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Every company is the multifaceted group of functioning that contains various single performances within the various similar as well as distinct aims and goals. In this Audit Assurance Compliance Assignment Help various aspects and facts of the copyright development as well as their improvement will be elaborately mentioned. As the same time the performance and efforts of auditor will be discussed, auditors are the main back bone of the company as they give efforts in evaluating the statement of finance of the company(Owers& Wilson, 2001). Bio Sustainable Feeds Ltd. is a bio research organization in Australia which comes under the Australia Stock Exchange at the same time carrying out its industry for research as well as development on sustainable aqua culture feeds. In this paper, the given questions will elaborately answers the various parts, which begins with a short introduction relating to the topic, along with auditors roles and performance as they concern about the financial statement of the company and at the same time the auditor’s report will comprised of various transactional entries which is done by the firm in order to incurring expenses through development and research section.
Discuss the steps that you need to consider before accepting to do an audit and apply them to BSF Ltd.
Auditors perform and give efforts to calculate all the financial transaction that is undertaken within the company by evaluating it in a statement format which is refers as financial statement. The auditors are appointed by the management of the firm, and once they selected by the management they owe the positions of professionalism as well as ethical obligations to all the group of stakeholders in order to delivers them professional evaluation of financial statement of the company (Savitz& Weber, 2006)
For accepting as well as for approving any auditing program the auditors requires to concern about the various facts which are vital for improving the professionalism determination to the firm.
- Relation- this aspect is the main consideration of the auditor to be professionalized as well as liberated since the firm pursues auditing program in an appropriate and relevant manner. According to the GAAR laws, communications audit standard is necessary as auditor should good communication and relation with the company as well as with the employees or else the auditor may be prohibited to operate any auditing program.
- Qualification- according to the GAAR and International Audit Standard it is observed that those auditors who conduct and work auditing programming must be eligible for performing auditing programs at the same time he also must be eligible certified public accountant who includes huge variety of information which are connected with financial accounting as well as auditing facts.
- Independent Auditors- independence of auditors are provided at the second most standard of the GAAR that describes the independence, qualification as well as eligibility determined to the company in which the auditors functions auditing programs(Wiler&Granovsky, 2015)
. Several types of legislations and laws are provided that describes as well as separates independency determined in a substantial manner.
If the inherent risk of the BSF Ltd.is estimated as 90% and the control risk and detection risk are estimated at, respectively, 5% and 80%, should your audit firm accept the role of doing an audit of BSF Ltd.?
Audit Risks are present in the defined situation and it can be mentioned as a situation in which the auditors creates an opinion that is not suitable or appropriate for the specified condition in the audited financial statement (Hess, 2010). Audit risk can be defined as a risk that an auditor issues an inappropriate opinion in the financial statement. It is the combination of inherent risk, detection risk and control risk. The BSF Ltd is involved in the research and development activities for the enhancement of situation for fishes in the current environment. Various risks that are associated during an audit functions are described below:
Inherent risk is considered as a risk of material misstatements in the financial statements which usually arise due to an error or omission as a result of factors other than the letdown of controls (Zheng, 2012). It is usually considered to be higher where a high measure of judgment is attained or where the transactions of the enterprise are complicated. If the work of a company is highly complicated then inherent risks are bound to happen as the same that has been happened to BSF Ltd. The research which is undertaken by BSF Limited is highly subjective and to proceed with the work, personal opinions and judgments are required (Berry, 2000). It is has been described in the question that BSF is suffering largely in inherent risk as 90% of the company is anxious with this specified risk (Edwards, 2005). Auditor should make clear explanation while performing the audit contract of the company.
Control risk is the chance of material statement in the financial statement which occur due to the absence or failure in the examination of relevant cost of the organization (Taylor, 2016). The control risk that is associated with BSF Limited is 5% which justifies that the risk is comparatively lower. It is found that this percentage of control risk occurred due to not paying attention to complete books of accounts and invoices (Chorafas, 2004). As the company is suffering from this amount of control risk, it can be solved by proper care and determined efforts during and in the audit process. In order to examine this misstatement, BSF need to out adequate material in the place and should have proper control measures (Wilkinson, 2003). The Auditor should also need to make commentary about the financial statement of the company.
Enterprises like BSF have to face higher risk because of their size and positions and if these are not well structured by the management. The detention risk of the company can be defined as the inability of the auditors or the chances of failure of the auditors to detect potential misstatement in the financial statement of the company (Monahan, 2001). It is found that BSF is undergoing through 80% of detention risk. This risk can be lower down by operating more number of sample test commenced by the Audit team. This specified risk revolves around the inherent and control risks, thus the auditor must need to overawe these problems by examining all the possible invoices and transactions (Chorafas, 2007). Audit risk model is applied usually by audit teams to understand the general audit risk which is the combination of overall audit risk namely, Inherent risk, control risk, and detection risk. So to derive the total audit risk, all the risk mentioned above should be multiplied.
Audit risk = Inherent risk x Control Risk x detection risk
The department of Audit shall proceed officially through the fortitude of inherent and control risk and to minimize the same adequate steps should be conducted by discussing the matter with the team. If the risk is comparatively high, then the team might decline to accept the engagement. Audit team members should use safeguarding approach to reduce the chances of detection risk but it will consume more manpower. If the detection risk is high, then the expectation of inherent risk and control risk is to be lower. But if the both risk are high, then the audit team would refer to achieve the detection risk to be lowered (Broder, 2006). In the feature of overall risk attained in the audit of BSF seems to be on the higher side. The overall risk involved in the Audit risk is calculated as:
Audit risk = Inherent risk x Control Risk x detection risk
= .9 x .05 x .8 = .036 or 3.6%
Usually, audit teams would consider anything less than 10% and thus the audit risk involved in the BSF seems to be on the lower side. Thus, there shall not be any specific hesitation involved in accepting the audit of BSF Limited.
List and discuss what should be included in an audit program for the BSF Ltd. Your program should include general coverage plus the specific items covered above.
Auditing program is determined as well as multifaceted independent reports actually utilise to calculated the organizational performance with the help of a financial statement which contains investment and expenses which are done by the firm for the patent development and research(Zheng, 2012). In the following report various performance of auditing functioning is given.
For analysing financial statement of the company in every different years are clearly made by the auditors, which includes investment transactional entries, purchase books, cash books and sales books followed by the firm in the format of journal entries which are utilize to develop as well as maintain the connection of the transactions in a signified manner.
Here, the part of the proposed audit program has been discussed below:
- Financial reports – quarterly.
- Diagram of accounts listing
- Firm’s trial balance of the year ended.
- Rechecking of the previous performance of auditor as well as opinion expressed thereof.
- List of funding collected as well as report signifies their distribution to planned destinations.
- Reviewing of the proper opening balances entirely.
- Reviewing of proper ledgers which include cash and accounts receivables etc.
- Summarize the bank deposits and reconcile the same with home office accounts data.
- Reconcile bank statement with the official account.
- Observe whether the cash is used for the same is received and check appropriate transfers made.
- Check for all the large transfers along with their authorization.
- Analyze the books for assets individually, along with checking accuracy by physical verification.
- Observe the creditors in order to verify liabilities.
- Observe with banks for payment of interests etc. in order to verify the amount of loans short term loans as well as long term loans.
- Intellectual Property: the auditors requires to calculate various expenditures which are done by the firm in the development andresearch working process because many expenditures are done for establishing patent as well as intellectual properties, for intending the expenditure nature like capital expenditure, the auditors needs to verify entire level of the patent development and research program.
- Grosses of authority contributions: for developing the applicability of the contribution invested in BSF along with nature of its grosses for stating the contribution in balance sheet, auditors requires to evaluate various features of liabilities connect along with the contribution in a determined way.
- Bills and Invoices: these types of transactions are the transactional reserves as well as expenditures which are created by the company(Zheng, 2012). The auditors during creating report requires to calculate each and every bills and invoices for developing an original relation amongst transactions and its liability with the company functioning procedures.
Discuss any concerns the auditor should have for the full set of journal entries of the R&D transactions from 2013 to 2016.
The potentiality of journal entries is to discover financial irregularities; the same is being audited by external auditors for sufficient external audit. Journal entries are the initiation step in recording and keeping the transactions of the company. The auditor will start the audit as well as design the auditing procedure through a general emphasis of regulation of journal created by the client accounting management department. The audit group should assure that chosen journal entries are identified for exactness. The audit group even makes enquiries of people who are in charge of creating entries as well as allocating funds.
Development and research is the vital key factor for BSF as well as the success of those performances is necessary for the industrial success but it should be remembered that the last outcome of research is hugely uncertain as it depend on various external factors. The grant provided by CSIRO is needed to be contributing on a fixed purpose as well as the entire amount which is needed to be contributing till now is $ 400 million out of $ 500 million assigned for this purpose. Hence, the CSIRO assigned which should be in hand must equivalent to $100 million at the end of 2016. The management of the firm should explain any deviation in the necessary contribution for this fact as well as the contribution’s assignation will be developed and forms a separate set of real entries.
- Narration are given during the need of the operation or not
- Whether proper rules and regulations are followed during the entries of book or not
- Whether the Debit and Credit are appropriately mentioned with their serial numbers or not
- Data of the transactions are exact to the happening or not
- Whether Investigation has been conducted over invoices and transaction or not
- Inspection of authorization made to the column of journal entries in the records of accounts.
In a triple-bottom line addendum (i.e. addition) to their GPFS, BSF Ltd. describe their research as being socially responsible and environmentally friendly. Are you willing to sign-off on that statement as being true and fair?
Triple bottom line is an extension of the traditional reporting settings which includes the economic, environmental as well as social functioning of the firm. Triple- bottom line is an approach that is operated to connect the interest of the company with the majority of people. This approach is an accounting process which is organized to explain the accounting significance in framework along with the profit, environment and individuals’ performance. There are several business authorities as well as ethics programs that are operated for the safeguard of the environment. Copyright established commodities along with the development and research section for producing new fish feeds that can be created to various other firms and to the environment for making feed fishes in an appropriate way.
BSF is an Australian bio research organisation which has been aligned in establishing trendy commodities that can remove various disadvantages of the society as well as in the new research, it is identified that firm has established an operative fish feeding commodities for helping the fish company to develop and improve in future. The organization is aligned in order to provide fish feeds which is established by the development and research section in the company for the safeguard of the environment.
This paper describes that BSF has implemented several different aspects at the same time contributed huge grants in its development and research section of the company as the disadvantages aligned with the lifecycle of fishes can be create in an appropriate way. Moreover, the organization is also guided by different institutions both in a monitory manner as well as through liberalizing various rules. BSF also establishes a copyright that is guided to several fisheries sections in the company as well as various other linked organization performing in the similar set as the fishery business could be develop in an operative way(Zheng, 2012).The commodities which are established by the company has been identify to remove the various drawbacks of fishery business as well as create expansion in the development of the fishing industry that can actually finish in guiding the environment in a maximum way.
BSF limited has perform excellent for containing a triple bottom line report in their statement of finance and the same is expected to give credit to its performed task. It is true that the firm was criticized regarding the approach for doing research and it has been solved to a maximum extent. As the auditor has hesitancy in signing the documents, it states the triple bottom line as a developed measure in scientific research.
BSF Ltd. management asserted in a prospectus that the patent values were predicated on BSF Ltd. having exclusive control over the bacteria-based feeds technology. Are you willing to sign-off on that statement as being true and fair?
Yes, the auditors are more willing to sign-off the documents according to the information provided which is conducted by suitable market research. The documents are made by estimation as well as asserting matter on the basis of the conditions of the markets. In this paper, it has been observed that theyproduct development and research section in the company has made AUD$360 Million out of that AUD$120 was failed(Zheng, 2012). The importance of patent is asserted by its capability in order to conduct revenue in the future and the management of the firm is aware of the condition. The financial statement of the firm of both the previousand current data is completed in the development and research section as well as statement of finance of the firm, it is a full set of books journals and all the correct information fully signifies the investment andexpenditures done in the whole year. Various contributions are evaluated according to the several important data provided as well as according to the market approach process as accurate fair market amount can be identified in a sequence way.
In this paper, the various different features of auditors’consideration with the statement of the finance of BSF Ltd along with the patents researchanddevelopment strategy has been discussed. Auditor performs by evaluate the financial statements which are provided them by the management of the organization. BSF limited has perform excellent for containing a triple bottom line report in their statement of finance and the same is expected to give credit to its performed task as well as functions in a critical way.
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