Midway limited is the company which is listed on the Australian stock exchange and was founded in 1980. The company is dealing in the export and production of high-quality wood fiber. The report will be consisting of the information about audit matters involved in the company. Audit committee and its role in the company will be determined and in this process the independence of auditor will also be considered. There will be some payment which will be made by the company to the auditor and the same will be recognised in the report below. The subsequent events which take place will be identified and also the opinion of the auditor will be represented. The material information and its effectiveness for the third party stakeholders will be ascertained so that they are provided in a proper manner.
Auditing is the process in which all of the events and transactions which are there in financial statements will be analyzed. In that, there will be checking off all the requirements so that it can be ascertained that whether they are followed or not (Haste, 2015). In the company, there are various requirements which are to be met and in them, auditor will be required to be provided with a proper level of the independence so that they can carry the functions in the manner required. In the audit it is required that opinion regarding the financial statements is presented and for that the auditor will be undertaking required checks. The company will be providing then with the required independence without any restrictions (Dawuda, et. al., 2015). There will be verification which will be made in relation to all the accounts so that all the misstatements and errors which are there can be ascertained. The auditors will not be required to hold any kind of interest in the company as by that their judgment will be affected and they will not be able to provide the unbiased opinion (Kehinde, et. al., 2017). The activities and functions will be carried in such a manner that all the material aspects are taken into consideration and there will be no problems which will be identified in the coming period. The independence will be managed by the company by ensuring that all the requirements of the laws are fulfilled and there also the professional behavior shall be managed (Xie, 2016).
The company is given case has also appointed the auditor and looked to the maintenance of independence in all regards. It has been provided in the report that proper laws are followed and there is no contravention in accordance with the corporation act, 2001 (Midway limited, 2017). All the requirements of the professional conduct are also fulfilled in the auditing.
Non-audit services are those which are provided by the auditor to the company other than the audit services (Zhang, et. al., 2016). In those services other than auditing is being provided and will be containing the taxation services, management services, advisory services, and other related services. For that, there will be approval of the management that there will be no impact of the services on the independence of the auditor (Svanström, 2013). There shall be no development of the interest by the auditor in the company due to the provision of all the non-audit services.
In Midway, the board has assured that all the services are such by which the independence of the auditor will not be affected. There is the proper disclosure which is made in respect of such services including the amount which is paid for them (Midway limited, 2017). Several advisory and taxation related services have been provided and they all are incorporated in the making of financial reports.
The business is required to make the payment for all the services which are availed by it and same is the case with audit services and that payment is remuneration of auditor (Money matters, 2018). In the calculation of the same, there will be consideration of all the aspects and the payments which are made will be ascertained. The amount that is incurred by the company in the non-audit services will also be taken into account. The total amount which the company has paid in the current and past year to the auditor is provided below:
|
Details |
2017 |
2016 |
Change in % |
|
Statutory audit fees |
160000 |
119715 |
33.65% |
|
Assurance services – IPO related services |
236752 |
650000 |
-63.58% |
|
Non-assurance services – taxation services |
0 |
14300 |
-100% |
|
Non-assurance services – other advisory services |
10000 |
148024 |
-93.24% |
|
Non-assurance services – IPO related services |
0 |
167898 |
-100% |
|
Total remuneration |
406752 |
1099937 |
-63.04% |
All the changes which are taking place in the amount of the audit remuneration are presented in a proper manner in the context of midway limited. There is the calculation of changes also which are taking place in the current year (Midway limited, 2017). The overall decline has been made in the payments of 63.04% and this is because one auditor has resigned.
The business which is carried involves various activities and there are certain events which are key matters. The auditor will be required to take them into account and make the proper verification of them and also the procedure which is followed for resolving of the matters. Description of the main audit matters is provided hereunder:
Valuation of land: In the company there are lands and most of them are in relation to the forestry plantation and constitutes 49.6% of the total assets which are held by the company. The valuation of them is made at fair value and the process which is involved in this is complex and due to this, it is the key audit matter (Midway limited, 2017). The valuation is done by the management and they are experts who perform the valuation of all the assets in an effective manner. In order to make the proper balance the discounted cash flow model is used by the management. The market conditions and fluctuation which will be arising in the coming period will be covered under the evaluation. The growth and discount rate is also assessed and with that the physical verification is also made by which best use of it will be determined (Midway limited, 2017). For the checking of this entire auditor will be using the report which is presented by the expert and if there is any doubt then clarification is obtained from the expert. The sensitivity analysis is performed and by that assumption which is made are evaluated. All of the estimations which are made are reviewed to ensure the accuracy of them.
The independence of the auditor is required to manage and with that other aspect which is related to audit are to be properly carried out (AICD, 2018). In this process, there will be a requirement of proper authorities who will be ensuring proper compliance and audit committee is established due to this. The members involved in this will be the board members only having the adequate knowledge about the manner in which all the aspects are to be managed. They will be playing the important role in making the auditing process a success (Al-Matari, et. al., 2017). The same is properly made in midway limited and the members involved in this are as follows:
|
Director’s name |
Title |
|
Gregory McCormack (Non-executive) |
Member |
|
Gordon Davis (Non-executive) |
Member |
|
Thomas Keene (Non-executive) |
Chairman |
The carrying out of the audit is performed by the auditor with the objective of providing the proper opinion about the financial reports of the company (Sherman, 2018). They will be required to give the assurance in respect of the statements which are made so that reliance on them is placed and their accuracy is ensured. There will be several opinions which can be made which depend on the findings (Tian & Xin, 2017). The adverse opinion is the one which will be provided in case any misstatement or error has been determined in the reports (Public Company Accounting Oversight Board (PCAOB), 2013). The unqualified opinion is to give in case there are no negative aspects and it is found that all the accounting is made in the most appropriate manner. If there will be some of the issues for which clarification is not there then the company will be provided with qualified opinion.
The company is not having any kind of issues or errors in the reporting that is made and that is guaranteed with the help of the unqualified opinion. It is stated that all of the data which is involved is accurate and in that the required standards are complied with (Midway limited, 2017). The company is undertaking all of the processes by which compliance with the laws is ensured.
Management responsibility: The making of the financial reports and accounts in the company is an essential aspect. It is required that it shall be carried with complete effectiveness and in that the management will be responsible. It will be required that the management ensures that all of the reporting is made in the proper manner and there is accurate information which is involved in that (Clikeman, 2018). The compliance with the required standards and laws will be required to be made by the management so that auditor can use the information and reliance is placed on accounts.
Auditor’s Responsibility: The auditor will be required to perform the evaluation and verification of the accounts so that their correctness can be ensured (PCAOB, 2018). There will be identification of the misstatement and error which is present and then the same will be disclosed so that elimination of it can be made. The main aim will be to make the opinion by considering all the aspects and the findings which are made. They will be making the opinion and providing it in their report so that all the required parties are made aware about the same.
The company will be having such events which have occurred after the balance sheet date and they are subsequent events. For them, there are several rules which are made which help in the determination of such events (Sessoms, 2018). Also, the manner in which they will be considered in the accounts by the company will be identified and the treatment will then be made accordingly. The business will be required to make the classification of all the transactions according to their nature in the available categories (Al Nawaiseh & Jaber, 2015). The impact on the final accounts will be made in case of the adjusting events as they will be incorporated in the accounts (Ozdemir & Gokcen, 2016).
The statements of the Midway have been reviewed in a proper manner and there is no such event which is brought to the notice (Midway limited, 2017). There is no subsequent event and so the company will not be in the requirement to make any of the treatment for the same.
The accounting reports which are made in the company provide the information in relation to all the areas of the business. They will be used by several parties in need of them and so it is required that all of the material information in the company shall be included in them. Third-party stakeholders are the ones who are not affected by the information in a direct manner but indirectly they will be facing the impact (Christensen, et. al., 2018). There are various types of decisions which are to be made by them and it will be requiring the sufficient amount of the information. The parties include investors who will be evaluating the chances of the returns and then on that basis will be deciding to invest in the company or not. The government is required to make the collection of the income tax and that will be made only after the ascertainment of the income and for this purpose, the statements will be required by them. There shall be the correct representation which shall be made in the accounts. The employees will be required to make the decision in respect of the manner in which the performance of the company can be improved. This will be possible after proper evaluation of the available information.
In the making of statements coverage of all the information has been done. There is the need to identify all of the information which is material so that it can be included and no such material events remain unreported (Kipp, P., 2017). The accounts of the Midway limited are considered and evaluated in an appropriate manner in the carrying out of the audit. By that, all the aspects are covered and information about them is also included. It has been determined that there are proper disclosures which are made in relation to all of the important transactions and matters which are included in the company. There is no such data which is found to be unreported or which is missing from being included. Also, the provided matter is appropriate and error-free and this can be said due to the opinion which has been provided by the auditor in the audit report.
All of the suspicions which are there in the minds of the shareholders are required to be taken into consideration. It will be required that they are resolved and for that proper clarifications from the auditor will be required to be obtained. The process of the follow up will be performed in the annual meeting of the company. In that, all the shareholders will be there and will be provided with the required information by the client. There will be a requirement of certain questions which will be asked and they are as follows:
Conclusion:
The report which has been prepared in the context of Midway limited covers all the important and relevant information, in respect of the material aspects. The manner in which the auditor is provided with the independence is determined and with that non-audit services which are provided by the auditors have been identified. Determination of the payment to the auditor has also been covered. The key audit matters are identified and explained in the report in a proper manner. The importance of the material information for the third part stakeholders is determined and also it is determined that there is no subsequent event in the company. The board members which became the part of audit committee have been ascertained with their importance.
References
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Al Nawaiseh, M. A. L., & Jaber, J., 2015. Auditing subsequent events from the perspective of auditors: a study from Jordan. International Journal of Financial Research, 6(3), 78.
Al-Matari, Y. A., Mohammed, S. A. S., & Al-Matari, E. M., 2017. Audit Committee Activities and the Internal Control System of Commercial Banks operating in Yemen. International Review of Management and Marketing, 7(1), 191-196.
Christensen, B.E., Eilifsen, A., Glover, S.M. and Messier, W.F., 2018. The Effect of Materiality Disclosures on Investors’ Decision Making.
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Dawuda, A., Aninanya, G. O., & Alnaa, S. E., 2015. The Organizational Independence of Internal Auditors in Ghana: Empirical Evidence from Local Government. Asian Journal of Economic Modelling, 3(2), 33-45.
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Midway limited, 2017. Annual Report [Online]. Midway limited. Available At: https://www.midwaylimited.com.au/wp-content/uploads/2017/09/Midway-AR-2017-LR.pdf [Accessed: 17 September 2018]
Money matters, 2018. Remuneration of Auditors | Who fixes the remuneration? [Online]. accountlearning.com. Available At: https://accountlearning.com/remuneration-of-auditors-who-fixes-the-remuneration/ [Accessed: 17 September 2018]
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