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Executive Summary

The astounding examination on the significant centrality of the association has been acknowledged through which one of their closest to perfect quality based evaluations. The survey-based assessment a conclusive way through their capacity evaluation has been mulled over that could be helpful keeping gotten to ability related to the best in class area. The tempest assessment related to the account of the risk and the organization has been acknowledged by the studied tremendousness. The exhibited evaluation and its related tremendousness would be critical for the broad systems.

The more raised measure of procedures and this level of significant worth based satisfaction has been acknowledged through its past and prior yearly reports. The unquestionable, similarly as vague assets, has been given through which most of the working criteria has been issued. The better approaches and its level best zones have been gotten a handle on through the examination. The higher quality and higher ability have been evaluated through the procedure of senior chiefs to be managed.

Table of Contents

Introduction. 4

  1. Result of analytical procedure. 4
  2. Risk of Material Misstatement (Inherent Risk) at the Financial Report. 7
  3. The integrity of management. 7
  4. Management experience, knowledge and changes during the period. 7
  5. Unusual pressure on management. 8
  6. Nature of the entity’s business. 8
  7. Factors affecting the industry in which the entity operates. 9
  8. Risk of Material Misstatement (Inherent Risk) at the Assertion Level 9
  9. Explain why the account balance is at significant risk of material misstatement. 9
  10. b) Explain the key assertion at risk of not being valid. 9
  11. c) Detail one (1) relevant substantive audit procedures to address the assertion at risk as identified in b) above 10
  12. d) Detail one (1) relevant practical internal controls that would mitigate the risk in relation to the assertion at risk 11
Conclusion. 11
Reference list. 12

Introduction

The amazing investigation on the important centrality of the organization has been appreciated through which one of their absolute best quality based appraisals. The review based evaluation in a definitive direction through their capability appraisal has been contemplated that could be useful keeping gotten to capability identified with the up and coming section. The storm cellar identified with the dangers account and the administration has been appreciated according to the surveyed hugeness. The presented appraisal and its related hugeness would be significant for the extensive methodologies.

The more elevated amount of methodologies and this degree of value-based fulfillment has been appreciated through its previous and earlier yearly reports. The unmistakable just as impalpable resources has been given through which the greater part of the working criteria has been issued. The better approaches and it is level best areas have been grasped through the appraisal. The higher quality and higher capability have been assessed through the methodology of senior supervisors to be overseen.

1. Result of the analytical procedure

Fortescue Metals Ltd has managed to maintain appropriate business performance per year. With the assistance of key ratios such as gross profit margin, net profit margin, operating profit margin, current and quick ratio, the financial performance of the company can be calculated properly in the market.

Particulars

2017

2018

2019

Gross profit margin

42%

28%

49%

Operating profit margin

41%

27%

48%

Net Profit margin

25%

13%

32%

Current ratio

1.2

1.3

1.4

Quick ratio

0.9

0.6

1.0

Table 1. Calculation of key ratios of Fortescue

(Source: Fmgl, 2019)

In relation to the above discussion, it has been clear that the business organization has been capable of maintaining appropriate business performance in 2019. Even though the financial performance of the company decreased in 2018, potential business performance has stabilized in 2019. In addition, it has been seen that the organization expanded its cash assets based on the high sales revenue in the year 2019 (Fmgl, 2019). It can help the organization in gaining competitive advantage and maintaining appropriate performance per year.

In relation to the gross profit margin, it is seen that the company failed to increase its management effectiveness in 2018, which has decreased the potential profitability rate. Nonetheless, as the senior executives have properly evaluated the financial statement, the potential profitability rage has expanded rapidly. Similarly, as the potential gross profit margin has developed in 2019, both operating profit and net profit margins have increased.

It has helped the business organization in avoiding additional economic loss in recent years. Moreover, the company may avoid unnecessary market liabilities in the upcoming years. Finally, the liquidity ratios such as quick ratio and current ratio have shown that The Fortescue Metals Ltd was unable to increase the liquidity of assets in 2018. As the amount of the assets has decreased compared to the market liabilities, the potential crisis has constantly expanded. However, the senior executives of Fortescue Metals Ltd have evaluated the current situation and taken appropriate action to mitigate the issue. It has helped to improve the rate of current ratio in the year 2018.

In relation to the above discussion, it can be stated that the organization has stabilized its market position in the current year. However, the unnecessary losses in 2018 had forced the organization to take implement appropriate management strategies. The senior executives of The Fortescue Metals Ltd had hired an external group of auditors who were capable of evaluating the business effectiveness of the company.

Based on that, the potential business performance of the organization has improved in the future. In addition, in 2019, the effectiveness of audit management is improved as both internal and external auditors review the financial statement. The review of both internal and external auditors has helped in improving the quality of audit evaluation. Therefore, the potential crisis of the company can be reduced in an effective manner. In addition, the organization can be capable of providing appropriate business performance per year.

2. Risk of Material Misstatement (Inherent Risk) at the Financial Report

a. Integrity of management

The company FORTESCUE METALS LTD has been one of the extraordinary company in the field of mining and iron ore. The iron ore extraction and it's to the point-based assessment has helped the company to be one of the growing companies in the country. The assessment based on the internal, external risks assessment has been one of the high-level growth.

The managers and the director has been managed through the internal and external assessment of the company basic. The DirectorMR, Andrew Forrest has been oneof the extraordinarydirectors who have their eligibility to be consistently raised (Dai & Vasarhelyi, 2015).

The responsibility and the share of management have to be comprehended through the share of professionalism which is based on having much of the actions which could be maintained as per the high-quality standard that has been utilized. Thee healthy and strong bond has been very quality based work has been implicated in the recent future. The proper essence in the key satisfactory has been taken within the management. The high quality of team management and it's levelbasedcomprehensiveness has bene managedthroughpropercomprehension.

b. Management experience, knowledge and changes during the period

The management of the company has been promised to be one of the better prospects which would be meaningfulthrough the direct and indirect analysis in perspective.   The verycomprehensive and very meaningful analysis has been down through the step byestoes showcases its level of apprehensive through the proper significance. The high quality and it's level best assessment in the correct and enhanced procedure thee ASX governance council has been taking participants through the better approach to take its perspective in the higher quality.

The transparency, such as the direct client basis of approach and its Lela based section using it for r a higher level. The better ambitious sectionscut as the level of management and it’s too the point-based management has been very accurate. The cost-saving method as been taken into consideration which couldbe utilized through their integrity and empowerment. The high performance-based work and its development have been comprehended through the high quality of management to be processed. The principle and operation have been concurrently utilized in the respected position.

The ethical and unethical based world has been handled by the governance Amanda the sustainability-based framework that has been done in the company. The careful consideration and it's level based approaches have been considered to be one of the better aspects which could be the best significance (Smith & Van Der Heijden, 2015).

The ultimatesignificance ofthe level best apprehension and its related apartment has been managed as per the ultimate significance in terms of the bettersegregation. The high quality of management push cam the HR management and the audit based management has been taken into consideration which could be easy for the better assessment and establishment of the company. The diversityand its reliability of maintaining the balance have been comprehended through which most of the suckered measure has arena considered to be produced.

c. Unusual pressure on management

The pressure which has been kept on the management in terms of more and more amount of profit within the less spading of time act have to be processed through its level best of comprehension. The utilization and the different types of appointment, such as the sisals and exposure of permeability has been utilized through powerfulmanagement.

The proper assignments such as non-executive and executive based management has to be comprehended through the senior chair and the person who is encouraged through the betterment of the perspectives. The remuneration and its perfect assessment have been effected through its proper acceptance, and its proper Percival has been comprehensively managed. The better assessment and its related level of aperture has been grown through which it could be meaningful through the internal approaches.

The directors and the executive management are the main responsible assessment which could be meaningful through the allover existence through the level of approaches. The board committee has created the intensive pressure and it's level based approaches through the governance of the company. The estimated growth of the company is based on having particular things to be adjusted with the precedence. The high performance-based pressure and it's relevance significance which could make the engagement of the growth a bit more.

d. Nature of the entity’s business

The business has been owned by the company founders and chairman with the minimal amount of shares that has been precisely controlled within the context of approaches related to the enhancement. The business has been considered by the enhancement of individual entire sand he overlaps properties and share basis of development has been taken into consideration though the total amount of sales within the statement.

The entity of the business is being considered with the business which is purely making money through the internal and external announces. The dividend and share basis of portion has been taken into consideration which is based on having the consideration to be signified.

e. Factors affecting the industry in which the entity operates

There are several types of factors which could have a direct and indirect effect that might b be the high-quality basis of advancement in terms of the betterment. The effect of entity operation and is probable specs such as the rate of growth has been exempted through which the allover significance in the growth margin would be considered.The entities such as the tiered approach of business the good and the other export-related stuff are related to bee take through the higher approaches in terms of getting better in quality.

The GDP and the other financial-based sections are being considered as per the total amount of consideration through their work approaches (SimMet, Carson & Vanstraelen, 2015).

3. Risk of Material Misstatement (Inherent Risk) at the Assertion Level

a. Explain why the account balance is at significant risk of material misstatement

The higher risks of the market opportunities have been explained in terms of misstatement, which has been done in the corrective procedure.  The statement which might be beneficial for the company could put in risk, and those who might not be risk could be created to view them as a risks ionthe potential statement.

The Company, however, has sole confidentiality to the company director and the manager as per the comprehensive management of the initial and final stage of assessment.  In terms of the significant assessment of the company current assets as liabilities, the entries must have to be intheir particular position (Beard et al. 2019). The particular position such as the high-quality basis of their improvement through the estimated approaches.

The assets could be highly imposed in the profit and sides of the company, which is very helpful for the best possible management in the company based attainments. The high quality based approaches could be highly utilized in the proper process of management.

b) Explain the key assertion at risk of not being valid

Account name

Explanation

Audit assertion

Other current assets

The amount has been lowered in terms of the previous year, which has explained the chance of misstatement has been grown.

Proper data needs to be collected from the senior executives based on the transaction. It will help to identify the authenticity of the other current assets, and the actual amount can be recorded.

Property, plant, and equipment

The amount has been lowered in terms of the previous year, which has explained the chance of misstatement has been grown.

Proper data needs to be collected from the senior executives based on the transaction. It will help to identify the authenticity of the property, plant, and equipment the actual amount can be recorded.

Intangible assets

Even Though the intangible assets have been increased, it is clear that the intangible asset is extremely low compared to the other assays. Therefore it is needed to be reviewed for the auditor.

The auditor can collect the data from the managing director and make it look more authentic.

 c) Detail one (1) relevant substantive audit procedures to address the assertion at risk as identified in b) above

Other current assets

Inquiry

The other assessment has been one of the better quality basis of calculation and their approaches which could be effective after observation. The process of observing the assets will be having the correct amount of auditor to be ensured. The value has to be much higher than other values. It could be highly reliable than other things.

  • Property, plant, and equipment
  • Observation

The observation is needed to be done with proper care which is needed to be observed through the ultimate significance in terms of the equipment based on the outer level of significance. The application of maintaining the equipment is based on having bettersignificancethrough the ultimate assessment for the better assignment. The proper implementation through better applications has been corrected through its related management.

  • Intangible assets
  • Recalculation

The recalculation has been considered through the proper implementation and ditto we point-based assessment needed to be concerned.

d) Detail one (1) relevant practical internal controls that would mitigate the risk in relation to the assertion at risk

The different types of duties. And calculation must have tobe utilized through which the heavy and accumulate analysis could be utilized. It is needed to be precisely managed through which the better services are needed to be managed as per the document assessment. The high levels of assessment through the intermittent level of assessment in the convenience assessment.

Conclusion

 The high-quality analysis of the relevant significance of the company has been comprehended through which one of their very best quality based assessments. The audit based assessment in the ultimate guidance through their proficiency assessment has been taken into consideration that could be helpful in keeping accessed proficiency related to the upcoming segment. The basement related to the account of the risk and the management has been comprehended as per the assessed significance.

The conferred assessment and its related significance would be very relevant for considerable approaches. The higher level of approaches and this level of quality based satisfaction has been comprehended through its former and prior annual reports. The tangible, as well as intangible assets, has been conferred through which most of the working criteria has been issued.

The better approaches and it's level best sections has been comprehended through the assessment.  The higher quality and higher proficiency have been estimated through the approach of general managers to be exclusively managed.

Reference list

  • Barr-Pulliam, D., Brown-Liburd, H. L., & Sanderson, K. A. (2017). The Effects of the Internal Control Opinion and Use of Audit Data Analytics on Perceptions of Audit Quality, Assurance, and Auditor Negligence. Assurance and Auditor Negligence (August 17, 2017).
  • Beard, J., Coram, P., Espahbodi, R., & Mock, T. J. (2016). Does recent academic research support changes to audit reporting standards?. Accounting Horizons30(2), 255-275.
  • Dai, J., & Vasarhelyi, M. A. (2017). Toward block chain-based accounting and assurance. Journal of Information Systems31(3), 5-21.
  • Edgley, C., Jones, M. J., & Atkins, J. (2015). The adoption of the materiality concept in social and environmental reporting assurance: A field study approach. The British Accounting Review47(1), 1-18.
  • Fmgl. (2019). Retrieved 20 September 2019, from https://www.fmgl.com.au/docs/default-source/annual-reporting-suite/fy19-annual-report.pdf
  • Hardan, A. O., Mohamad, N. R., & Salleh, Z. (2016). Human capital antecedent's: The impact of the implementation international standard on quality control1 isqc 1 on the audit firm performance in Jordan: A conceptual study.
  • Kachelmeier, S. J., Schmidt, J. J., & Valentine, K. (2017). The disclaimer effect of disclosing critical audit matters in the auditor’s report. Working paper.
  • Kowaleski, Z. T., Mayhew, B. W., & Tegeler, A. C. (2018). The impact of consulting services on audit quality: An experimental approach. Journal of Accounting Research56(2), 673-711.
  • SimMet, R., Carson, E., & Vanstraelen, A. (2016). International archival auditing and assurance research: Trends, methodological issues, and opportunities. Auditing: A Journal of Practice & Theory35(3), 1-32.
  • Smith, S., & Van Der Heijden, H. (2017). Analysts’ evaluation of KPI usefulness, standardisation and assurance. Journal of Applied Accounting Research18(1), 63-86.

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