Auditing can be explained as the process of evaluating along with investigating the financial reports published by the companies for evaluating that such reports are devoid of any material misstatements, frauds, errors and certain aspects. For this reason, the auditors need to enhance the quality of its audit report by means of revealing material-based information related with the company’s annual report(Chand, Patel & White, 2015). In addition, the companies alsorequire to offer such information to all its stakeholders in a format that will be simple for them to understand. In the recent years, the audit committees have considered implementing several effective approaches in order to enhance their quality of the audit report. Therefore, this is deemed important for the auditors to considerincreased issues within the company’s financial statements which can facilitate them in ensuring better quality of audit(Bond, Govendir& Wells, 2016). In accordance with that, it is important to justify that the selected company “Wesfarmer Limited’s” audit partner is Ernst and Young.
At the time of offering better audit services, all the auditing companies requires to make sure that the important guidelines along with norms associated with auditor’s independence. In other words, it must also be indicated that the auditors requirebeing associated with the audit partner in which they offer certain better audit-based operations(Perera& Chand, 2015). The directors associated with the company have alsoindicated that Ernst and Young has abided by every important professional guidelines and principles associated with auditing standards(Leung &Verriest, 2015). “Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants’’ and “Corporations Act 2001” are followed by the company in maintaining effective reporting. These standards are implemented so that the auditor’s independence can be sustained in a better manner.
For Wesfarmers Company, its audit partner provided certain non-audit services that encompass tax complianceservice along with certain other services. In tax-based services, the Ernst and Young was paid $683,000 and $343,000 was offered to the audit firm for its non-audit services. Conversely, Wesfarmers have also entertained that the needed compliance for Ernst and Young with all the important standardsfor attaining certain non-audit services. Rather than that, Wesfarmers have offered the auditor with certain type of work which encompass the work review of auditor itself for undertaking certain management decisions(Chapple, 2017). In addition, certain corporategovernance guidelines as well as norms followed by means of offering certain non-audit services. Moreover, all the factors indicate the auditor independence.
The table indicated below facilitates in analyzing the audit service payments taking into consideration the Australian along with cross-border network companies. Non-audit services like tax compliance and some additional services are provided by Ernst and Young to Wesfarmers. As gathered from the table above, it is observed that Wesfarmers has decreased its audit service payment to its audit partner by 5.50% for the year 2018 in comparison to the previous year(Howieson, 2017).
Figure 1: Remuneration for Ernst and Young
(Source: Wesfarmers.com.au., 2018)
In addition, an identical trend has also been indicated for the non-audit services for the reason that payment to the non-audit services has been decreased by 55.53% for Ernst and Young in contrast to prior year. This situation also indicates that an overall payment that is offered to the auditor has decreased in the year 2018 by 16.44% n comparison to the previous year(Green, 2014).
Based on the viewpoint presented by Ernst and Young, major audit matters are considered to be considerable at the time of financial statements auditing. Relied on the financial statements of the year 2018 for West farmers, four major audit matters are recognized. Such factors are explained withdesirable audit techniques for its segmentation and minimization(Wee, Tarca& Chang, 2014).
The annual report analysis of the company signified the company’s management has maintained an audit and risk committee within Wesfarmers. The responsibilities fulfilled by them includes maintaining efficiency of internal control in, analyzing usefulness of assets through maintaining integrity of annual report information (Susela Devi& Helen Samujh, 2015). The committee of the organization is observed to include few important executive directors including J.A. Westacott and D.L. Smith Gander. The committee also has a responsibility of including efficiency of financial reporting, analysis and review of commercial incomes that is necessary in “audit risk management”.
The auditor independence information offered by Wesfarmers indicated that the organization prepared its remuneration section in adherence to “Section 300A of the Corporations Act 2001”guidelines. In addition, based on the viewpoint of Ernst and Young, the financial statements are prepared and represented in a way that every Australian accounting standards-based reporting along with different norms are suitably followed by the Wesfarmers. For this reason, in such scenario, Ernst and Young issued an unqualified audit viewpoint.
Based on the recent yearly report of Wesfarmers, the responsibilities fulfilled by the directors and management are different from that of the part of the auditor. This is observed to be apparent at the time of developing and indicating effectiveness of the financial statements. The directors along with the company’s management are needed to entertain that the financial statements are developed for offering suitable overview regarding the “2001 Corporations Act” along with the accounting standards existing within Australia. In addition, the directors have the responsibility to analyses the ability of the company to carry out functioning in increasing concern basis at the time of developing the financial statements(Liu, 2015). On the other hand, the auditors attain some responsibilities which is not aligned with the responsibilities of management and directors.
The auditors are associated in evaluating and analyzing the financial reports reported by the companies for analyzing that such factors are devoid of the financial frauds, errors, material statements along with others. Certain important responsibilities of the auditors encompass recognizing along with analyzing the uncertainties related with material misstatements andattaining suitable knowledge considering internal control (Santos, Ponte &Mapurunga, 2014). This also facilitates in analyzing the analysis of accounting policies along with indicating the suitability related with increasing concern base regarding accounting employed by the directors. Conversely, the auditors are responsible for evaluating the development along with financial statements presentation as well as attaining enough examples focused on audit.
It is deemed important to indicate that two considerable events for Wesfarmers that took place for the recent year. In such case Coles demerger is also carried out in the current year in March (Bodle, Cybinski&Monem,2016). Conversely, Ernst & Young have not considered the event attaining material value as it is anticipated not to attain any material effect on the company’s financial statements. The Wes farmer Company’s board of directors has announced totally aligned ordinary dividend of around 120 cents each share because of which the overall amount of the yearly dividend to be offed to the stakeholders might be 223 cents for each share in the year 2018 and the dividend is yet is to be offered to the shareholders (Ipino&Parbonetti, 2017).
Relied on the perception of the third-party stakeholder, it is deemed important that Ernst and Young has been increasingly effective in evaluating the material information of Wesfarmers Limited relied on the financial statements. This is caused based on the auditing ad reporting regulations mentioned within “APES 110, auditing standards of Australia as well as Corporations Act 2001” (Perera, 2016). On the other hand, the auditors attain some responsibilities which is not aligned with the responsibilities of management and directors. In addition, it can also be indicated that the auditor has disclosed four major audit factors within the financial statements along with decreasing their impacts as well. These factors focus on the fact that Ernst and Young have been increasingly effective for dealing with material information.
In alignment with the yearly statements of Wesfarmers Limited in the year 2018 it is also important that the auditors Ernst and Young did not fail to encompass certain material factors or information attaining material collationregarding the company’s financial reporting. Every information is elaborated and represented in a better manner by the Wesfarmers auditors concerned with the material factors which can have drat effect on the operations of business (Kabir & Rahman, 2016). Wesfarmers have also entertained that the needed compliance for Ernst and Young with all the important standards for attaining certain non-audit services. Rather than that, Wesfarmers have offered the auditor with certain type of work which encompass the work review of auditor itself for undertaking certain management decisions. For this reason, it can also be indicated that there is lack of under or partially reported along with material information within the Wesfarmers yearly financial statements.
At the duration of the general meeting within Wesfarmers Company, several relevant questions might be asked to the shareholders of the company (Hardy, 2014). Such questions are briefly explained in the following points:
Conclusion
From analysis of the annual report of Wesfarmers it was gathered from the paper that at the time of offering better audit services, all the auditing companies requires to make sure that the important guidelines along with norms associated with auditor’s independence. In other words, it must also be indicated that the auditors requirebeing associated with the audit partner in which they offer certain better audit-based operations. The paper also revealed that the auditor has disclosed four major audit factors within the financial statements along with decreasing their impacts as well. These factors focus on the fact that Ernst and Young have been increasingly effective for dealing with material information. It has also been revealed that based on the viewpoint of Ernst and Young, the financial statements are prepared and represented in a way that every Australian accounting standards-based reporting along with different norms are suitably followed by the Wesfarmers. For this reason, in such scenario, Ernst and Young issued an unqualified audit viewpoint. Conversely, the auditors are responsible for evaluating the development along with financial statements presentation as well as attaining enough examples focused on audit.
References
Bodle, K. A., Cybinski, P. J., &Monem, R. (2016). Effect of IFRS adoption on financial reporting quality: Evidence from bankruptcy prediction. Accounting Research Journal, 29(3), 292-312.
Bond, D., Govendir, B. & Wells, P., (2016). An evaluation of asset impairments by Australian firms and whether they were impacted by AASB 136. Accounting & Finance, 56(1), 259-288.
Bugeja, M., Czernkowski, R., & Moran, D. (2015). The impact of the management approach on segment reporting. Journal of Business Finance & Accounting, 42(3-4), 310-366.
Chand, P., Patel, A. & White, M., (2015). Adopting international financial reporting standards for small and medium?sized enterprises. Australian Accounting Review, 25(2), 139-154.
Chapple, S., (2017). IFRS adoption in Australia: A strong structuration perspective. Accounting History, p.1032373217741142.
Green, G., (2014). Auditors, bankers, and company directors. Governance Directions, 66(11), 690.
Howieson, B., (2017). The Phoenix Rises: The Australian Accounting Standards Board and IFRS Adoption. Journal of International Accounting Research, 16(2), 127-154.
Ipino, E., &Parbonetti, A. (2017). Mandatory IFRS adoption: the trade-off between accrual-based and real earnings management. Accounting and Business Research, 47(1), 91-121.
Kabir, H., & Rahman, A. (2016). The role of corporate governance in accounting discretion under IFRS: Goodwill impairment in Australia. Journal of Contemporary Accounting & Economics, 12(3), 290-308.
Leung, E. &Verriest, A., (2015). The impact of IFRS 8 on geographical segment information. Journal of Business Finance & Accounting, 42(3-4), 273-309.
Liu, C. (2015). The conflict between public interest and self-interest in public accounting. International Journal of Services and Standards, 10(3), 103-115.
Mita, A. F., Utama, S., &Wulandari, E. R. (2018). The adoption of IFRS, comparability of financial statements and foreign investors’ ownership. Asian Review of Accounting, 26(3), 391-411.
Perera, D. & Chand, P., (2015). Issues in the adoption of international financial reporting standards (IFRS) for small and medium-sized enterprises (SMES). Advances in accounting, 31(1), 165-178.
Perera, D. (2016). Adoption of international financial reporting standards (IFRS) for small and medium-sized enterprises (SMEs): problems and challenges.
Santos, E. S., Ponte, V. M. R., &Mapurunga, P. V. R. (2014). Mandatory IFRS adoption in Brazil (2010): Index of compliance with disclosure requirements and some explanatory factors of firms reporting. RevistaContabilidade&Finanças, 25(65), 161-176.
Susela Devi, S. & Helen Samujh, R., (2015). The political economy of convergence: the case of IFRS for SMEs. Australian Accounting Review, 25(2), 124-138.
Van Akkeren, J., &Tarr, J. A. (2014). Regulation, compliance and the Australian forensic accounting profession. Journal of Forensic and Investigative Accounting, 6(3), 1-26.
Wee, M., Tarca, A. & Chang, M., (2014). Disclosure incentives, mandatory standards and firm communication in the IFRS adoption setting. Australian Journal of Management, 39(2), 265-291.
Wesfarmers.com.au., (2018). [online] Available at: https://www.wesfarmers.com.au/docs/default-source/reports/wes18-044-2018-annual-report.pdf?sfvrsn=4 [Accessed 20 Sep. 2018].
Zeff, S. A., Radcliffe, V., &Gunz, S. (2014). Accounting and Auditing Activities of the Ontario Securities Commission, 1960s to 2008 Part 3: The Fifth Chief Accountant, 1996–2008. Accounting Perspectives, 13(4), 223-252.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download