Delivery in day(s): 5
ACCT3005 Auditing Theory and Practice Assignments
In recent changes in accounting standard, there are numerous objectives that must be evaluated or amended by the organisation AMP Limited. With every change in how auditing principles must work, auditor of every organisation ensures that their ways are in accordance with those changed policies always.
Evaluate how revelations during the Royal Commission hearing would affect your audit plan.
The new change in the accounting standard that is ASA 315 clearly states that it will be helping in identifying and assessing the risk of material misstatement keeping in mind the nature of the entity and the business environment the business is operating. Now before considering how the new auditing policy will impact the way the auditor the organisation the application of it must be evaluated to understand whether the organisation will be at all impacted by its aspect.
The auditing standards apply to an organisation which course by the Corporation Act 2001 and the financial report or the audit financial report is prepared half yearly. With this standard the organisation selected is applicable and its operation will get impacted (Auasb.gov.au, 2018).
Now for the second objective, the organisation must have an audit of a financial report or a complete set of financial statement. Keeping in mind this standard the organisation selected qualified to get impacted by the change in the auditing standard as per ASA 315 (Auasb.gov.au, 2018)
To understand the potential impact that will be inducted over the financial statement being provided by the auditor we need to understand the objective that the new amendment of ASA 315 has.
The objective that the auditing standard infers is that the auditor will be entitled to identify and evaluate asset every week of financial statement in material understanding. The risk that the auditor will be identifying can be from any cause including error or fraud. The objective also specifies that the auditor must have knowledge regarding the challenges that could be brought forward by environment or the internal control of the organisation which in turn may impact the rising cause of risk in material misstatement.
Now the present auditing plan does not considered the natural ways that is faced by the organisation within its financial period of time. To evaluate and we considered the problem or the issues that the natural calamities our environment provide in the organisation the plan of auditing needs to be amended in accordance to that. To plan the process of auditing auditor must have every aspect of the new standard of auditing. To incorporate the new changes provided in ASA 315, the comparison of the previous way and the new way will be essential creating a long time consuming process of work for the auditors of AMP Limited. According to the new standard of auditing of identifying assessing the risk of material misstatement the auditor needs to evaluate every internal control means and processes that are designed from past operation. The risk assessment procedure also gets infected and the auditor has to understand every aspect of environment including the risk of materialistic factors that are vulnerable to fraud and other error.
The contents of internal control needs to be evaluated by the auditor in more advanced and Critical way that would help in understanding the business risk that significantly affect in the entity or Ability to understand and achieve the objective of an organisation (Auasb.gov.au, 2018).
Identify two major audit risk areas for AMP, and explain why you have identified these accounts as being significant. Discuss the potential impact of the audit risk on the company’s financial statements; and detail the auditing procedures to verify the account balances impacted by the risk
In consideration of the organisation chosen, the AMP limited, Avail to be knowledgeable in consideration of understanding the new changes in the auditing standards. The acknowledgement that the organisation behaviour has provided in accordance to the changes with the implementation of ASA 315, has clearly justified or greater chance of minimising the risk that are generally faced by the organisation (Contessotto and Moroney, 2014).
However, as risk is eminent and will occur even if there is enough planning done, AMP limited will surely face risk during its operation. By considering the recent aspects that the organisation has considered for fulfilling their requirement in success one of the prime area of risk that may hamper the general business run in the financial period is the area of stating the values of materials in assertion level (Chang, 2017). The material value when stated wrongly creates to be a situation where issue becomes risk in operating the business by a smooth note. Mistake mint of the material value would lead to a situation where the auditor may not understand the originality of the financial statement by the values of the materials is provided (Abdallah, 2018). If there is improper understanding of the values being provided to the materials then under the subjection of ASA 315, the whole act of auditing may be considered as fraud or a illegitimate course of action.
Another auditing risk that may be faced by the organisation selected above is the Evaluation of the cells value due to its operation in diversifies area. The improper valuation which will lead to understatement or overstatement of sales value may be due to the differences in the currency value undertaken by the organisation during their sales (tot Babberich et al. 2018). Differences in the currency value being provided in the statement of cells may not coincide with that of the actual values being provided in the financial statement leading to a situation where the values which is actually to be provided maybe in a position of understatement or overrated. Search values will create authentic problems that may lead to Wars improper judgement of financial statement that the organisation is operating in and may lead common people towards unwanted misconception (Sanderson, 2014)
For both these is considered the values must be authenticated by evaluating all other cross connected figures including trial balance, financial statement, income statement, sales value and cash receipts of the organisation
1. Abdallah, S., 2018. External auditor type, discretionary accruals and investors’ reactions. Journal of Accounting in Emerging Economies, 8(3), pp.352-368.
2. Auasb.gov.au, (2018) AUDITING STANDARD 315 Accessed from https://www.auasb.gov.au/admin/file/content102/c3/ASA_315_Compiled_2015.pdf [Accessed on 14 September 2018]
3. Chang, K.H.V., 2017. Internal audit quality and its association with financial distress: An Australian context (Doctoral dissertation, Curtin University).
4.0 Contessotto, C. and Moroney, R., 2014. The association between audit committee effectiveness and audit risk. Accounting & Finance, 54(2), pp.393-418.
5. Sanderson, J., 2014. Audit issues. SMSF Guide: Current Issues and Business Strategies for the Self-Managed Superannuation Funds Adviser, p.377.
6. tot Babberich, M.P.D.N., Detering, R., Dekker, J.W.T., Elferink, M.A., Tollenaar, R.A., Wouters, M.W., Tanis, P.J., Beets-Tan, R.G.H., Bemelman, W.A., Boerma, D. and Coenen, P.P., 2018. Achievements in colorectal cancer care during 8 years of auditing in The Netherlands. European Journal of Surgical Oncology, 44(9), pp.1361-1370.