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1). Select a listed company from the current ASX List provided. This must be approved by the Lecturer.

2). Understand the nature of the entity and its industry, including the following items:

a. Business operations

b. Investments and investment activities

c. Financing and financing activities

d. Financial reporting practices

3). Perform analytical procedures of the Statement of Financial Position and of Financial Performance over the last three years using appropriate ratios and metrics. Select four key ratios and provide a brief explanation in the report. This can be presented in a table format.

4). Discuss with your group members which account balances are considered “material”. Explain how you calculated materiality for planning purposes and provide appropriate justification for your decision-making. (Note - Use a table format to structure your answers to questions 5, 6 and 7.)

5). Select up to ten different material account balances, at least five assets and five liabilities.

6). For each material account balance selected, list the relevant financial report assertions and explain why the selected assertions are applicable to each account

Business operations

1. Nature of Afterpay touch group limited and industry 

This company is working in the field of software and services. It is a technology driven payments company, it is provides financial services in the country with specialty in finance. ATG serves with innovative digital payments to the organisations operating in telecommunication, health and convenience retail sector in Australia and overseas (ATG, 2018).

a. Business operations

Aftertouch group is providing exclusive payment services and offering platform for payments of the goods such as apparel, watches, personal care products, food, beverage or any other kind of goods or services for which payments are to be made (ATG, 2018).   This company is serving large number of customers in Australia. The mission of the company is to make purchasing feel great for a global customer base. ATG is also driving innovation in the retail sector by allowing leading retailers with the services of ‘buy now, receive now, pay later that eliminates the need of end-customers to opt for a traditional loan or payments of any kind of upfront fees and interest to the company. The company is serving to more than 1.8 million customers and more than 14000 retailers for daily payments (Afterpay touch Group, 2018).

b. Investments and investment activities

Company has investment in the expansion activities and is entering in to New Zealand market as international expansion strategy. The company is also investments in the technology so that it will be able to provide smooth transfer of the funds. It is also ensuring high level of security for the various payments made by the customers to the retailers it is serving various sectors such as health care and telecommunication businesses (Afterpaytouch, 2017). The investments are also in Available for sale financial assets that include equity investments. After the initial measurement of the investment it is identified that the financial assets are recognized at fair value with unrealized gains or losses are identified in other comprehensive income. The investing activities also include investments in associate –Afterpay. There are some investments that are sold includes plant and equipments and intangibles (Afterpaytouch, 2017).  

c. Financing and financing activities    

Financing and financing activities are related with the management of finance in case of needs for the company with the help of external sources it may includes issue of shares, debentures or external borrowing.  It is identified that the other financial asset which is cash held for the repayment of the borrowings is increased which was nil in last year. ATG is also able to generate proceeds for exercise of share options. The equity shares issued during the year were worth $3000000 and it has also utilized external financing form financial institutions to complete the financial needs (Afterpaytouch, 2017). The managing of the finance and the costs related to the arrangement and repayment is considered as financing activities. Financing activities also includes the interest and bank fees, capital raising expenses and repayments of the internal and external borrowings.

Investments and investment activities

d. Financial reporting practices

It is necessary for the companies to maintain and follow the IFRS and AAS for true and fair picture of the accounting statements so that the external stakeholders will be having trust and confidence towards the company. The report is based on the historic cost and it is presented in Australian dollars. ATG also complies with IFRS and shows comparative information for the current and past year. ATG is also following new AS and interpretations relating to method of depreciation and amortization, relating to materiality and financial reporting requirements for Australian group with a foreign parent company (Afterpaytouch, 2017). This change does not affects financial reporting as it will be effective after 30 June 2017.    

2. Analytical procedures of statement of financial position and financial performance

It is necessary to identify the financial performance of the organization which leads to measurement of the performance of the organisation in context to the competitors, industry and comparison of past performance for the internal evaluation (DRURY, 2013). The most popular measure for the measurement of the financial position are financial statements such as income statement, balance sheet and cash flow analysis based on this information ratios are calculated which provides the actual financial position of the company (Afterpaytouch, 2017).  There are four main types of ratios that are used to identify various aspects of the companies. These ratios also support the auditors to evaluate the performance of the company (William Jr, et al., 2016). These measures are useful for the external stakeholders who are not able to understand and study the financial statements of the company and compare the various companies working in the same sector and under specific industry (DRURY, 2013).    

Ratio Analysis for Afterpay Touch Group Ltd.





Liquidity ratio (Weygandt, et al., 2015)

Current ratio =  Current assets/current liabilities




Current assets




Current liabilities




Efficiency Ratio

Asset turnover = net sales/average total assets




Net sales




Average total assets




Solvency ratio

Solvency ratio = (net income after tax + depreciation)/ short and long term liabilities




Net income + depreciation




short term + long term liabilities




Profitability ratio

Operating margin ratio = operating profit/net sales




Operating profit or income




Net sales




While analyzing the financial performance of the ATG with the help of ratio analysis the current ratio identifies that there are huge fluctuations in the liquidity position of the company. Current ratio identifies the condition of the company to mitigate daily operations this ratio is also considered as working capital ratio. It is considered that the company having the current ratio of 2 is having good availability of the cash to meet and carry daily operations (Weygandt, et al., 2015). The current ratio in year 2015 was just 0.16 shows critical condition for meeting current operations. In context to this the position of the company changed and this ration jumped to 29.64 times which shows huge surplus of funds with the company. It is again declined but still better than the required liquidity ratio 4.71.

Financing and financing activities

Efficiency ratio signals towards the returns generated by the assets of the company, it is identified that there is continuous improvement in the efficiency of the company (DRURY, 2013). Assets turnover ratio in year 2017 was 0.16 better than last year 0.064. On the other side the solvency ratio indicates that the position of the company is critical in terms of solvency. It is recommended that the company must focus and improve the solvency position although there is improvement in current year -0.12. It is identified that the long term obligation payment capacity of the company is not good which is needed to be improved (Weygandt, et al., 2015). The profitability position of the company is also not good with operating margin ratio in negative figures indicated the criticalness (DRURY, 2013). The profitability ratio is improved in year 2017 indicating recovery of the company to generate higher profits in the sales.

3. Material account balances and materiality for planning of the accounts

Materiality is the concept related to the importance of entering or omitting a particular transaction in the business. The activities which are having most significant impact on the performance of the organisation are considered material. Similarly the transactions and activities which are having highest financial weight are considered material (William Jr, et al., 2016). Although there are no specific materials misstatements related to the recording and preparation of the financial information. Still some of the material account balances that signals towards the critical condition and needed to be improved (Afterpaytouch, 2017). The revenues of the company are having increasing trend but still ATG is in loss, it is identified that asset impairment and provision for onerous contract and merger related costs leads to critical condition of the company. Finance cost of the company is also on higher side. Cash and other financial assets are having positive balance indicates enough cash to payout interest and installments. There is significant growth in trade receivable that is needed to be improved for improving current financial position. Likewise trade payables are also having huge amount of liability on the company (William Jr, et al., 2016). The reason behind the materiality of the above mentioned accounts are due to the vital importance in analyzing the performance of the company. The company is having increased revenues still it is facing losses is difficult to judge for a common man.    

 4. Selection of ten different material account balances as five assets and five liabilities 

Financial reporting practices

From the financial statement of Afterpay Group Limited the material account balance is detained in order to gain the information about the assets and liabilities of company. The ten different material balance is extracted from the accounting information of Australian is as follows       


Amount ($)


Amount ($)

Cash and cash equilant  


Trade and other payables  


Trade receivables


Income tax payable

1,065, 348       

Property plant and equipments




Net loss after income tax


Interest and bank fee paid


Asset impairment


Interest bearing loans


(Source: ASX, 2017)

From the financial statement of Afterpay Touch Group Limited for the year 2017, five assets and five liabilities are determined in relation to the material account balance (Bloomberg, 2018).

5. Relevancy of material account balances for financial reporting assertion and applicability of each account 

The financial reporting assertion is very important for the company and its shareholders to follow the standard practices and the rules for the preparation of income statement, profit and loss and balance sheet. In relation to this, the Afterpay Company has followed the standards of financial data presentation in relevant manner. The assertion existence is applicable for all the items and accounting transaction is presentation with the proper evidence. The financial reporting assertion is valuable for the stakeholder as they determine the stock valuation from the assessment of financial performance of business in positive conduct manner. The assertions are the regulations that are developed by the management of organization so that the financial statement of business can be audited by the external parties. For the above chosen material account balance, the following assertions are followed in order to deliver the important information to its stakeholders. The listing of financial reporting assertions is as described as


Name of Assertions




For all the selected material account statement in the balance sheet and income statement, these are used in high accuracy manner so that the external stakeholder can determine the actual position of company in the concerned market. The material account balance is accurate for the assets and liabilities as the balance is extracted from the financial transactions of business in the particular time duration (Cristian, Giacomini and Teodori, 2018). All the related information to loans, payables, receivable and the interest and income tax is in fair manner.

On the other hand, this assertion is applicable because the company cannot produce the misstatement of information due to the losing market image in this competitive era.


This assertion is also followed by the Afterpay Limited in order to prepare the full information which is recorded in the financial transactions. The assertions should also be followed by the business and the footnotes information should also be developed so that the query and the full details about the financial activity which incurred in the financial statement. For instance the depreciation is recorded for the business than how it is calculated the entire information how it came should be prescribed in the footnotes below the concerned financial statement of company (Braswell and Daniels, 2017). From the descriptions about the complete information, the material balances can easily be determined by the external parties and the picture of results can be assessed in significant manner.

The completeness is also applicable over the selected material account as cash and cash equilant, trade receivables, payables, and income and liability items because the company do not state the false information as it is listed on the ASX and the Australian stock institution is fully focused on the accurate and complete auditing.


Cut – off

The cut off assertion is also followed by the company as the financial transaction should be recorded on the particular time duration at that time the transactions have took place in business operations. The reporting period of material accounting item should be written in the exact time periods for company transactions
(Abdullahi and Abubakar, 2017). For instance, if the material account information is not presented in the real time duration when it has been occurred than the identification of right kind of information for the business cannot be availed by the external parties of business which are actively playing the import role in business performance.

The cut off assertions is also applicable on the selected material account for the Afterpay company because the right time entry of financial transaction is required to determine the real picture of business in particular time duration.  



In context to this assertions, it can be stated that the information which is recorded in the financial transactions, it should be occurred in the financial performance of business. In addition to this, if any information is not occurred in the financial transactions of business and it are recorded by the business’s financial statements than it is deterred as the misconduct by the company (Accountingtools, 2018). In addition to this, the fraudulent transactions should not be recorded in the financial operational activities because of the development of positive creditworthiness of company.

This assertion can be applied over all the material account transactions because the fraudulent activities might violate this assertion to be implemented in effective manner (Mutunga and Owino, 2017). Moreover, it can also be stated that the liabilities, assets and equity of shareholders should be exists where it is standard format applied so that the trust and confidence of stakeholders can be gained in efficient manner.


Rights and obligations

In relation to this assertion, it is entails that all the rights and obligations of business should be followed by its assets and liabilities so that it can create positive image of business in the eyes of its customers. If the financial institution communicates about its right and obligations are not than the external parties can claim for their rights so it can violets the pursuer.

The right and obligation assertions is applicable over all the selected material account because the description or showing only the assets might be a cheating with its partners to engage them by affecting through higher profit.



In relation to this assertion, it can be stated that the presented information in the financial statements should easily be understood otherwise it can create misunderstanding                              about the showing information.

Understandability is also applicable over the material account because the confusing information might create issue for the business to influence its stakeholders by typical information presentation.


The valuation of material items is an important assertion so the up to date valuation should be done. In addition to this, the price of items should be recorded over the market value so that it might not create issue for the business and its partners.    


It is applicable for the determination of right kind of values for the stakeholder from the financial statement of material account so that the faith can cannot be distorted.

6. Designing of comprehensive set of worksteps for the material account balance of Afterpay touch Group Limited    

For the identifications of financial information’s corectiveness and accuracy, it is required to follow the steps in the auditing work so that the actual information from the company can be acquired with reference to the selected assertions for the business. The following worksteps for each and every material account is carried out so that the successful audit can be done in objective manner

Material Account Name

Worksteps for Auditing  

Cash and cash equilant

In order to determine the cash and cash equilant the auditor will request the documents about the cash flow from the operating activities (Engelhardt, Spicker, and Towers, 2012).

Trade receivables

In relation to this, the due amount will be checked with the creditors with the proof evidence.

Property, plant and equipments

To identify the property and equipments, the auditors will organize the meeting with the management of company.

Net loss after income tax

The auditors will access the balance sheet and profit and loss accounts to review as per the transaction have been occurred as the balance is calculated (Flood, 2015).

Asset impairment

In relation to this, the audit process will be planned to access the information.

Trade and other payables

To determine the transactions, the detailed information will be accessed from the trade entries (Gramling, Johnstone and Rittenberg, 2012).   

Income tax payable

In context to this, the income tax liability will be checked with the rate of applied tax on the business.

Interest and bank fee paid and Interest bearing loans

To determine the interest and bank fee, the auditors will review the interest rate and loan amount with the bank managers information (Gay and Simnett, 2017).  


To process with the auditing of reserve, the auditors will carry out the internal process for assessing the information for purpose of external stakeholders.


On the basis of above analysis of Afetrpay touch group limited, it can be concluded that as per the financial reports of business, the financial position of company is critical but in real manner it is growing. The financial performance is impacted from the merger and acquisitions of company with the software and technology Company. On the other hand, it can also be summarized that the materiality concept is followed by the Afterpay Company in its financial reporting of performance. Moreover, the material accounts are also assessed with relation to the assertions applicability. Along with this, it is also said that the worksteps are also effective to carry out the auditing for the company.  

Analytical procedures of the statement of financial position and financial performance

Auditing is having significant role in the smooth functioning and avoiding issues related to the compliance of the IFRS and AAS. The report will be focused toward development of audit program for Afterpay touch Group limited (ATG); it will discuss the operations, investments and financing activities followed by the company along with the financial reporting practices (ATG, 2018). The report will also focus on analysis of the financial ratios to identify the financial position and the concept of materiality for company. The report will also include financial reporting of the material accounts and developing the audit plan for the material accounts identified so that the there should be enough evidence for Afterpay touch to manage these accounts.


Abdullahi, A. and Abubakar, M.Y., (2017) Adoption of International Financial Reporting Standards (IFRS) and Measurement of Reporting Quality: A Review of Methodologies. International Business and Accounting Research Journal, 1(2), pp. 103-108.

Accountingtools, (2018) Financial statement assertions. [Online]. Available at: (Accessed: May 23, 2018).          

Afterpaytouch (2017) Annual report for the year ended 30 June 2017. [Online]. Available at: (Accessed: 23 May 2018).

ASX, (2017) Afterpay Touch Group Limited. [Online]. Available at: (Accessed: May 23, 2018).

Bloomberg, (2018) Company Overview of Afterpay Touch Group Limited. [Online]. Available at: (Accessed: May 23, 2018).

Braswell, M. and Daniels, R.B., (2017) Auditing, Attestation, and Financial Reporting for an Early American Charity. Accounting Historians Journal, 44(2), pp.27-46.

Cristian, C., Giacomini, D. and Teodori, C., (2018) Accounting Reform in Italy and Perceptions on the Local Government Consolidated Report. International Journal of Public Administration, pp.1-10.

DRURY, C. M. (2013) Management and cost accounting. Germany: Springer.

Engelhardt, H. Spicker, S. and Towers, B. (2012) Clinical Judgment: A Critical Appraisal: Proceedings of the Fifth Trans-Disciplinary Symposium on Philosophy and Medicine Held at Los Angeles, California, April 14–16, 1977. Germany: Springer Science and Business Media.

Flood, J. (2015) Wiley Practitioner's Guide to GAAS 2015: Covering all SASs, SSAEs, SSARSs, PCAOB Auditing Standards, and Interpretations. USA: John Wiley and Sons.

Gay, G. and Simnett, R.  (2017) Auditing and Assurance Services in Australia, Sixth Edition Revised. Australia: McGraw-Hill Education.

Gramling, G., Johnstone, K. and Rittenberg, L. (2012) Auditing. USA: Cengage Learning.

Mutunga, D. and Owino, E., (2017) Moderating Role of Firm size on the relationship between Micro Factors and Financial Performance of Manufacturing Firms in Kenya. Journal of Finance and Accounting, 1(2), pp.14-27.   

Omoolorun, A.J. and Abilogun, T.O., (2017) Fraud Free Financial Report: A Conceptual Review. International Journal of Academic Research in Accounting, Finance and Management Sciences, 7(4), pp.83-94.

Thornton, D.B., (2018) Canadian Financial Reporting Institutions. Accounting Perspectives, 17(1), pp.89-107.

Weygandt, J. J., Kimmel, P. D., and Kieso, D. E. (2015) Financial & managerial accounting. USA: John Wiley & Sons.

William Jr, M., Glover, S., and Prawitt, D. (2016) Auditing and assurance services: A systematic approach. USA: McGraw-Hill Education.

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