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HI6026 Audit- Assurance And Compliance For Fortune Asia Group

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HI6026 Audit, Assurance And Compliance For Fortune Asia Group

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HI6026 Audit, Assurance And Compliance For Fortune Asia Group

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Course Code: HI6026
University: Holmes Institute

MyAssignmentHelp.com is not sponsored or endorsed by this college or university

Country: Australia

Questions:
Based on your analysis of the auditors’ sections and other areas pertaining to the auditor, as included within the Annual Report, submit a report which summarises and evaluates the auditor’s assurance services performed for the client company.
As part of your review of the assurance services provided, consider the following:
 
1. Has the auditor complied with Independence requirements?2. If there were non-audit services provided, what was the nature of such services?3. Provide an analysis of the Auditor’s remuneration in a table with prior year comparisons. Include percentage changes and explanations of the remuneration.4. In relation to the key audit matters, which audit procedures were performed to provide assurance over each matter? Summarise and paraphrase each key audit matter. Correctly classify each audit procedure listed as: tests of controls, substantive tests of detail, substantive test of balances or analytical procedures.5. Is there an Audit committee? Are there any non-executive directors on the audit committee? Is there an Audit Committee Charter? If so, summarise the main points of the charter including: the structure, function and responsibilities of the Audit Committee.6. What type of Audit Opinion was expressed?7. How do the Directors’ and Management’s responsibilities differ from the Auditor’s responsibilities in relation to the financial report?
8.  Were there any material subsequent events? If so, briefly outline them and paraphrase and summarise how they were treated.9. As an interested third party stakeholder, make an assessment of the effectiveness of the material information reported by the Auditor in your conclusion.10. Consider whether there is any material information which could be missing, under-reported and/or not fully explained or disclosed in an effective way for the intended users?

Answer:
Introduction
It has been observed that every organization our days require an auditor in order to analyze the financial statements of the form because of the vulnerable and risky nature that is faced by them in relation to the accounts. An effective corporate governance structure should also be present and a Company shows that the evaluation of material risks can be made which will further help to enhance the reputation of the organization. This report consists of a detailed analysis of Fortune Asia Group Ltd and the role that has been played by the auditor in order to give a better understanding of the accounts of the firm. Fortune Asia Group Ltd is a very renowned company in Australia and is also listed on the Australian Stock Exchange. The information that has been provided by the company was true and fair in nature which has helped to assess the company’s performance in an elaborated manner.
The compliance of Fortune Asia Group Ltd with the independent requirements
It is of major importance that ASX listed companies adhere to proper accounting practices and standards. The major objective that was to be achieved by the organization and auditor was to make sure that the financial statements of the organization are free from any kind of material misstatements. Any fraud or error that has taken place in the financial accounts of the organization should be detected by the auditor and stated in his audit report. It is not always possible that the auditor will find each and every liability present in the accounts of the organization with the help of ASX auditing standards. The misstatements can take place individually or in a group because of which the independent decision making of the users of the accounts can be hampered.
The difference between the management’s responsibilities and the auditor’s responsibilities
The major responsibilities carried out by the organization management with regards to auditing process is to look after the cost aspect of the auditing process, and to provide a suitable environment for the auditor to carry out his activities without any interference. The auditor is needed to provide a transparent, unbiased and professional report of the financial condition of the company and also the fairness of the statements that have been provided in order to provide them to the public so that they can use it to make further investing decisions. The task of accounting and management body is to look after the positivity of all the policies and portfolios that have been adopted by the organisation in order to conduct smooth business where are you did the job of auditors to find any type of Indians that is present in the accounts of the organisation that may cause the uses of the documents to make unethical decisions. If all these objectives are carried out in a proper way, a very elaborated and ethical financial report will be conveyed to the shareholders and investors. It is the sole duty of the auditor to make sure that all information provided in the financial statements of the organization is true and faithful in nature. The management should always try and maintain all the assets and liabilities of the organization in the best possible manner. Therefore, it is very important to maintain the transparency of the records and also to represent the financial report in a positive manner that is the responsibility of both the auditor and management staff of the organization. The two parties have to play their roles to ensure that reliable financial statements are provided for to the relevant users. After all, it is from these records and information given that the organisation will expect their stakeholders both internal and external to use to make key decisions going forward.  
Non-audit services
The non-audit services that have been provided by the auditor have not loan against any principles of the code of ethics of professional accountants. Thus the non audit services didn’t involve any kind of review of auditor’s own work, decision-making function of the company or acting in the management, or acting as an advocate to the company for removal of risk or earning rewards. It was also observed during this financial year that one of the related companies auditors try to provide them with additional audit services. The number of fees that is payable to the auditor for the non-audit services provided by him to the organization has been clearly mentioned in the note 11 of the financial statements of the organization. Also, clear analysis of all the risk and fraudulent factors have been made by the management of the organization so that it can be ensured that no unethical means have been used by the auditor while performing the non-audit services for the organization.
Audit committee
An audit committee is considered as an essential committee in a board of any reputable organisation. It has the key mandate of ensuring that financial reporting standards and disclosure are properly adhered to (Badolato and Donelson, 2014). In most countries not only Australia, a company cannot be listed in the stock exchange market if it does not have a qualified functioning auditing committee in place.  
By the virtue of the company being listed on the Australian stocks Exchange, it is assumed that Fortune Asia Group Ltd has a functioning auditing committee. It is also indicated in the financial report that there is actually an existing audit and risk management committee. By the virtue of the existence of the committee, it can be seen that there is an auditing committee chatter, which governs and dictates the membership and roles of the auditing committee. However, there was limited information with regards to the auditing committee chatter used by the organisation.  From the composition of the committee in Fortune Asia Group Ltd it can be noted the members of the auditing committee are non-executive board members which further signifies independence from the main company board.
Auditors Remuneration
Auditor’s remuneration is defined as the amount payable to the auditor for carrying out his services and any other non auditing services provided assigned by the organisation (Asien, 2015). Normally the remuneration is set by the general meeting or the board of directors. 
Description Year
2016 2017
$000 $000
Audit services 32,185 31,509
Tax compliance and advisory services 4,883 1,845
37,068 33,354
From the financial report, it can be noted that the total auditing fees incurred by the organisation rose by over 11% as compared to a similar financial period in the previous year. The audit services fees rose by 2%. The biggest chunk of the increase arose from the Tax compliance and advisory services which rose by over $3000.  
The efficiency of the material information that is disclosed by the auditors
It was clearly observed after the analysis of the financial report of Fortune Asia Group Ltd that no material information that was disclosed by the auditors was having any loopholes present in them. But, it should also be noted that proper transparency was not maintained in the material information that was provided by the auditors which show the ineffectiveness of the information provided. The main reason behind this can be the fact that more attention was exerted only on selected topics which made the more fundamental and important topics to become inefficient in nature. The major information that was depicted in the auditing report was not at all useful for the analysis of financial information by the investors and the shareholders of the company which has made it hard for them to conduct proper decision-making processes for the purpose of investment. The details about attempted to describe the reasons behind the adoption of these major factors in the audit report to the users in order to make it relevant. This was the positive aspect that was shown by the auditors in order to clear the doubts of the users of the financial data. It should also be clearly noted by the organization that any kind of investments that have been made by the organization should be recorded efficiently in the organization’s financial detail so that the liabilities and assets can be recorded in a better position. Hence it can be concluded that the presentation of footnotes will not be assessed in proper decision making on the part of users. These footnotes will only provide with inessential information that may cause hindrances in the future for the users of the information because of which it is very important for the auditors to present a detailed analysis that can be used by the shareholders and investors of the organization to make significant and important decisions in relation to the investment strategies.
Auditors opinion
An auditors opinion can be described as; a qualified, unbiased and independent outlook made by the auditor with regards to the financial reporting of an organisation, and how that particular organisation has conformed with the set accounting practices and standards (Gajevszky, 2014).
It can be noted that from the auditor’s notes in the financial statements of Fortune Asia Group Ltd, the opinion given in this regard was an unqualified opinion. This means that the organisation met the accounting standards as prescribed by the Australian Accounting Standards and the Corporations Regulations 2001
Missing material information or underreported information
It should be noted that the auditors have created footnotes and notes in order to help the investors to make decisions based on them. But, not all the information that was conveyed using these footnotes was useful in nature. Proper footnotes also were not issued in relation to the financial statements of the organization which states it to be a negative indicator for the auditing process.
The users who are not able to analyze the financial statements of the organization like balance sheet, profit and loss account, cash flow statement, etc. use the footnotes in order to analyze the business of the organization and then make investment decisions based on them. Therefore, it was very important for the auditor to present a footnote in a proper manner so that all the data that is required for the purpose of decision making is disclosed and the data can be further used by the shareholders and the investors of the organization in order to assess the business strategies. It has been observed in the auditing statement that the organization have disclosed a lot of non-material information in the financial statements which are not needed to be disclosed and may cause harm to the firm by exploitation of data. However, this information has to make the auditing report of the organization look more quantitative by depicting the conceptual framework of the organization in accordance with relevance, materiality, reliability, etc. Hence, it is very important for the organization to disclose all the information so that the proper decision-making process can be carried out by the investors and shareholders.
Conclusion
It can be clearly analyzed by the annual report that the auditors were not effective in disclosing all the information that was provided to them, which resulted in them to become deviated from the ethical standards which were needed to be kept in mind by them at the time of auditing. The organization’s management and directors have also promised to fulfil all the necessary rules and regulations that are needed to be conducted for the audit procedures. It was observed that some information was disclosed by the non-audit services provided by the same auditors who have conducted the sitting process. After the assessment of the information, it can be understood that the internal control mechanism of the organization is strong and can handle any future risk that may question the integrity of the firm to safeguard itself in future. There are also some material information’s that have been placed wrongly in the financial statements of the organization that will need attention in short notice. 
References
Asien, E.N., (2015). Firms’ attributes determining auditors’ remuneration: empirical evidence from Nigeria. International Journal of Auditing Technology, 2(4), pp.297-315
Arens, A. A,  Best, P. J, Shailer, G. E. P & Loebbecke, J. K. (2013) Assurance Services and Ethics in Australia, 9th ed,  Australia: Pearson.
Badolato, P.G., Donelson, D.C. and Ege, M., (2014). Audit committee financial expertise and earnings management: The role of status. Journal of Accounting and Economics, 58(2-3), pp.208-230.
Gajevszky, A., (2014). The Impact Of AuditorS Opinion On Earnings Management: Evidence From Romania. Network Intelligence Studies, 2(1), p.3.
Geoffrey D. B., Joleen K., K. K.S., and David A. W. (2016). Attracting Applicants for In-House and Outsourced Internal Audit Positions: Views from External Auditors. Accounting Horizons. [online]. 30(1), p.143-156.  DOI:  https://doi.org/10.2308/acch-51309   
Livne, G. (2015) Threats to Auditor Independence and Possible Remedies [online].  Available from: https://www.financepractitioner.com/auditing-best-practice/threats-to-auditor-independence-and-possible-remedies?full [Accessed 7 September 2018]
Mock, T. J., Bedard, J., Coram, P., Davis, S., Espahbodi, R. and Warne, R. (2013) The audit reporting model: Current research synthesis and implications.  Auditing: A Journal of Practice and Theory. [online]. 32, pp. 323-351. DOI: https://doi.org/10.2308/ajpt-50294
Parker, L.,  Guthrie, J. and Linacre, S. (2011) The relationship between academic accounting research and professional practice.  Accounting, Auditing & Accountability Journal. [online].  24(1), pp. 5-14. Available from: https://media.accountingeducation.com/1304/Parkeraaaj24(1).pdf [Accessed 14 September 2018]
Roach, L. (2010) Auditor Liability: Liability Limitation Agreements. Pearson.
Wood, D A. (2011) The Effect of Using the Internal Audit Function as a Management Training Ground on the External Auditor’s Reliance Decision.  The Accounting Review. [online] 86(6), 2131-2154. DOI: https://doi.org/10.2308/accr-10136

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