FNS60217 Advanced Diploma of Accounting FNSACC602 Audit and Report on Financial Systems and Records Prerequisite: This Unit has a Prerequisite FNSACC506 Implement and Maintain Internal Control...

Assessment Task 2: Plan for a Balance Sheet Audit
Developed or used an appropriate business/organisational context and summarised organisation’s business activities and structure including different business units/subsidiaries
Woolworths’s business structure is unitary in nature and comprises of Chairman, an independent director, the CEO and executive and non-executive directors. The board is responsible for performing the fiduciary duties, deliver necessary oversights on Group’s strategic initiatives and ensure that there is good governance which is established within the organization. Woolworth’s subsidiaries are Big W; Dan Murphy’s, BWS; EG Australia.
The plan for audit is prepared as a formal business document with appropriate style, and structure
· Assertion on various classes of transactions and events for the period under audit
· Claims on account balances at the end of the period
· Claims on presentation and disclosures
Through the auditing of balance sheet, the accuracy of information is discovered in the balance sheet of a company. Further, it also helps in the previous period comparisons, adequacy in the reserves and provisions, accuracy of valuations, non-recu
ing or exceptional items and usage of analytical procedures and approaches for the purpose of auditing.
The management assertions fall into three categories:
Transaction level assertions: This consists of accuracy, classification, completeness, cut-off and occu
ence.
Analytical procedures include comparing the financial information with prior period, budgets, forecasts and similar industries.
How to audit the below balance sheet items:
a. Cash and bank balances?
· Comparison of cash book with bank statement
· Bank reconciliation to verify the balances
· Verification of unresented cheques
· Check the accuracy
· Verify the direct debits and credits
· Checking the post balance sheet items
. Accounts Receivables?
· Auditor will require the receivable ageing report
· Calculation of total receivable report
· Testing the invoices
· Confirming the accounts receivables
· Review cash receipts
· Assessing allowances for doubtful debts
· Receivables of related party
· Trend analysis
c. Fixed Assets?
· Trace for the fixed assets to property and determine to record the assets
· Classification or prepare an analysis with respect to repair and maintenance expense account
· Accurateness and review of the rental revenue and expenses related to property tax
· Rights and obligations
· Review of the lease agreements
· Valuation and allocation as well as reconciliation of plant and property
· Existence and vouch of the property, plant and equipment
· Presentation, disclosure and review of loan agreements
d. Liabilities?
· Checking the balances of the purchase ledger balance to the creditors’ list
· If the previous years’ closing balance is
ought forward
· Check the name of the suppliers not shown on the payables of the last yea
· Choose a sample of goods received note before and after the year end
· Review the after-payment date invoices and payments. Verify such amount is paid appropriately.
e. Investments?
· Determine if all transactions are presented in the financial statements
· Determine if all the transactions during the period is recorded in the financial statement
· Valuating and determining the accuracy of recording the assets, revenue, expenses and liabilities
· Check all the assets and liabilities are co
ect at a given date
· Check if the entity has the rights to record the assets at a given date
· Check if liability is an obligation at a specific date
· Disclosure and presentation of all the components of financial statements are classified accurately and disclosed.
Describe the significance and purpose of audit
The purpose of auditing Woolworths is to review and provide opinion to verify if the Woolworths statement is prepared co
ectly, fairly and as per the financial reporting standards according to the Corporation Act.
Overview of legislative and compliance information and references to specific laws and standards pertaining to financial reporting and auditing
The auditors will perform their tasks according to the laws and no company and its management can obstruct the auditors from performing their duties. The auditing body has the right to submit data, to inspect and investigate as well as collect evidences for taking temporary enforcement measures. When an auditor exercises any independent auditing authority in the Australia it is well protected by the laws. Further, if the company which is being audited refuses to perform then the auditing authority can penalize the company. Further, the auditor must maintain confidentiality for implementation of the avoidance system. They must be impartial in handling of audit matters, pursue for truth, be honest and try not to disclose all facts. If on the other hand the auditor abuses his duties then he shall be investigated for criminal charges according to the law. As per Australia’s auditing necessities the audited entity must implement audit decisions with respect to illegal incomes and fines in specialized accounts which are designed for the auditing agencies. Further, if the auditing entities fails to execute the auditing decisions as per the laws there must be measures initiated to order their execution. Such decisions will be dragged to the court and agreed upon legally if they refuse to implement the audit decisions.
Company’s responsibility for reporting, governance and record-keeping as a public company
Many key controls will exist in the company of there is a prudent corporate governance system established in the place. It will also consist of a high-risk management framework and procedure which is used for recognition, implementation, reporting on the framework and enhancing the operational efficiency for establishing a prudent internal control management and elimination of the risks.
Governance and internal control issues relevant to audit
The purpose of corporate governance is to improve the corporate governance, ensure the realization of company objectives and enhance the values for the company. Corporate governance audit consists of corporate governance audit at the shareholder level, governance audit at the board level. The governance auditing conducted at the board level involves supervisor, independent, internal and government audits. If one conducts governance audits then such audits help to safeguard the stakeholders’ interests, improve the operational management of the company, company’s credit policy, business management and performance.
Audit procedure and auditor’s approach to audit
The audit method is a term which is used by the auditors for auditing and supervising activities. This was developed by the people for the long-term perspective of audit work. As the social economy and advancement of technology the auditing method has been developed gradually. There are two basic methods which are auditing and auditing techniques. The basic methods used in auditing are auditing, evaluation, adjustment and reporting. The various techniques used in auditing are checking, reviewing, query, evaluation and inventory management. For a complete auditing system its experimental identification method, comprehensive investigation method and random inspection process.
Analytical procedure & its significance
It is a crucial part of audit process and consists of the analysis of financial information which is formed by a studying the relationship between the financial and the non-financial data. There are various types of analytical procedures which ranges from simple comparisons to complex modelling. Specific conditions which can cause variations in the relationships consists of unusual transactions, business and accounting changes and random misstatements.
Trend and ratio analysis are two analytical procedures used in the audit process. The auditors use these trends and ratios by comparison the client accounts and the balances as per their expectations which they were able to obtain in the prior years, as per the present economic development...