Continuous and Comprehensive Evaluation Assignment

Assignment Task

In addition to various calculations, the questions in Assessment Item 3 include a component for communication skills. Communication with clients is an imperative necessity for auditors and excellent writing skills are expected from professional accountants, therefore please write your answers carefully and clearly. You will lose marks for poor presentation, spelling mistakes or grammatical errors.

Question

1. Based on the results of your calculation performed in Assessment Item 2 and the nature of your company’s business and its markets, outline the apparent trends and changes in these ratios, the key risk areas for the audit and the matters that will have to be addressed in the audit plan. Give examples of relevant assertions and at least one audit procedure for each assertion.

The partner also requests that you review the statement of cash flows. Which category of cash flows provided the majority of cash inflows? Which category had the greatest outflows? Identify the primary cash receipts and cash payments during the year. What were the main non-cash financial and investing activities? Using the results of your review of the cash flows, analytical review and other public information, evaluate the going concern risk of this company. What audit procedures would you recommend to address any such risk?

2. What are the trends? Are these positive or negative from a financial management perspective? Are any movements consistent with the over-statement of profit and assets, or the under-statement of expense and liabilities? Summarise the main risks. What audit objectives (e.g., occurrence/existence) are relevant? What audit procedures are useful? Chapter 9 of the textbook might be helpful.

3. The second part of the Question wants you to consider if the company is trending towards problems with short-term or long-term solvency? Is operating cash flows positive? Is the company investing in its non-current assets? What does your analytic review tell you about the company's prospects? Is anything else impacting on the company (COVID?)? See Chapter 18 of the text on the auditor's responsibilities (e.g., mitigating factors, management plans).

The second part of Question 1 can be obtained from a review of the cash flow statement. Now review the audit report of the 2022 financial report. State what type of opinion was expressed for your allocated company? Are there any additional sections or paragraphs indicating any audit issues? What key audit matters have been addressed and how? Describe the nature of these issues in detail.

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