AUDIT RISK – SALES REVENUE – Occurrence and Accuracy
In terms of Sales Revenue, an auditor for Telstra should focus on identifying risks in the revenue recognition and management process.
Financial Statement Assertion Potential Audit Risk
Existence
Assets recorded in Telstra’s fixed asset register do not exist OR are not in use at year end
Occurrence
Additions and disposals of assets listed actually have not occurred
Completeness Not all assets in use, additions and/or disposals have not been recorded
Rights and Obligations Telstra does not hold rights to PPE items listed at year-end
Accuracy
Additions and disposals amounts recorded are not correct
Valuation and Allocation The carrying value of PPE items recorded are not correctly (relates
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Going concern issues in financial reporting, as discussed in Australian Auditing Standard ASA 570 , applies to all audits performed on a set of financial report in accordance with the Corporations Act 2001. A
Going concern issues are of minimal significance to Telstra, being Australia’s largest provider of telecommunication services and having a strong history in the Australian market. However, as Telstra’s sales revenue for FY14 was $25,199m, sales revenue is an account that has an underlying greater risk of audit misstatement given the volume of transactions required to generate that,. Sa – cash, trade payables AUDIT RISK – PPE: Accuracy, Valuation and Allocation, and
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In particular, two inherent risk factors will be addressed. The first is in relation the the recording of Telstra’s PPE with the correct cost basis and the second being the complex nature of book value calculations associated with Telstra’s PPE.
For recording with the correct cost basis, Telstra must capitalise all costs related to PPE acquisition and ongoing use until disposal. The ongoing use of PPE also means that Telstra must include in the carrying values all associated major repairs and maintenance costs, rather than being expensed elsewhere. Telstra can acquire PPE assets either through purchasing or leasing. When Telstra purchases a PPE item, an auditor can sample and test to consider the accuracy of the assigned cost basis and any depreciation can be recalculated through substantive analytical procedures.
However when Telstra leasing a PPE item, there is a more inherent audit risk as there is increased complexity of book value calculations after initial recognition, such as differentiation between capital or operating leases as discussed in AASB 117 . An auditor should maintain professional scepticism in the case where Telstra chooses to expense capital leases (or capitalises operating leases), as Telstra could be materially misstating items on the balance sheet and income statement, noting that the fraud of WorldCom involved capitalising expenses as
CenturyLink is one of the larger communications companies within the United States and has even expanded abroad to other countries. When analyzing the SWOT analysis for CenturyLink, I was able to identify several strengths that set them apart from their competitors. As mentioned, they are distributing services in over 20 states currently and continue to broaden services to reach more clientele. They pride themselves on exceling in data communications and network systems databases which has allowed them to become one of the desired communication companies.
We have been engaged to audit the financial statements for Exxon Mobil Corporation (ExxonMobil) and assess the effectiveness of their internal controls for the fiscal year ended December 31st, 2010 in compliance with the laws of the state of Texas and the standards set forth by the Public Company Accounting Oversight Board (PCAOB). In the previous memo sent, we outlined the client’s high inherent risk due to the account balances and transactions, foreign currency translations and the complexity of accounting for and auditing the client’s vast oil reserves and inventories. This memo will address preliminary assessment of control risk and the appropriate level of detection risk given the forgoing conclusions on inherent risk, audit risk and control risk.
COMMUNICATION SYSTEM What are the strengths and weaknesses of Telerik’s communication strategy and practices? Strengths :- 1. What is the difference between a. and a. Employees at Telerik work in an open space. The atmosphere is informal, flexible and open.
At the end of the useful life of fixed assets the businesses will dispose, and any amount received from disposal will represent its residual value. This may be difficult to estimate in practice. How ever, an estimate has to be made. If it is unlikely to be significant amount, a residual value of zero will be assumed. The cost of fixed assets less its estimated residual value represents the total amount to be depreciated over its estimated useful life.
It had to provide ‘front-line’ with frameworks, policies, methodologies, tools and assistance to counter the risks and it was handled by a Chief Risk Officer. The Third line is Group Internal Audit – this gives the independent and objective assurance on the efficiency of company’s governance, risk management and internal control processes. Organization culture of Telstra- In the times of David Thodey, Telstra transformed. The company’s purpose was discovered again and same was the done with the beliefs.
As per PCAOB standard 12 it is our responsibility to identify internal and external risks to the business and risks that could result in material misstatement. The Newham
In conclusion, appropriate principles could lead to clearer interaction and more comparable financial reporting standards without the need of the current rules. The NZ Framework has provided parts of clear and appropriate underlying principles to lead the application of NZ GAAP and other financial reporting standards. However the standards setting movement from ‘rule-driven’ approach to ‘principle-based’ approach is still half-way in New Zealand. How could principles be sufficiently clearly portrayed and put into practice require the profession to think and support. Just as Tweedie (2007, p.7) states, a principle based system will only work if preparers, auditors, users and regulators wish to make it work.
According to the conceptual framework, the potential users of financial statements are investors, creditors, suppliers, employees, customers, governments and agencies, and the general public (Financial Accounting Standards Board, 2006). The primary users are investors, creditors, and those who advise them. It goes on to define the criteria that make up each potential user, as well as, the limitations of financial reporting. The FASB explicitly states that financial reporting is “but one source of information needed by those who make investment, credit, and similar resource allocation decisions. Users also need to consider pertinent information from other sources, and be aware of the characteristics and limitations of the information in them” (Financial Accounting Standards Board, 2006). With this in mind, it is still particularly difficult to determine whom the financials should be catered towards and what level of prudence is necessary for quality judgment.
As with all industries and audits there is audit risk and inherent risks, although GD has potential risks, these risks seem to be mitigated due to GD’s industry performance.
Financial risks include general ledger accounting, accounts receivable risk, accounts payable accounting risk, the risk of payroll, fixed assets accounting risk, cash management risk and cost accounting risks.
AASB, Australian Accounting Standards Board, Statement of Accounting Concepts SAC4 ‘Definition and recognition of the elements of financial stat
4) . One of the largest bankruptcies in history was enabled by accountants hiding debt and destroying the evidence to avoid implication (Buckstein, part 2 pgs. 1, 2, and 3). These unfortunate events led to the need for increased scrutiny and regulations, including the Sarbanes-Oxley Act (Buckstein, part 3 pg 1). This legislation inspired the creation of the Canadian Public Accountability Board (CPAB) (Buckstein, part 3 pg 1). These changes have led to an increased awareness of the need for auditor independence as well as higher standards for accounting and business in general (Buckstein, part 3 pg 1). While these measures have helped to reassure the public, there is still the question of why Accountancy is not a protected
The SWOT analysis is a useful tool for identifying our personal strengths, weaknesses, opportunities, and threats to our plans and goals. According to a “Fuel My Motivation” article (2010), this analysis considers internal influences that can positively or negatively affect our ability to achieve our goals. The internal factors are our strengths and weaknesses. Also considered are opportunities and threats, which are external influences that can have a positive or negative impact on the ability to achieve our goals. I will share how the self-assessment instruments and self-exercises in this course have contributed to assessing and understanding my strengths and weaknesses. I will also discuss techniques I will use to leverage my strengths and understand my weaknesses. In addition, I will consider opportunities that I can take advantage of and the threats that can possibly impede my progress.
Auditing has been the backbone of the complicated business world and has always changed with the times. As the business world grew strong, auditors’ roles grew more important. The auditors’ job became more difficult as the accounting principles changed. It also became easier with the use of internal controls, which introduced the need for testing, not a complete audit. Scandals and stock market crashes made auditors aware of deficiencies in auditing, and the auditing community was always quick to fix those deficiencies. Computers played an important role of changing the way audits were performed and also brought along some difficulties.
test whatever it's a bad effect or not. So when it used on humans, we