Accounting Theory and Current Issues Audit Process

Question: Discuss about the Accounting Theory and Current Issues for Audit Process. Answer: Introduction As per the given case study, the report addresses the conditions needed to be included for the development of audit process of Bio Sustainable Feeds Limited. The report includes the predetermined conditions for the amendment of the audit, which shows the important feedbacks from the previous legislative activity imposed by BSF Limited. The various contributions made by the previous auditors are taking into account for the purpose of the termination of unethical activity in the overall audit process. Furthermore, the report considers the inherent risk factors for consideration of the audit risk parameters. The report also takes into account the internal controls during the audit process. It is vital for an individual to understand the integrity of the audit services and the various factors associated within it. The most important service is considered the initial screening process of the clients before finalizing the offers. The involvement level of the client will be also related to the different service of the non-auditory procedures. Hence, the study takes into account the regulatory controls, which is required for enumerating the important ethical framework for the various types of auditory services. The audit services should also consider the factors adhering to the audit risk while the preparation of the audit report. The quantum of the risk level has been reflected through the historical data interpretations and the analysis done on the financial data of the company. In the recent times due to the increase in the fraud is related to auditing important to consider a reliable framework for addressing the unethical behavior in corporate practices. The unethical b ehavior refers to incidences of reporting our decisions, which has material misstatements. It has been further seen that the increasing level of agency cost has shown conflicts with the interest considered for the subject and further alleviated the problem of the present study. In order to address the various level of risk report has been designed to categorize the inherent risk are the pre-existing uncertainties of BSF Limited (Krishnan Wang, 2013). Factors necessary for audit engagement and acceptance The primary factors considered for the acceptance of the auditory procedures are directly related to the investigation done at BSF Limited. Furthermore the past records of the company has been able to review the financial status of Bio sustainable feeds Limited to confirm and assured that there is no criminal proceedings against the company. The consideration of the members at reputable positions such as Chief Financial Officer, Chief Executive Officer and the Chairman of the company has been also included for the purpose of evaluation of the audit engagement (Krug, Rabczuk, Cenian, 2015). The different information on the regulatory actions put an augmented emphasis on the shortcomings of the control mechanisms. Hence, the consideration of the previous information is necessary for taking the ferry measures in the internal control system and ensure structural efficacy. The high amount of attrition rate has also suggested on the inefficiencies of the internal structure of Bio sustainable feeds Limited. For the purpose of previous analysis several companies such as HIH Insurance, One. Tel and Enron have been considered for the reliance on the opinion of the various types of external audit services (Pelkmans et al., 2012). Procedure for risk detection and suggesting of control techniques for inherent risk The study considers the research done by Bio Sustainable Feeds Limited and studying the existing uncertainties, it has been considered in the audit report. The main risk is considered in the inherent risk which includes misstatements both in the financial and the nonfinancial data and exclusion of several important components of the inherent risks in the report. The main considerations for the shortcomings in the control risk or due to the lack of facilitation in the internal control system and several issues related to material misstatement in the data (Ato.gov.au., 2016).The control risks are also seen in form of the falsification of accounting information in the clients books. Based on different findings the factors detrimental for the sustainability and profitability of the firm are mainly due to the breach of ethical standards, which are essential for the auditory process. Some of the important factors also relates to the procurement of information on different types of relationships, which is being enjoyed at Bio Sustainable Feeds Limited (Rotherham, 2015). It has been further observed that the control risk or as a result of the material misstatement and various types of issues related to the control system. The control risks a report to the risk, which are because of the non-detection of the important components related to the internal control system for auditing. In order to curb the fraud it is important to understand the requirement of internal system and formulate a plan accordingly (Meissner et al., 2013). The audit risk computational formula is mainly done through the following process and the calculation for the same is shown below as follows: Audit Risk = Inherent risk*Control Risk * Detection Risk Or, Audit Risk = (0.9*0.05*0.80)*100 = 0.036*100 = 3.6% At present BSF Limited has shown several shortcomings for the control risk and the internal risk controls due to the increasing problem of material misstatement. Although the inherent risks are observed to be the highest, the control mechanisms should focus on reducing the risk level. The overall analysis has further shown that the risk level index of the company currently stands at 3.6%. Factors, which needs to be considered in the audit engagement program of BSF Ltd The audit process needs to consider the rules in relation for meeting the different types of audit objectives. It has to consider the audit module for the verification and examination of proper presentation of data along with depicting the appropriate relationship of the steps with one another (Nmfs.noaa.gov, 2016). The audit engagement program to consider including the following factors in the business information through the following procedure as suggested below: The consideration of the previous record is crucial for the audit process and making an investigation at Bio Sustainable Feeds Limited It is also essential to take into consideration the various types of modules necessary for student safety of the research and making the history modification in the overall audit program, which are in line with the laboratory activities for the development, and making research for the fish feeds. The company should consider the recognition of activities for coordinating with the audit procedures and taking important steps for carrying out the audit engagement at Bio Sustainable Feeds Limited (Blay et al., 2014). Fourthly, it is important to take into consideration the minutes of the meeting and implementing the same in the development activities It is also important to assess the findings and verification of the same for requirements of the employers in the firm. The company should ensure that that assessment has been made as per the specified regulatory authority of the audit committee. The findings need to be further made sure to comply with the audit assurance performed in the previous year at BSF Limited. Furthermore it is important to include any sort of unfavorable outcome we has been discussed with the management and seem to be feasible for addressing to such problems. The company should make sure that the location of authorities done at all level when the financial report is being prepared. It is important to ensure the disclosure policy as per the specific standards It is also important to examine the external structure of the company The company should furthermore consider the verification process for the purpose of examining the various types of the developmental procedures carried out at Bio sustainable feeds Limited (Nmfs.noaa.gov., 2016). Auditors Concerns related to Journal Entries The general purpose for the financial report for the developmental activities of the company has been prepared in accordance with the conceptual framework of AASB 1011. Although the standard has been considered, it is difficult to distinguish the various cost categories under the natural science and social science for the various types of disclosures as stated under AASB 1011. In addition to this, the aforementioned standard also includes those concepts, which are highly sensitive to the preproduction activities (Gong, J.J., et al., 2016). The basis of the given case study it has been found that BSF Limited has considered research and the developmental works as a primary focus for the manufacturing of feeds of aquaculture. The various sections of the related research activities are related for the purpose of production of enhancement made in the fish based feeds. In the given case study the expenses are significant for including the various types of research and developmental activities as per the standard provided by AASB 1101. As per the given case 40 % relaxation has been granted by the government which is further applicable in the financial year of 2014-15. Bio sustainable feeds Limited is further observed to benefit from the offsetting of the tax amount settlement, which had amounted to more than $ 20 million every year. It has been further observed that BSF Limited has settled for an amount of $500 million AUD from Commonwealth Scientific and industrial Research Organization after spending of $100 million, AUD an nually which is in context to the various alternative of aquaculture feeds. Can be further suggested that the payment for such a grande is dependent on the advance amount and hence this amount is to be considered as prepayment as per the conditions prescribed by the company (Cpaaustralia.com.au., 2016). Similarly, for the purpose of preparation of the journal entries, preconditions provided by the Government of Australia have been considered as expenses for research and capital for patents. Year Particulars Amount (Debit) Amount (Credit) 2013 Cash A/C 500000000 To CSIRO A/C 500000000 (Being cash received from CSIRO for development activities) 2014 RD A/C 360000000 To Cash 360000000 (Being cash spent on research and developmental activities) 2014 Plant Feed A/C 360000000 To RD A/C 360000000 (Being being payment made for plant-based feed) 2015 RD A/C 160000000 To Cash A/C 160000000 (Being cash paid to the research workers) 2015 Development Costs A/C 160000000 To RD A/C 160000000 (Being expenses incurred for the various types of research and developmental activities) Arguments pertaining to the amendment of triple bottom approach The main arguments have been found by the scientist by seeing the scope of improvement for new research and developmental avenues and making the fish farming more sustainable by cutting back on feeds made from fishes and replacing the same with blonde based feeds known as the alternative strategy. This is recognized as an alternative strategy for providing adequate nutrient requirements for increasing the net volume of fishes and overall enhancement of potential for fish farming (Spence Rinaldi, 2014). Due to this fact, the transformation has taken place in fish farming by putting an augmented focus on high-protein feed from trout, salmon and shrimp. This is been further observed to encourage the growth potentiality due to supplemented omega 3 variant. For considering several other arguments, it is important to consider lipid rich pallets which is considered as highly beneficial for consumption by humans. The broader perspective takes into consideration the improvement of the defici encies related to the bones of fishes. Some of the significant changes have been observed in the field of reduction fisheries, this is due to the result of overall marrying growth and production of the fishes. The research studies have further stated that the several types of feeds based on agriculture has shown changing pattern due to the inclusion of canola, Glutton and soya beans, which are also identified as potential sources of proteins. Hence we can state that company can significantly decrease the overall amount of cost by including fish based feed (Gustafsson Wikner, 2015). Evaluation on prospectus: The prospects the evaluation of BSF Limited shows that the company has not considered the different information relevant to patents when it was engaged in the evaluation of technology for the treatment of bacteria during the methane production process. The case study also indicates that Bio Sustainable Feeds Limited has faced major drawbacks due to inclusion of bacteria based feeds. In several locations it has been incorrectly assumed that the company has restricted the privileges for the application of bacteria based feeds and owning of the patent for bacteria based technology. Hence, it is not appropriate to consider the producers to manufacture such a feed, due to inappropriate rights. It has been further shown that the growth potential of the company has seen to be decreased due to the scarcity in the fishes and various types of removal of fish feeds an alternative consideration can be found for nutrients (Porter et al., 2013). Conclusion The report shows that BSF Limited has taken several initiatives for sustainable aqua cultural feeds from the last 20 years. Hence the study suggests the various types of considerable treatment which can be made by the government in supporting the developmental activities. The report clearly states the various types of facts related to the environmental impacts and the social facet in terms of inclusion of the research activities for the purpose of discovering fish food nutrients and at the same time ensuring continuous growth in fish farming all over Australia. Based on the case study it was found that the company has showcased the research and developmental operations by considering various types of scientific expenditure which are in accordance with the audit engagement programs and the present guidelines stated under AASB 1011. It has been further observed that the company has been able to procure the various types of tax relaxations which have been provided by the Australian gove rnment. Hence, it can be concluded by saying that the 45% of the tax relaxation provided by the government to the company needs to be fulfilled for carrying out development activities for aqua based feed and plant-based feed based on the concessions. Reference List and Bibliography Ato.gov.au. (2016). Research and development tax incentive - offset | Australian Taxation Office. 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