Inherent Risk, Fair Value, And Material Misstatements: Audit Procedure And Analysis Of JB Hi-Fi And Common Wealth Bank

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

Non-routine transactions and assertions

Common Wealth Bank

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.

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.

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

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 30^th 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.

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