Auditing and related services

Richard A Bobb offers the following auditing and related services:

–          Statutory audits

–          Trust account audits

–          Non statutory reviews

–          Due diligence investigations

–          Internal control reviews

STATUTORY AUDITS

The purpose of an audit of financial statements is to express an independent opinion as to whether the financial statements present fairly, in all material respect, the financial information in accordance with the applicable financial reporting framework or accounting standards.    Such an opinion can only be expressed after:

–         planning the audit,

–         undertaking relevant test procedures, and

–         reaching audit test conclusions

 Whilst this is the traditional audit function, required under various statutes on independent reporting, there are many variations which can be undertaken in conjunction with a client’s requirements. More is said about this below.

An auditor should be an independent person having no involvement in the management or ownership of the auditee.  Independence is a state of mind and it is recommended, therefore, that the auditor is not otherwise engaged in the performance of other services (e.g. valuation, management accounting etc.) which might adversely affect the notion of independence (whether actual or perceived).

Companies

Under the Corporations Act, 2001(“the Act”) large proprietary companies (specifically defined in the Act) are required to be audited.  Small proprietary companies may elect to have an audit (although an audit of such proprietary companies is not compulsory).

A proprietary company is a small proprietary company for a financial year if it satisfies at least two (2) of the following conditions:

–          the consolidated gross revenue for the financial year of the company and any  entities it controls is less than $A25 million;

–          the value of the consolidated gross assets at the end of the financial year of the company and any entities it controls is less than $A12.5 million;

–          the company and any entities it controls have fewer than 50 employees at the end of the financial year.

A company auditor may be compelled to report to the Australian Securities and Investments Commission any deficiency or irregularity (comprising a breach of the Act in respect of the audit of a company’s financial statements.

Superannuation Funds

To ensure that self-managed superannuation funds are compliant an audit of their financial statements is a necessary condition precedent.  For example, under the Superannuation Industry (Supervision) Act, 1993 a trustee is required to engage an approved auditor for the purposes of auditing the annual financial statements of the superannuation fund.  In certain circumstances the auditor may be compelled to report to APRA or to the ATO (as the relevant regulator) any deficiencies detected in the course of conducting the audit.

DUE DILIGENCE INVESTIGATIONS

In the event that a company or a business is acquired it may be helpful, indeed it is prudent, to undertake a due diligence investigation to ensure that what is acquired in the bargain meets the expectation of the purchaser. 

A due diligence investigation will assist in determining that the assets are owned by the vendor, that the values ascribed to such assets are within tolerable limits and there are no adverse findings which would materially impact upon the acquisition.

INTERNAL CONTROL REVIEWS

Internal control or an internal control system is the integration of the activities, plans, attitudes, policies, and efforts of the people of an organisation working together to provide reasonable assurance that the organisation will achieve its objectives and mission.

In Australia, internal control remains a matter for company directors who are charged with the responsibility of safeguarding and protecting company assets.  In AWA Ltd v. Daniels t/as Deloitte Haskins & Sells(1992) 7 ACSR 759; Daniels & Ors (formerly practising s Deloitte Haskins & Sells) v Anderson (1995) 37 NSWLR 438 Rogers CJ said:

“Management has an obligation to prepare the accounts of a company and the auditor has a separate duty to give an independent opinion whether the accounts  have been drawn up in accordance with applicable accounting standards, and  whether they represent a true and fair view of the company’s financial position”.

The traditional objective of an audit of a financial report is to enable the auditor to express an opinion whether the financial report is prepared, in all material respects, in accordance with an applicable financial reporting framework. Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements of the financial report will not be detected, even though the audit is properly planned and performed in accordance with relevant Auditing Standards. Therefore, if an auditor is to be separately engaged to perform an internal control review it is extremely important for management to remain aware of its primary responsibility, as stated above.