Costs And Benefits Of Mandatory Auditing- Free-Samples for Students

Questions: 1.Explain how your results Influence your planning decisions for the audit for the year ending 30 June 2015 2.Explain why it is a risk and how it may affect the risk of material misstatement in the Financial Report 3.Identify and explain two key fraud risk factors relating to misstatements arising from Fraudulent Financial Reporting to which DIPL may be susceptible. Answers: 1.Application of analytical procedures to the financial sreport information of DIPL The various types of the aspects of the financial processing of DIPL have been developed based on the audit plan. The blueprint of the audit has been considered based on the time taken to frame the audit plan. In this aspect, the assessor has been able to consider the auditing costs at a reasonable aspect for assisting and averting the misunderstanding with the clientele. The declarations associated to the analytical framework for DIPL is considered as the dissemination process of the information in terms of the financial proclamations. The evaluation mechanism needs to be set as per the proper utilization of the variety of the mechanisms. The analytical procedure needs to be based on the financial considerations. The different types of the evaluation process needs to be considered as per the utilization of the various mechanism procedures. Despite of this, the analytical process needs to be analysed as per the financial declarations of the firm. The various types of the evaluation p rocess is based on the dissemination of information as per the financial information for DIPL. The evaluation process has been carried as per utilizing the various types of the mechanisms. The financial declarations has been further analysed as per the vital decisions made for the business (Regoliosi dEri, 2014). The common sizing for the analytical process has been considered as per the common reference point. The comparison of the financial statement has been done based on the consideration of the various corporations. The assessors need to consider the financial report and evaluate the method for reporting. The registering of the items as per the net liabilities and the assets needs to consider as per the owners equity in the financial report. This needs to be further examined as per digressing from normal procedure. The analytical benchmarking is based on the utilization of the audit plan. The actual variance from the benchmark from the financial declarations is seen to detect the root cause (Regoliosi dEri, 2014). The ratio analysis has not been considered appropriately and this needs to be further considered for the plan of audit. Explanation of the way the results influence planning decisions for the audit The decisions associated to the audit plan have been based on the influence of the analytical approach and segregation of the data as per the annual report. The current ratio has been seen to be 1.42 in 2013, 1.46 in 2014 and 1.5 in 2015. In the profitability ratio, the profit margin of the company has been seen to be 0.068 in 2013, 0.60 in 2014 and 0.06 in 2015. Based on the various types of the information associated to the profitability, the various aspects of the net income are compared based on the net sales of the DIPL firm. The assessor will be able to understand the expenses are appropriate and whether the same can be considered to curtail the budget and time consideration of the firm. The various natures of the changes in the ratio has been considered as per the soundness of the financial position and financial condition. For instance, the solvency ratio is discerned as 0.62 in 2013, 0.44 in 2014 and 0.21 in 2015. This has been further seen to be considered as per the trends of the financial statements. The comparison of the ratio for the three periods has been seen to be based on the overall cash transactions based on the long term liability evaluation of the corporation (Yang Jia, 2013). 2.Identification of inherent risk factors that arise from nature of business operations of DIPL The several types of the important considerations have been considered as per the material misstatements in the financial consideration of the specific concern. This has been further seen to be considered as per risks reference as per the misstatement in the financial decisions taken by the corporations. The identified risks have been able to reflect the various facets of the misstatement as per the financial data. The different nature of the risks has been further associated to the financial and non-financial factors which can be considered to be true with a fair view of the financial declarations. The evaluator may further see it demanding for the associated risk. The evaluator may further detect the risk for non consideration of the various natures of the distinct risk factors. The identified risk may also be seen to be related to the diverse errors in the specific bookkeeper. With this essence the main form of the inherent risk may arise in terms of the DIPL business operations ( Ryoo et al., 2014). The given study has shown the numerous transactions which are particularly omitted by the accountants or the management of the corporation of DIPL. This can however be sequentially avoided by DIPL. The corporation has direct lead towards the various types of the inconsistencies which will be ineffective based on the planning of the sales activities. In addition to this, the financial declarations of the firm has revealed about the preferred level of profit from the revenue which has been considered from the sales. The management of the firm may decide to specify the requirement and the consequent adjustments which need to be made based on the functionality of the corporation. It can be hereby stated that the DIPL has led to failure for analysing of the micro and the macro economic factors and associating the existence of the same in the social and political factors. The subsequent consideration has been further seen to be reflected as per the poor sales figure and the inherent risks. The firm has stated about the various nature of the inherent risk. The main consideration for this has been based on the lack of expertise and the proficiency of the employees of the corporation along with the escalated issues. The specific business concern has been dependent on the members of the staff to prove their competency. In addition to this, the various types of the non-proficient workforce will be able to enhance the inherent risk of making mistakes, errors associated to the exclusion and other announcements made by the firm (Carey et al., 2013). The significant aspects of the risks have been further seen to be categorised as per the material misstatements, environmental risks and the consideration of the falsified exercises. The environmental consideration has been made as per the internal risk and the associated valuation for the major issues of stiff competition, inventory and generic market along with the shortage in the capital. The corporation will be further able to consider the material misstatements which have been directed for the inherent risk. The present DIP case has reflected on the various types of the complexities and the difficulties on the succession process of CEO based on the inherent risk. The succession of the CEO has been further able to consider the individual candidates. There has been several risks which has been further associated to the quality of the selection procedure. The process which are not complying with the initiating the process and the strategy has been considered for inadequate involvement of the CEO and the candidates departure from the firm (Al-khaddash et al., 2013). The case study has shown the implementation process of IT infrastructure has generated significant problems. DIPL does not have adequate staff for execution and the installation of the reconciliation process which is necessary for making prior arrangement at the end of the year. The initial testing has shown that the transaction has not seen to be considered properly in the given time span. This has been further seen to be based on the various considerations of material misstatements and the inherent factors which are necessary for the considerations of the omissions and the financial declarations. The cash receipts have been recorded by the finance professionals and they might consider the various types of the internal risks. The members of the staff need to follow the sequence as per the accounts receivable registered and the recording of the same in terms of the bank reconciliation statements. The revenue registration has been generated from the e-book and taking into consideration for reprinting the textbooks and upcoming period off the internal risks and the complexity of the process (Mihret, 2014). Risk and way it might affect the risk of material misstatement in the financial report The inherent risk is considered as per the particular assertions made in terms of the material misstatement. Excessive pressure on employees and management- The excessive workload of the staff has led to poor bookkeeping. The propensity of the certain aspects has been further considered as per the poor liquidity, cash flow issues and outcomes of the poor operating outcomes. Risks of errors or else incorrect misrepresentation- The intricacy and the reliability have been related to the risks of errors of misrepresentation. Integrity of the entire management The management of DIPL, has been able to consider the essential drawback of the required integrity and prepared with the reputation loss and entire community of the business (Lee Talen, 2014). Unusual pressure on management The existing incentive in terms of the management and the misstatements in the declarations. Nature of entity business DIPL has considered as per the competitive aspects. The main consideration of the overall internal risk is essential for audit analysis and the structure of the audit plan in an effective way(Wang et al., 2013). 3.Identification and explanation of two key fraud risk factors relating to misstatements arising from fraudulent financial reporting Identification of the fraud risk leads to considerable amount of losses pertaining to the material misstatement. Asset Loss In various cases the losses of the assets has led to several instances of fraud. The workforce dissatisfaction has further considered from the excessive workload among the employees which can be considered for the fraud. The expectation of the investors need to report the specific considerations of the management to attain the appropriate performance leading to fraud risk. The strong pressures to declare the specific financial are outcomes to generate the guarantees. Financial reporting fraud The major involvement of the risks pertaining to fraud has been further seen to be considered as per the operations of DIPL, which includes the workforce engagement of the fraudulent activities. As per the given case the DIPL operations management remains a challenge pertaining to the novel accounting system. The enormous pressure on the employees has been further seen to be based on the installation of the new IT system, which might lead to accounting. This has been further able to imply that the fraudulent activity related to handle the procedure for reconciliation done in an inappropriate manner with the subsequent misstatement in the material. The case study has been also able to consider the various processes for the execution related to the implementation of the certain transactions which has been considered in the end of each year. This may further lead to losses for the fraud risk and the material misstatements (Jans et al., 2013). Unsuitable average cost Another important financial reporting has been further considered as per the financial fraud reporting. During the time of excessive expectation from the outside financiers, the financial announcements needs to meet with the specific performance related to meet with the qualification of the goal criteria and the high amount of the risk related to the improper announcement of the finance. The various information of the financial position has been further seen to be based on the revenue of DIPL which has increased from 2013-2015. Furthermore, the current and the total assets for DIPL have also increased considerably. As per the given situation the valuation of the raw materials from the inventory cost was not seen to be suitable for the present cost on paper, which was considerably higher than the average costs. The risk of the identification of the fraudulent acts are involves as per the implementation of the new information technology systems, which can be carried out based on the mo nitoring of the various activities in various phases. The financial risk of the reporting has been based on the evaluation carried as per the monitoring, assessing and control of the mechanisms. References Al-khaddash, H., Nawas, R. Al, Ramadan, A. (2013). Factors affecting the quality of Auditing?: The Case of Jordanian Commercial Banks. 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