• Internal Code :
  • Subject Code : ACCT5015
  • University : curtin university
  • Subject Name : Auditing

Table of Contents

Introduction and Summary

Auditors Independence

Planning and Risk Assessment

Inherent and Control Risks

Risks of Fraud

Audit Strategy

Key Audit Matter

Subsequent Events

Audit Reporting

Conclusion and Recommendation

Reference

Introduction and Summary

Otto Energy Limited is the company that deals with the products related to the gas exploration and production of the different energy components. The company has a regional focus on North America. The company was founded in July 2004 with the point of view to provide the energy resources which are less costly as well as less harmful to the environment. Currently, Otto Energy has its oil production unit named SM 71 oil field in the Gulf of Mexico, and other operations like gas or condensate production are in the onshore country area of Matagorda country, Texas (Bloomberg , 2020 ).

Auditors Independence

The auditor of the company for the year ended June 2019 was the audit firm named BDO Audit Pty Ltd. The director of the company has given the statement based on the declaration of independence of the auditor. The auditor has revealed that to best to the knowledge, there was no contravention to the auditor related to the independence requirements of the corporation act 2001 while performing the auditing structures. The 1st risk related to the independence of the director is based on self-interest. The self-interest of the director can be based on the remuneration for the auditing fees. Mr. Ian Boserio is the director of the company who has the experience of 35 years in the relevant field is also a member of the Audit and risk management committee and remuneration. So the issues related to the remuneration of the directors are reduced (Otto Energy, 2019 ). Other risks related to the independence of the director of Otto Energy are as follows:

  1. There is a risk related to the self-review of auditors' work or the work that is done by other firms. In self-review the chance of biasness increases.

  2. The government and other legislative bodies tend to rely on the verification of the auditors. If any of the information is omitted, then there is a threat of biasness at the end of the auditor so that it may defend the omitted information. So the legal threats can also affect the independence of the directors.

  3. There are threats related to the independence of the auditors based on the intimidation. The directors can be biased with the point of view that the auditor is being intimated by the management and any of the directors (Otto Energy, 2019 ).

Planning and Risk Assessment

Inherent and Control Risks

The company is facing the inherent risks, and the theses risks are controlled by the internal control and the management of the company. Following is the list of inherent risks that the company is facing:

  1. Operating risks have been increased due to unplanned interruption in the production sites.

  2. Inherent risk is related to the unsuccessful exploration and depletion risk of oil and gas reserves. Limited resources of oil and gas are greater risks to the activities of the company.

  3. Commodity Price risks are also associated with the inherent risks of the company.

On the other hand, the major control risk of the company is based on exploration. Exploration for and can be the less successful and less profitable due to the number of factors that related to the control on the resources as all of the energy companies are facing (Otto Energy, 2020).

Risks of Fraud

The company is earning more of the cash by using the financing activities, and in the year ended 2019, the company has issued the shares. The company is generating negative cash flow from its operating activities, so the financial risks of the company are increasing due to a lack of availability of financial resources. The lack of financial resources of the company indicates that the company has been failed to manage the financial activities. So the risks related to fraud have been increased (Otto Energy, 2020).

Audit Strategy

The audit Strategy of the company is based on the audit committee of the company. Audit Committee of Otto Energy has the following strategies related to the auditing:

  1. The appointment of an effective and independent auditor and decide about the remuneration.

  2. The committee has a strategy to look after the effectiveness of an independent auditor.

  3. The strategies related to the cooperation with the auditor regarding the sharing the information

  4. Reviewing the audit requirements and assessment of risks related to audit

  5. Review and assessment of services that are provided by the auditor and distinguish the audit and non-audit services.

The audit committee of the company shall demonstrate the procedures related to the suiting with the help and consultation of an independent auditor. The auditing committee will demonstrate the materiality level (Ottto Energy, 2020).

Key Audit Matter

The evaluation of the different considerations which are associated with the distinctions of professional judgment matters is considered in the course of the KAM. The different courses of maintenance and compliance with the essential bases in consideration of aligning the financial statements with the different considerations of practices are matched and evaluated. These are the notions that are maintained at the time of the audit execution, and these are the essential considerations in the course of audit expansion (Koskinen & Breyer, 2016).

The significant bases which are considered in the considered expansions of audit communications are aligned with the bases of reporting standards and the compliance necessary in case of considerations. The development which is executed at the course of aligning the evaluation of the functions and performance for the organization is also the integral matters of the key considerations (Child, Koskinen, Linnanen, & Breyer, 2018). The aligned bases in the course of maintaining the communication regulations and complying with the audit standards are the integral bases of consideration. Hence the reclamation of the key audit matters is assessed to be integral in the course of forming compliance, which is associated with the different distinctions of charge in case of governance.

Subsequent Events

The different bases of the occurring associated with the domains other than the mentioned course of date are assessed as subsequent events. These are the events and considerations which are necessary to have complied with the different considerations of evaluation (Polly et al., 2016). The maintaining of these factors is the bases that are weighed in the different domains as per the consideration of aligning factors that are developed as per the course of considering different propensities in the course of aligning the bases of audit considerations.

The extensions of the different bases which are expanded in the course of aligning the evaluation of the events which are expanding beyond the notion of the consideration are the bases that are expanded in the course of audit compliance (Petrescu & Petrescu, 2016). The different compliance, which is the consideration in the evaluated course of considering the events as per the course of activity, is the evidential recollection in the determination of the appropriate course of the alignment. These are the bases that are aligned as per the different notions which are assessed to rise after the depictions of the provided audit date.

Audit Reporting

The course of formation in the development and the alignment of the audit propensities are the bases which are evaluated in the distinctions of the development which is providing documentation of the different consideration of the audit events (Child, Koskinen, Linnanen, & Breyer, 2018). The alignment in the course of activity and the measure of improvisation in the distinctions is weighed in the stance of the audit. The evaluations maintained in the determination of the bases of audit propensities are aligned in the assessment of consideration and development of the alignment formation with the necessary accounting information.

The different bases in consideration of developed propensities in the course of establishing appropriations in the domains of financial statements are the foundations weighed as per the formation and the alignment of the considered bases of effective evaluations. The propensities in the audit consideration are the bases that are aligned as per the course of responsibilities of the quoted events (Petrescu & Petrescu, 2016). The different discoveries based on the notion of aligned propensities in the development of appropriate audit measures in the propensities of the examination are weighed in the considered propensities of reference. The alignment in the bases of developing the stance in the notion of effectiveness and fundamental equations is the alignment in the report and compliance, which is to be weighed as per the audit standards.

Conclusion and Recommendation

The basic objective assessed in the case of the audit consideration is the variables that are aligned as per the maintained notions of the aligned propensities, which are developed according to the course of formation. This formation is weighed concerning the appropriate notions of audit propensities. The alignment of the different factors, are measures as per the issuance of audit reports, are based that are considered in the variables of a consistent course of propensities and development of coordinated bases of efforts. These considerations, which are extended in bases of evaluating the bases of audit compliance, which is weighed in the course of presenting comparative, are the evaluated bases of appropriate course in the stance of the responses. The development which is maintained in the aligned bases of propensities is the considerations of issuance, which are critical in acknowledgment.

Reference

Bloomberg . (2020 ). About Otto Energy Ltd. Retrieved from Bloomberg : https://www.bloomberg.com/profile/person/20696759

Child, M., Koskinen, O., Linnanen, L., & Breyer, C. (2018). Sustainability guardrails for energy scenarios of the global energy transition. Renewable and Sustainable Energy Reviews , 321-334.

Koskinen, O., & Breyer, C. (2016). Energy storage in global and transcontinental energy scenarios: a critical review. Energy Procedia , 53-63.

Otto Energy. (2019 ). Annual Report 2019 .

Otto Energy. (2020). Summary of Risk Management, Internal Compliance and Contro.

Ottto Energy. (2020). Audit Committee Charter.

Petrescu, F. I., & Petrescu, R. V. (2016). Otto motor dynamics. GEINTEC, ISSN , 2237-0722.

Polly, B., Kutscher, C., Macumber, D., Schott, M., Pless, S., Livingood, B., et al. (2016). From zero energy buildings to zero energy districts. Proceedings of the 2016 American Council for an Energy Efficient Economy Summer Study on Energy Efficiency in Buildings, Pacific Grove, CA, USA , 21-26.

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