Audit Assurance And Compliance
Assignment Question 1:
a.) Would King and Queen be liable to EFL? Provide specific case references to support your answers.
Case study analysis:
King and Queen is an auditing firm and they conduct audit over the firm named as “Impulse” or “Impulse Pty. Ltd.”. Auditors make examination of their prepared financial statements for the year ended 2012 and in the end they render unqualified report to them. Unqualified report means organisation follow all the set rules and regulation and policies effectively also with this they make correct representation of their financial statement and make disclosure of every activity in detailed manner (Christensen, et. al., 2013). It also derived that financial statements didn’t have any errors or there is no such fraudulent record of misleading activities. Impulse is trying to take the loan from the EFL and in order to render the loan EFL require audit report because they have trust over the report prepared by the auditors firm King and Queen which shows that they have good financial performance. But it is identified by them as there is effective regular decrement is noted down in debtors turnover and stock turnover and this part is not discussed or described by the auditors firm due to which the report become qualified or attain negative feedback over their opinion. So this verifies that auditors fail to find correctness in context to the debtors and closing balances of stock (Foster, 2015). If they put rely over the auditor’s report they approve the loan which can be termed as non-beneficial for them. It is observed that auditors didn’t perform their duties effectively in order to make identification of the correctness of financial position. As per this analysis auditors need to provide qualified report over the financial performance of organisation.
Requirement of ISA
It is auditor’s responsibility to provide correct and reliable report over the organisational financial performance during the current year. The auditor’s objectives get explain into ISA 200 in context to audit program. It is very important for Auditors to follow the set guidelines of ISA or International Standards on Auditing (Foster, 2015). With the help of these standards auditor attain effective powers in order to check the financial statements of the organisation and prepare report in context to the true, fair and reliable presentation of financial statements. Signed auditory report is the proof of having financial statements free from errors, or fraud or from misrepresentation of the facts and figures. As per the auditing standards regulations auditors need to make proper record of their findings and it is very important for auditor to perform their activities ethically. In order to behave ethically he/she didn’t need to become bias and took corrective actions in order to safeguard the interest of their respective stakeholders (Foster, 2015).
Case study evaluation in relation to the law requirements
Audit is conducted in order to prepare such report which renders true and fair organisational financial position for their stakeholders. In order to conduct audit program they make appointment of auditors and in order to define the roles and responsibilities of auditors there are effective number of auditing standards are given. So in the present scenario, King and Queen need to follow adequate procedures in order to comply with the legal and other regulatory requirement in order to satisfy the needs and wants of their interested stakeholders. But they are lacking in order to perform their activities accordingly (Christensen, et. al., 2012). As per the auditor firm there are lots of appropriate and effective audit evidences are presented for interpretation which get utilised in order to give fair, reliable and correct information over the financial statements of Impulse which are prepared on year ended 2012. If they are unaware about the effect of the low debtors and stock turnover ratio on their overall organisational financial performance there is effective requirement of getting advice from experts according to the ISA 620 requirements. They also make use of the ISA 570 in order to evaluate the organisational going concern capability. Auditor of the firm needs to assess the risk level which is associated with the misrepresentation of figures in their financial statements and they also need to perform substantive procedures in order to make evaluation of account correctness. If there is some doubt remain left then they took the written clarification against their doubt as a proof of authentication. The report prepared by the Auditors considered as trustworthy and on the basis of it EFL render loan to them. In order to know about the organisational financial performance they need to make comparative analysis. King and Queen adopt various elements at the time of audit program such as integrity, confidentiality and professional conduct (Christensen, et. al., 2012).