In general, IASB is set with the guidelines based on the expert auditing of the financial data. The planning of the audit should take into account the identification of the risk factors relating to the material misstatement. The important consideration of the material misstatements has been taken in charge by the auditor. The vital involvement of the expert auditing has been seen with the evidence of the planning of the work. The of the work by the audit expert is required with the competent, capable and objective required for the audit requirement. The main task by the auditors are
In alternative perspective the field of audit and accounting under the obligation deriving the audit evidence has been seen with the service of expert which must be sought. In addition to this, the audit expert is seen to can deliver the objective of the services which is sufficient with the reporting of the audit. Based on the external review of the books of accounts it has been discerned that the nature of the expertise of the auditor. In addition to this, audit expertise is required with the extensive recognition of the expertise service based on the specific discipline. The objectivity has been concerned with the various types of the specific issues which has been seen with the probable effects of favouritism and influence of expert judgement. There have been several experts entrusted with the interest of expressing the expert judgement relating to the subject matter (Schmidt, Wood, & Grabski, 2016).
Based on the evident facts, the specific facets of the issues stated by the audit expert has been listed below as follows:
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Necessary Issue |
Decision required to indulge in audit related to this issue |
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Inventory Obsolescence and issues associated to purchase |
The detailed analysis of the audit process has been seen to be conducted based on the inventory purchase. The estimated value obsolescence of the assessor is required for obtaining the service of the audit expert and reckoning the total amount of inventory (Christensen, Glover, & Wood, 2013). |
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Fixed assets depreciation |
The financial report for the organisation is noticed with the depreciation of the fixed assets which is stated based on straight line method. The measurement objective has been further taken into account with the measurement of the overall depreciation along with the asset impairment (Lad & Dahl, 2014). |
The factors associated to the materiality is based on the aggregate and significant representation of the financial statement and compliance to the necessary standards. The case study of the business has been seen to be related to the determination of the five factors which are seen to be having an important effect on the preliminary numerals for the overall materiality. In fundamental terms, the financial report is seen to create a significant impact on the fair representation of the materiality aspects. The various types of the fraud relating to the error omits the particular amount of the disclosure of the financial report (Schmidt et al., 2016).
The documentation of the varied range of the factors for creating an impact on the materiality are shown below as follows:
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2 A: Factors |
2 B: Explanations |
2 C: Influence up on preliminary overall materiality |
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Risk of Fraud: In general fraud risk is identified as the most important element by creating an undesirable influence for materiality and financial report. Based on the case study, DIPL has been exposed to numerous fraud risk which will have adverse effect on the financial statement. |
As per the depictions of the procession and collection of data it has been discerned that the financial information is based on the data gathered during the preparation of the report. The irrational projections taken from the accounting projections. Moreover, error in the process of specific accounting policies are related to the valuation and classification of the methods having an impact on the financial reporting (Christensen et al., 2013). |
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Accounting policies influencing materiality: The reporting activity has been evident with the deployment of the raw materials which cannot be considered to be appropriate in nature. The assessment of the case study has been able to put light on the various types of the consideration related to the valuation of the raw material inventory, which is not appropriate in nature. |
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Environmental factors influencing materiality: The preparation of the financial report has been considered with the several transactions which is seen with the error as a result of the omission and recording of the transactions by DIPL. The resultant plan has been inconsistent with the planning of the market process which has been associated to the marketing and selling process. It has been further discerned that the materiality factor has been infective as per the given situation. |
The consideration of the fraud activities is seen with the growing pressure of the board has been seen with the execution of the new system in the accounting which may influence the overall financial information. |
Environmental factors impacting materiality: The management has failed to identify the significant factors for the identification of the micro and the macro environmental factors with the omission of the specific financial transaction adopted by the company. In particular the users may fail to get the required information for the depiction of the true and fair value of the books of account and creation of overall impact on the planning of the audit. The users of the variosu types of the financial information has been presented with the fair view of the books of accounts which can have a simultaneous influence on the audit plan and identification of the material misstatement. |
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Materiality influencing the selection of CEO: The selection and the appointment of CEO of DIPL has been particularly considered to be an intricate procedure. The risk factor has been seen to be taken by William Jackson as the process of the appointment did not comply to the required schemes. |
As the CEO appointment is a cumbersome process, the appointment process of the CEO of DIPL negatively affects the transparency of the decision makers. The results of this has been further seen to affect the overall materiality (Kubuabola, 2013). |
Complex appointment of CEO influencing the Materiality: The CEO appointment process for CEO of DIPL is a complicated process and overall result of this has impacted on the materiality. It has been further discerned that the appointment of CEO should be conducted with more caution. |
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Factors related in recording of cash receipts and expenses: The important factors related to the materiality aspect has been taken into account with the materiality of DIPL. A significant portion of the expenses has been seen to be accepted by electronic means and there is significant process by which the bookkeeping of the cash receipts could be followed by the download of the receipts from the mail and processing the same with the reconciling of the data in the overall batch. |
The accounting process adopted by DIPL for the raw material is viewed as a specific factor affecting the overall materiality aspect. In similar terms the accounting process has been seen with the determination of the various types of the valuation procedure for the raw material. This has been seen with comprehending of the true and fair view of the books of account. The management is unable to integrate the environmental factors which is having a negative effect on materiality. Due to this, the environmental factors have been considered with the outcomes of the financial data with a viewpoint of audit (Schmidt et al., 2016). |
Factors relating to the recording of the transaction in the new system: The expense payment procedure is seen to be done thorough the electronic means which is seen to be having an influence on maintain the transactions related to accounting. The presentation of the receipts by DIPL is further seen to e based on the reconciliation of the statements. The company has been discerned to be incapable of recording the transactions based on the cash receipts and reconciliation statement. This has the scope of inability to record the transactions leading to the downfall of the business. |
Reference List
Ahmed Haji, A., & Anifowose, M. (2016). Audit committee and integrated reporting practice: does internal assurance matter? Managerial Auditing Journal, 31(8/9), 915–948. https://doi.org/10.1108/MAJ-12-2015-1293
Christensen, B. E., Glover, S. M., & Wood, D. A. (2013). Extreme estimation uncertainty and audit assurance. Current Issues in Auditing, 7(1), 36–42. https://doi.org/10.2308/ciia-50447
Kubuabola, S. (2013). External Quality Audit. External Quality Audit. https://doi.org/10.1016/B978-1-84334-676-0.50005-4
Lad, P. M., & Dahl, R. (2014). Audit of the informed consent process as a part of a clinical research quality assurance program. Science and Engineering Ethics, 20(2), 469–479. https://doi.org/10.1007/s11948-013-9461-4
Schmidt, P. J., Wood, J. T., & Grabski, S. V. (2016). Business in the Cloud: Research Questions on Governance, Audit, and Assurance. Journal of Information Systems, 30(3), 173–189. https://doi.org/10.2308/isys-51494.
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