Elements of the Financial Report Audit Process - Auditing Assignment Help

Assignment Task :

Learning Outcomes :
1. Demonstrate an understanding of the reporting requirements and auditing standards;
2. Demonstrate an understanding of the auditor's professional, legal and ethical responsibilities to their clients and third parties;
3. Identify the elements of the financial report audit process;
4. Understand the audit planning procedures, evaluate the business risk and assess the internal control;
5. Prepare auditing procedures for transactions and balances by conducting control and substantive tests;
6. Understand the auditor’s reporting obligations.

Description:

Each week students were provided with three tutorial questions of varying degrees of difficulty. These tutorial questions are available in the Tutorial Folder for each week on Blackboard. The Interactive Tutorials are designed to assist students with the process, skills and knowledge to answer the provided tutorial questions. Your task is to answer a selection of tutorial questions for weeks 1 to 5 inclusive and submit these answers in a single document.

Week 1
You are the audit manager of Overseas Explorer Ltd (OEL), which acquired the small proprietary company Local Pty Ltd (Local) on 30 June 2018. The price of the acquisition was agreed at $5 million, on the condition that OEL is satisfied with the financial records of Local. As Local is a small proprietary company, it has not prepared statutory financial reports or undergone an audit since its incorporation in 2016. However, Local has agreed to allow your firm, which is the auditor of OEL, to access its books and records. The CEO of OEL, Wendy Champion, has requested that your firm provide assurance on the following three items:

• The management accounts for the year ended 30 June 2017
• All transactions occurring from the date negotiations commenced until the settlement date, to ensure that all transactions were within the normal course of operations
• The financial report prepared at the acquisition date of 30 June 2018 In order to clarify your responsibilities, you requested that OEL indicate the level of assurance that they require for each item. Wendy replied that the financial report as at acquisition date is very important, as are the transactions since negotiations commenced, but that she is willing to have less work done on the previous year’s management accounts.

Required:
Indicate the type of engagement that will most likely be undertaken for each of the three tasks and the level of assurance to be provided. Explain your selections. 
 

Week 2
You have been the auditor of Data Ltd for two years. Your auditor’s report for Data for the year ended 30 June 2018 was unmodified, indicating that in your opinion the financial report gave a true and fair view. In August 2018, Data obtained a large loan from Better Bank Ltd, to provide additional working capital. Subsequently Data suffered severe trading difficulties and was placed into liquidation in late December 2018, with insufficient funds to repay the loan to Better Bank.
 

Required:
Outline a defense for your audit firm to any legal action taken by Better Bank to recover its loss.

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