The meeting is scheduled between the audit clients, the Spanish manufacturing organisation establishing the business in Australia and their purpose is to look after their auditing for the Australian subsidiary. The meeting between the two teams for the purpose of information exchange are as follows:
‘Good Morning, Gentlemen!’ As you all know ours is a Spanish manufacturing organisation in business here in Australia for the last 3 and a half years. We are doing pretty well here, we are into manufacturing of small equipment and our main clients are the small and medium enterprises here at Sydney, Melbourne, and Tasmania as of now. Gradually, we will move to other business segments like acquiring clients from bigger enterprises. Currently, we hold a market share of 25% and the future looks good. Now! I request my CFO to present his points.
‘Good Morning!’ To start with our accounting team consists of 4 people, myself included. We have two account executives and an internal controller cum management accountant. As you know, we are from Spain and carries the accounting methods and standard followed at back home. We use the International Financial Reporting Standards (IFRS) accounting standard and we practice the preventive internal control system. So we generally, have the practice of testing the clerical accuracy, keeping back-up of our software data, proper job allocation and division of the workers, physical checking of assets, and obtaining transaction approval among others. We use the fair value of accounting for PPE, straight-line method of depreciation for the assets, fair value method for determining goodwill, and the LIFO inventory system. Our interim financial report looks good with promising figures attaining an operating profit of $5 million and I will be happy to help with the sorts of information you need to complete the audit.
And before I leave, I have some questions in mind on your workings. I would like to know how many of you will be in our audit team? The time you need to complete the task, a brief about your track record and how soon can you start the task? I like to state your team will get full co-operation from our side and if, you have any questions in your mind, please let us know.
Audit team –
Hello, everyone! Thank you for providing us this opportunity. We are a decade old auditing and assurance services organisation based in Sydney with an excellent track record. Besides auditing, we provide accounting consulting, tax planning, estate planning, management consultancy, internal audit outsourcing, and other audit-related services. So you can be well assured of a satisfactory level of auditing from our end as we have vivid experience and knowledge on auditing-related matters. The audit team will consist of 3 members, I will be in the team along with my fellow friend here and an intern at our firm. Here, in Australia, we use the Australian Accounting Standards Board (AASB) regulations having implications with the IFRS. Right from planning to execution of the audit, we will use the AASB policies and procedures. So I guess that will not be a trouble with you to have an understanding of the facts and methodologies used for auditing purposes.
Taking from what my fellow friend told you, I like to add that the objective of our financial statement audit would be to have an assurance that the financial reports prepared by your team are devoid of any financial errors. To ensure it, we will conduct certain audit tests based on the confirmation supporting the amounts shown in the financial statements and its credible disclosures. I hope you understand that the internal control system has its share of limitations which leads to misstatements of financial documents. The auditing process can rightly identify such material misstatement or errors to have transparent and full-proof financial statements. We will run audit substantive tests to detect any sort of material fraud at various assertion level in the business scenario. For auditing, we need to counter-check the transactions, so will be requiring the check-books, sales receipt, purchase bills, bank statements, petty cash, and inventory record among others. I have some questions like –
How much do you need to furnish the required documents?
Do you have any reservations regarding any transactions?
I hope you won’t mind if we get in touch with your vendors and suppliers.
The exercise has been meaningful as both the parties could interact freely amongst themselves. This sort of proposition is necessary while the audit team is getting into a negotiation and each of the parties need to be honest with each other. I liked the way the CEO and CFO introduced themselves and came straight to the point. They gave a vivid description of their nature of business and the sorts of auditing followed. It would be helpful for the audit team to conduct the audit purposefully. The audit team, on their part, gave their necessary introduction and information on the services they provide. Such information is helpful to make the clients understand the skills possessed by the audit team and for me, it is the real ice-breaker between the two parties. Such meaningful interactions paved for an effective platform for both the parties to seek each other’s co-operation in delivering the audit.
There is undoubtedly a cultural difference prevalent among the parties as the clients are Spanish expatriates while the audit team members are local Australians. There is a difference in their business dealings, customs, and cultural heritage. But business and auditing have international language which I believe would be effective to do away with the sorts of barriers among them. There is a difference in the auditing approach as well because the clients use the IFRS methodology while the auditing team takes consideration of AASB. I think it might be a matter of dispute between them but as the client wants to grow their business in Australia, it would be effective to pay attention to the auditors. Again, the AASB methodology is in synergy with the IFRS methods, so it hardly makes any difference. The client would be able to understand the audit report and in case of any issue, the audit team would be there to help.
The role-play exercise has been very helpful as it has brought in face-to-face both the parties and clarified the matters suitably leaving little room for confusion. I think the most amazing thing about the role-play is that both of the parties could make their stand and construct an effective case scenario. To me, it could be established as a perfect instance of cross-cultural business studies as the clients were of European origin while the auditors are local Australians. It is to see how the different cultures merge with one another for the sake of business. This sort of exercise is necessary for the Australian scenario as the country hosts foreign investors in a bigger way to prosper the economy. But the role-play exercise fails to explore avenues like to what level the management would co-operate with the clients and how the audit fees would be determined. These are significant aspects that the role-play session had left unanswered.
I think there are certain scopes of improvement that could be entailed to make the role-play session more impactful. The role-play was short in its length, I guess a vivid discussion on the different aspects of business is required to make the things more understandable. I rather take this role-play session as a mere ice-breaking thing. It would have been more effective provided the clients better giving a brief about its financial things could have produced certain financial documents to establish the fact. Of course, in the era of digital technology, the financial documents could be exchanged via e-mails. I ensure there was no such exchange because if it has been so, they would have put it up during their discussion. I recollect since it is a business meeting, it would have been better if the audit team starts with a PPT presentation on the services they provide and samples showcasing their expertise in the field.
But I agree with the fact that the role-play session is an insightful activity, the mere element of an audit is a continuous and extensive process. The role of the auditor is multi-dimensional right from checking the accuracy of the financial reports to provide consultation to the clients to come up with suitable accounting practices. In this case, as well, the auditors would not limit themselves to point out the accounting errors, they would also provide suitable suggestions to make the things more transparent and meaningful. So, the auditor is not only a mere external party rather a hired consultant who would give honest, valuable opinions to make the business proposition looks better. I believe that the clients would be benefitted if they listen to the auditors as they are poised to establish their business in Australia and expand it across the country. Moreover, the auditor would act as a representative of the regulatory body cautioning the clients of any kind of business malpractices enabling them to run the business uninterruptedly.
The role-play session had paved for an effective backdrop to conduct the audit in a purposeful manner. So I recommend that the auditors need to be transparent and meticulous of their job and have the honesty to face the challenges bravely. To make the audit impactful, the auditors are not required to have any sort of reservations and put into application the new accounting standards as prescribed by the regulatory bodies. For instance, in recent times there has been a revision in the lease aspects of business doing away with the categorisation of financial and operating lease. Since the clients are a manufacturing company, they are sure to take lease of their equipment and manufacturing unit. So to have an effective audit, there is the need for AASB 16 Leases rather than its erstwhile standards. The same is applicable for AASB 9 Financial Statements having new kinds of impairment models and AASB 15 for fair value measurement of assets over its cost value.
Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Auditing and Assurance Assignment Help
5 Stars to their Experts for my Assignment Assistance.
There experts have good understanding and knowledge of university guidelines. So, its better if you take their Assistance rather than doing the assignments on your own.
What you will benefit from their service -
I saved my Time (which I utilized for my exam studies) & Money, and my grades were HD (better than my last assignments done by me)
What you will lose using this service -
Unfortunately, i had only 36 hours to complete my assignment when I realized that it's better to focus on exams and pass this to some experts, and then I came across this website.
Kudos Guys!Jacob "
Proofreading and Editing$9.00Per Page
Consultation with Expert$35.00Per Hour
Live Session 1-on-1$40.00Per 30 min.
Doing your Assignment with our resources is simple, take Expert assistance to ensure HD Grades. Here you Go....