Auditing and Assurance Services - Report Example

Auditing and Assurance Services Name Date Institution Regulations and laws applicable to VAH Intellectually property rights Companies are entitled to have a right in registering the logo and the name of the company under their company trademarks (Gilbert, 2008). This trademark is applicable to the company only to use on whatsoever they practice they wanted and any other organization cannot use the name and logos without the written consent of the virgin Australian holdings. Therefore, the logo, name and other properties are protected by the intellectual property right which is available for personal use only (Gilbert, 2008). Market information disclaimer regulations Companies have a law that govern its activities in the airline as regard to information. The company is not liable to any source of information that constitutes financial advice on websites since it does not publish its financial status on websites (Gilbert, 2008). The company do not accept any liability caused from any kind of investment decisions that is made basing on the information that was obtained from another website rather than the original company website (Gilbert, 2008). Identification restrictions In many states, organizations have the first priority to consider the potential capability of improving the total security in their organization (Gilbert, 2008). Companies are also subjected to strict measures in regard to the process of identification. The holding has put clear, effective and enforced regulations that will determine the acceptable standards one will be needed to have in order to board a flight (Gilbert, 2008). These identification restrictions are being applied at all major organization in the entire world. Prohibited items and liquid restrictions Companies have a simple procedure that offer a restrictive plan by restricting some items that are illegal at the airport section (Gilbert, 2008). The common prohibited and restricted items includes explosives, martial arts tools, fire arms and other sharp objects since they pose danger to the company. It is therefore a common structure to follow and adoption of this regulation will eliminate certain future damages and danger (Gilbert, 2008). Potential level of reliance on the overall control of environment at VAH The level of reliance at the virgin Australian holdings limited is high since there are many regulations to consider at the location of the organization. Customer loyalty programs basing on the availability of daily charges is high (Joanne, 2013, p. 177). Daily price levels at the virgin Australian holding limited (Joanne, 2013, p. 177). There have been high charges in the price level hence this reflects general on the type of customer loyalty programs available at the company. Corporate government’s statements about VAH According to Joanne (2013, p. 170), identification procedures are frequently done on the entrance to check for illegal components among people arriving at the airport premises. The construction safety officers identifies the worksite that and generates the plans and coordinating the risks reduction activities. The engineering concepts at the holding premises have greatly contributed to the building of strong and resistible structures that can uphold many tension forces against it (Joanne, 2013, p. 172). This is a major concern as stated in the corporate governance statements of the company. In regard to the financial performance, will record high fuel prices relative to the decreased consumer spending; this ensured that the company registered a lot of profit which came from the high customer base pending the increased competition with the response to the corporate government statements (Wainwright, 2013, p. 61). The stronger financial performance will always reflect with the cost control as well as to improve the revenue yield which was accredited by the increased reliance that was in control of environment. Planning materiality base and percentage (%) that could be applied to the VAH audit engagement Material guideline Income = 1.46 billion (Wainwright, 2013, p. 57). Net income before bonus =3.5 billion (Wainwright, 2013, p. 57). Revenues or expenses for non- profit entities = 0.41 billion (Wainwright, 2013, p. 57). In calculation of the material base, this will make the difference to the users since an audit will never provides a 100% of assurance if the company has over stated its revenue which will be considered as immaterial (Hergert, 2009). However in the process where the revenue has been stated clearly without any errors then it is considered material. 5% of the income = 5/100 of 1.46 = 0.365 billion Percentage material base = 36.5% The percentage of the company is 36.5%. When the profits before taxes from the company are continuing in a volatile, the other benchmarks will be appropriate for example the gross profit or the total revenue for the company will also be appropriate (Hergert, 2009). During the audit, auditors will track down the misstatements from the summary of the unadjusted errors (Hergert, 2009). Materiality allocation Auditors have to assign a lower level of material to all accounts of the company that have been balanced with the current financial statements to improve the performance of the auditing procedures (Hergert, 2009). The rationale in the material allocation existed with several errors within the financial statements that would result in lower level of materiality for testing balances that occupied higher risks of misstatement at the company (Hergert, 2009). Conclusion Companies have the potential growth in both the customer base as well as in the financial sector through its service rendering which it has gained reliance feature from its operation (Gabriel, 2014, p. 45). Many customer and employees from all departments have created awareness that including auditing of the company financial statements to enable the public in understanding the company progress as well as the revenue collection. References Gabriel, Y. T., Richard, S, O., (2014). Building a sustainable business: Financial performance, journal of Virgin Australia holding, vol. 3(12), pp. 45-78 Gilbert, S., (2008). Laws and regulations relating to poisoning, imperial mineral resources bureau, London: H.M. Hergert, W., Ernst, A., Dane, M., (2009), Computational materiality computation: computation and allocation, Pearson publishers, New York: N.Y. Joanne, E. H., Wayne, G. K., Elizabeth, A. W., (2013). Generation of identification procedures, European journal of immunology, vol. 12(3), pp. 170-233. Wainwright, S.L., (2013). Security and safety, Journal of airport management, vol.2(4), pp.56-89. Business Risks Factors That’s Need to be considered for VAH Audit Engagement Name Date Institution Business risks Introduction Many business companies are faced up with a potential ability of being affected up by the business risks (Wainwright, 2013, p. 56). Businesses would like to venture into the business activities while taking risks of those opportunities which in the long run of the business would achieve its objectives while minimizing non-essential risks at the company (Wainwright, 2013, p. 56). In another words, the company needs to control and manage the risks to achieve company satisfactory objectives. Types of business risks considered for VAH auditing engagement Market risk In market risk, there is fear in the changes of market prices that includes foreign exchange rate, fuel prices, equity prices and interest rates which will affect the income and value of the financial instruments of the holding (Wainwright, 2013, p. 56). All businesses in the world normally have to take risks probably on the adverse circumstances that will come through and also with the cost accompanied by it. These two forces create the market risk that business organization has to pass through. However the market risk needs to be controlled. The objective of market risk management is to control and manage the market exposures within the tolerances (Arthur, 2009). Credit risk Credit risk refers to that risk that a borrower will have a debt by failing to make the required payments I a stipulated time frame (Neil, 2012. This risk normally involves that of a lender who lost a majority of the interest and principal, cash flow disruption and high rate of increased costs collection. This is a type of risk that is based on the financial loss when a counterpart or a customer to a financial institution fails fail to meet there obligations as part of their trade debt (Arthur, 2009). Loses that are gained maybe incomplete or partial. In order to reduce the credit risk the lender will have to perform a credit check so as to reflect on the amount of debt they have. This risk is done to create an exposure to credit by investing on the maximum credit in order to assess the credit performance. Liquidity risk This is the risk that the group will be unable to meet the financial obligations of the holding as they fall due. This is to ensure that there is maximum liquidity to ensure that there is always a sufficient liquidity ratio to satisfy the liability due (Arthur, 2009). This risk will ensure the company does not incur unnecessary losses or risking damages. Interest rate risk It’s a risk that is related to the borrowings that are floating periodically which are occasionally as a result of the aircraft loan facilities. This risk ensures that interest rates are swapped for floating rates into fixed rates (Arthur, 2009). Foreign exchange risk This is the risk that arises from the holding entering into contracts with countries to hedge a proportion purchase of commitments from other foreign currencies (Wainwright, 2013, p. 57). VAH auditing should engage this risk so as to anticipate future purchases of the current budget commitments. Commodity price risk This risk is based on the nature of the commodity purchase price that is anticipated from the purchase commitments of the airline fuels (Wainwright, 2013, p. 73). In a company’s auditing sector, commodity price risk is essential in determining the market value of a business. Operational quality risk This is a general risk venture such as when the website network goes down. It gives information about the failures in operations at the company (Wainwright, 2013, p. 77). The company auditing department engages operational quality risk to realize better service delivery in the company. Corporate governance risk Corporate governance refers to the process and mechanism where corporate bodies interrelate to each other. Its governance structures identify the distribution of responsibilities, duties and rights towards many different co-participants in the corporation (Neil, 2012. The practices include the procedures and rules for enabling and making decision in the corporate body. This risk assists the board in providing strategic guidance and an effective oversight of management (Wainwright, 2013, p. 80). It is responsible for setting out directives, strategies and financial objectives of a company as part of the auditing function. Therefore in conducting an audit, corporate governance risk must be engaged to be able to understand the procedures and rules. Compliance employment law risk This is the risk that is associated with the non compliance of employment related regulations and laws within the organization. The auditors at a company should engage in this employment law compliance so that they cannot fall short on any liability caused due to lack of observance to this law (Wainwright, 2013, p. 81). Reputational employer risk This is a risk that is associated with the attitude of gaining bad reputation as an employer hence it will be difficult to recruit top talents to work in the organization (Henry, 2012, p. 30). A company has to audit all the company information and provide relevant sources of information that will not mislead the public. Accounts at significant risk On account of interest rate risk, this account is faced up with risk since when there is a change in the interest rates being charged there will be a decline in customers to engage in services of the company. To assert on this a market study will be applicable. Market study will determine the right interest rate for a company at a certain period (Henry, 2012, p.25). Liquidity is at risk since many businesses are venturing into business activities; there is a risk of having inadequate amount of cash to facilitate daily transactions. Auditors have to analyze the liquidity ratio are to use in the business through market study (Henry, 2012, p. 27). Market study will depict the size and classification of ratio to use. Market risk account is also on high risk. This is because when there is a change in prices it is likely to be changes in the number of customers. Auditors have to analyze the information through the financial income statement. To assess this situation, a balance sheet has to be prepared to know the standing of the company (Henry, 2012, p. 28). References Arthur, Anderson, (2009). Managing business risks: an integrated approach, economist intelligence unit, New York, N.Y. Henry, A. S., (2012). Risk management, Journal of risk management in financial institutions, vol.12(2), pp.23-43. Neil, R., (November 2012).Virgin Australia holding limited (ASX: VAH), 2012 annual general meeting, vol.1(2), pp. 1-13. Wainwright, S.L., (2013). Security and safety, Journal of airport management, vol.2(4), pp.56-89. Read More