain of financial reporting. As per the “International Federation of Accountants (IFAC)” the supply chain of the financial reporting is seen to comprise “the people and processes involved in the preparation, approval, audit, analysis and use of financial reports”. This is further seen to be prepared as per the charges to the governance, regulators, professional bodies and professional bodies. The achievement process of the high quality of the audit needs to follow the rigorous audit process which is seen to be following the quality control procedures. The communication aspect is further stated with effective interaction with the stakeholders which will be able to improve the overall quality of the audit report.

Reference List

Al-Rassas, A. H. and Kamardin, H. (2015) ‘Internal and External Audit Attributes, Audit Committee Characteristics, Ownership Concentration and Earnings Quality: Evidence from Malaysia’, Mediterranean Journal of Social Sciences. doi: 10.5901/mjss.2015.v6n3p458.

Bandyopadhyay, S. P., Chen, C. and Yu, Y. (2014) ‘Mandatory audit partner rotation, audit market concentration, and audit quality: Evidence from China’, Advances in Accounting, 30(1), pp. 18–31. doi: 10.1016/j.adiac.2013.12.001.

Bell, T. B., Causholli, M. and Knechel, W. R. (2015) ‘Audit Firm Tenure, Non-Audit Services, and Internal Assessments of Audit Quality’, Journal of Accounting Research, 53(3), pp. 461–509. doi: 10.1111/1475-679X.12078.

Corbella, S., Florio, C., Gotti, G. and Mastrolia, S. A. (2015) ‘Audit firm rotation, audit fees and audit quality: The experience of Italian public companies’, Journal of International Accounting, Auditing and Taxation, 25, pp. 46–66. doi: 10.1016/j.intaccaudtax.2015.10.003.

Deng, M., Lu, T., Simunic, D. A. and Ye, M. (2014) ‘Do joint audits improve or impair audit quality?’, Journal of Accounting Research, 52(5), pp. 1029–1060. doi: 10.1111/1475-679X.12060.

Ettredge, M., Fuerherm, E. E. and Li, C. (2014) ‘Fee pressure and audit quality’, Accounting, Organizations and Society, 39(4), pp. 247–263. doi: 10.1016/j.aos.2014.04.002.

Huang, H. W., Raghunandan, K., Huang, T. C. and Chiou, J. R. (2015) ‘Fee discounting and audit quality following audit firm and audit partner changes: Chinese evidence’, Accounting Review, 90(4), pp. 1517–1546. doi: 10.2308/accr-50958.

Kim, H., Lee, H. and Lee, J. E. (2015) ‘Mandatory audit firm rotation and audit quality’, Journal of Applied Business Research, 31(3), pp. 1089–1106. doi: 10.1080/09638180.2014.921446.

Lennox, C. S., Wu, X. and Zhang, T. (2014) ‘Does mandatory rotation of audit partners improve audit quality?’, Accounting Review, 89(5), pp. 1775–1803. doi: 10.2308/accr-50800.

Litt, B., Sharma, D. S., Simpson, T. and Tanyi, P. N. (2014) ‘Audit partner rotation and financial reporting quality’, Auditing, 33(3), pp. 59–86. doi: 10.2308/ajpt-50753.

Rahmina, L. Y. and Agoes, S. (2014) ‘Influence of Auditor Independence, Audit Tenure, and Audit Fee on Audit Quality of Members of Capital Market Accountant Forum in Indonesia’, Procedia - Social and Behavioral Sciences, 164, pp. 324–331. doi: 10.1016/j.sbspro.2014.11.083.

Robert Knechel, W., Krishnan, G. V., Pevzner, M., Shefchik, L. B. and Velury, U. K. (2013) ‘Audit quality: Insights from the academic literature’, Auditing, 32(SUPPL.1), pp. 385–421. doi: 10.2308/ajpt-50350.

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2020). Inherent Risk, Fair Value, And Material Misstatements: Audit Procedure And Analysis Of JB Hi-Fi And Common Wealth Bank. Retrieved from https://myassignmenthelp.com/free-samples/accm-4400-auditing-and-assurance-for-the-council-recommendations.

"Inherent Risk, Fair Value, And Material Misstatements: Audit Procedure And Analysis Of JB Hi-Fi And Common Wealth Bank." My Assignment Help, 2020, https://myassignmenthelp.com/free-samples/accm-4400-auditing-and-assurance-for-the-council-recommendations.

My Assignment Help (2020) Inherent Risk, Fair Value, And Material Misstatements: Audit Procedure And Analysis Of JB Hi-Fi And Common Wealth Bank [Online]. Available from: https://myassignmenthelp.com/free-samples/accm-4400-auditing-and-assurance-for-the-council-recommendations
[Accessed 30 May 2024].

My Assignment Help. 'Inherent Risk, Fair Value, And Material Misstatements: Audit Procedure And Analysis Of JB Hi-Fi And Common Wealth Bank' (My Assignment Help, 2020) <https://myassignmenthelp.com/free-samples/accm-4400-auditing-and-assurance-for-the-council-recommendations> accessed 30 May 2024.

My Assignment Help. Inherent Risk, Fair Value, And Material Misstatements: Audit Procedure And Analysis Of JB Hi-Fi And Common Wealth Bank [Internet]. My Assignment Help. 2020 [cited 30 May 2024]. Available from: https://myassignmenthelp.com/free-samples/accm-4400-auditing-and-assurance-for-the-council-recommendations.

Get instant help from 5000+ experts for
question

Writing: Get your essay and assignment written from scratch by PhD expert

Rewriting: Paraphrase or rewrite your friend's essay with similar meaning at reduced cost

Editing: Proofread your work by experts and improve grade at Lowest cost

loader
250 words
Phone no. Missing!

Enter phone no. to receive critical updates and urgent messages !

Attach file

Error goes here

Files Missing!

Please upload all relevant files for quick & complete assistance.

Plagiarism checker
Verify originality of an essay
essay
Generate unique essays in a jiffy
Plagiarism checker
Cite sources with ease
support
Whatsapp
callback
sales
sales chat
Whatsapp
callback
sales chat
close