GrownMind Educational Services Pvt. Ltd. - Auditing and Assurance - Resonance Health Company Case Study - Auditing Assignment Help

Assignment Task:

INTRODUCTION
The people in today’s era are provided with immense opportunities to invest their money. However, the return that is available depends upon the way the organization in which money is invested is working. To invest the money available, the investors look for the organizations that present the best financial statements. But to get an idea about whether the financial statements are true and trustworthy an external assistance is required. The assistance is in the form of opinion on the financials. The professional providing the opinion is known as an auditor. However, to frame such opinion various audit procedures are required to be performed.

These audit procedures include computation of the audit risk model, calculation of ratios to perform analytical procedures, computation of materiality, setting the account balances that are considered material, sampling plan and etc. The current report lays down a complete focus upon the different audit procedures that an auditor inculcates in his audit program to gain sufficient and appropriate evidence. The entity chosen for the purpose of this report is Resonance Health Ltd. the different audit procedures are being applied to this organization to provide an idea of how these work practically.

ABOUT THE ORGANISATION AND THE RESPECTIVE INDUSTRY
The Resonance Health Company is operating under the health care equipment industry. The location in which the company is situated in Australia. Basically, services and software that relate to non-invasive imaging in the medical field are being developed and delivered by the company. This is the main specialization area of the said organization. The products developed by the organization are mainly sourced by the pharmaceutical companies as well as by the clinicians. The use is the management and diagnosis of the diseases prevailing in humans. The company is famous globally and has received commendations from the famous physicians all over the world. Although the company is situated in Australia but it has gained clearance from all regulatory restrictions for the US and Europe as well (Resource Base Limited, 2018).

AUDIT RISK MODEL
It is analyzed that the audit risk model is used or designed to identify the inherent, detention, and control risk associated with the audit procedure of an organization. However, there are several risks that could not be managed and mitigated by auditors of the company irrespective of the assertion test implemented in the audit procedure.

In order to compute the audit risk of the company, we need to multiply detention risk, control risk and inherent risk associated with the financial statement of the company. There are following risks are given which might be faced by the Resonance Health Company in its audited financial statements (Resource Base Limited, 2018).

The inherent risk of the Resonance Health Company would be determined high as there is chances that the company has high misstatement in its financial statement due to its increased complexities of the financial statements. 

The control risk of the company would be moderate as the company may face issues in identifying the reporting and accounting frameworks issues. In the case of The Resonance Health Company, control risk would be high as the company has been filling its financial statement domestic and internationally (Resource Base Limited, 2018).

In addition to this, detention risk of The Resonance Health Company would also be moderate as there is fewer chances of the fraud, errors, and omission to occur in the financial statements of the company. All the accountants are highly experienced and face fewer issues in preparing the financial statements of the company.

The audit risk model is used to identify the audit risk of the audit procedure implemented to evaluate the transparency and true and fair view of the assets and liabilities of the company.

An audit risk model is implemented to assess the audit risk associated with the financial statement of the Resonance Health Company.

The practical implication of the Resonance Health Company

After assessing all the details, it could be inferred that the Resonance Health Company is having high reporting risk and accounting compliance risk. There are chances that the company may face issues related to the legal compliance and fraud and errors in its financial statements. The audit risk of the Resonance Health Company would be high as it has higher control and detention risk. The audit risk of the company is computed by multiplying control risk, detention risk and the inherent risk of the company.

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