Auditing Assignment Example | Topics and Well Written Essays - 1500 words - 2

Auditing - Assignment Example sely, the primary purpose of the accounting framework is to ensure that the users of financial information are provided with user-friendly information. This assignment seeks to present the concept of the audit, audit risk, and substantive audit procedures based on the case of Applied Graphene Materials PLC. Based on the company’s financial statements, first, three areas of heightened audit risk will be identified, and a quantitative analysis provided. Second, in relation to one of the identified areas in the first part, five substantive audit tests will be identified together their significance (Foster & Greenawalt 1995, pp. 1-5). The company analysis can take two approaches. That is the providers of funds and the controllers of the funds. Funds are provided by stakeholders such as shareholders, creditors, and other entities. The categories of stakeholders that are responsible for the management of funds are directors and managers. From the statement, the providers of funds are different from funds managers. Therefore, fund providers require a report on how funds are being managed over a period, usually one year. However, the information contained in the financial statement may lack credibility for the following reasons: the information may contain errors; it may not disclose any fraudulent act; the information may be inadvertently or deliberately misleading; and the information may not disclose all the material information. It is a daunting task to prepare financial reports, especially for large companies with several subsidiaries that adopt different accounting practices. The process of consolidating the financial information of large companies such as Applied Graphene Materials PLC creates a breeding ground for multiple errors, fraud, and omissions. It is, therefore, the responsibility of the auditor to verify whether the company’s financial statements are free of error, fraud or material misstatement. That is, whether the information presents a true and