Audit Assurance

Audit, Assurance and Compliance

Executive summary

Considering that auditing is one of essential fact upon which all the institutions of Australia keeps on paying particular attention the following report have been made. The report deals with the methodical examination based upon the agreement of the organisation named Evolution Mining limited. This particular organisation is considered to be one of the lead gold miners in the Australian market as well the organisation that comes beneath  the  Stock Exchange of Australia. While the study was made, the requirements that were needed for auditing that was originally being exaggerated and within the countries grip. The annual report of Evolution Mining limited are taken into consideration and every matter that relates to auditing have been analysed. Towards the end of the study that is being conducted it can be said that Evolution Mining limited have gone through all the standards that are essential for auditing and also all the requirements are duly fulfilled.

Introduction

Among all the leading mining companies of the whole world, one among all the leading mining company in the Australian Market is the Evolution Mining Limited. This particular company is one of the lead producers in the field of gold production. The company has five gold mines in Queensland, Mungari and New South Wales that belongs to the company as a whole. Apart from mining, the company also has 49% of its involvement in the field of copper, silver and gold production in the upcoming years from a company named Ernest Henry. The study will be dealing about the total analysis how Evolution Mining Limited is holding a grasp of the various Australian auditor requirements. For doing so, the report of the whole year of the companies transactions will be analysed. The study include the essential matter related to auditing of the organisation and also the report that was made by the auditors. In the report being conducted, the play-role of Evolution Mining Limited’s auditor between the guarantee of the control environment and the financial statement will be dealt with.

Audit AssuranceImportance of auditing and auditing requirements in Australia

Among all the listed organizations of Australia, auditing is taken to be one of the essential part that is to be dealt with. Larger attention is given, to the various methods through which the improvement in the report that has been conducted by the auditor was conducted, considering the present situation and the last few years. According to the International Auditing and Assurance Standards Board or (IAASB), it is essential for all the organizations to deal with the “key-audit matters of the individual firms. These firms requires to provide the material that is required for a financial report in easy and simple English.

On the other hand, the requirements that are new, have been provided including the medium of various jurisdiction ‘s standard setters, for an example Australia and New Zealand, the rest of the jurisdiction have promised in issuing these standards very soon. Quite key standard number in the market of Australia the essential standards are also being prevalent to have a look at the improvements that are needed in the requirement for making a financial audit of the country. The ISA 700, 701, 720, 260, and 705   are considered to be the essential standards that have been set in the Australian market for making a proper audit in the finance statements of the firms. Thus, a conclusion can be drawn that auditing is of a greater importance not only for Australia but also for the listed companies in the Australian market.

Compliance of the auditor with the independence requirements and independence declaration

According to Ramsey et al. (2015), any individual auditor refers to either a Certified Public Accountant or CPA, or a Chartered Accountant or CA. Here their major role is to make an analysis of the finance records and the different transactions in the business of the organization with which they are not affiliated. The role that is played by the auditors essentially depend upon how the evidences are being analyzed that is gained from the individual information that the organizations provide. This information includes the position of finance, how the materials are analyzed, what the operation of the company results to and how is the cash flow conducted with the principles of accounting and standards. There are different standards that have been set to make a note regarding the individual company’s auditors of the organizations. The ISA 700 is the important international standard, where the organizations need to have statement regarding the auditors’ independence. Here, the responsibilities that are ethical should be relevant to the Code of Ethics. Adding to this, in the Australian market, there is a distinct declaration  that is to be given under Section 3073 according to the Corporation act 2001.

The detailed study of the full Evolution Mining Limited reports, it is easily understood the complains that has been brought from the independent declaration and the independent requirement of the auditors. This is due to the report that the director of the company stated and the audit services that the company gave can be easily compared to the general standards that are set for individual auditors. The study also shows that the company have given separate declaration of its independence according to the Section 307C.

The information gained from the auditors of the organizations are independent of the Evolution mining Limited. These information’s are all according to the standards that are set under the Corporation act 2001 and also under the ethical requirements that comes under APES 110. These information are also related to the finance report of the firm.

Independent auditor’s report

An independent auditor whose individual report for providing the results of the finance statements auditing also states the relevance of the reports has given a declaration. Individual auditors of the company made the study of the finance reports of the company. These reports reveal the individual opinions that the auditors had regarding the company. The auditors are of the opinion that the financial condition of the company is quite fair enough if compared with the corporation Regulations 2001 and Australian Accounting Standard.

Non-Audit services performed by the Auditor

The non-audit services indicates the services that are professional, which is given by the individual accountants within the given time span of the audit engagement. There are separate non-audit services that can also be given by the company such as the as basic accountant services, financial projection, preparation of budget,  preparation for the tax payment,  preparation to be done for payroll, planning of tax payments, preparation of the audit services, services of assurance and others as well. It is to be noted from the data that there are different non-audit services that are given by different appointed auditors.

Auditors’ remuneration

For auditing of the financial statements and annual reports, every organization pays its auditor a definite amount of cash as remuneration.  The company Evolution Mining Ltd is the leading, growth focussed company based out in Australian gold miner. The company operates in the wholly owned mines such as Cowal in New South Wales; Mt. Rawdon; Mt Carlton and Cracow in Queensland; and Mungari in Western Australia. Evolution company has economic hold on Ernest Henry, which gives 100 percent of future gold and  30 percent of the copper and silver produced from the agreed life of the mine area. Evolution has 49 percent interest in future cooper, gold and silver production from Ernest Henry. The company was created in the year2011 from the mid-tier Australian gold producer through the combiner of Catalpa Resources Ltd and Conquest Mining Ltd (“Evolution Mining – Australian Gold Company”, 2018). The company Evolution Mining Ltd’s yearly report states that the company has specified a definite amount of money as the remuneration for the auditors. In their report, it is mentioned in a separate area about its independent auditor Pricewaterhouse Coopers and its remuneration. However, this compensation is decided in the organization’s annual general meet and the board of directors of the organizations are responsible for fixing up the compensation of the self-governing auditors (Reid,  Mnguni & Le Bone, 2017).

Roles, functions and composition of the Audit Committee

Among the major operating committees, an audit committee is definitely one of the important committees, which is within the committees of board of directors of the organization. The audit committee of any organization undertakes several charges that it has oversee in the organization such as the financial reporting and the disclosure of the firm (Badolato, Donelson & Ege, 2014). Therefore, the role of the audit committee is diverse in a company. In the company Evolution Mining Ltd, the audit committee is responsible for analysing and evaluating of the yearly report. In addition to it, the audit committee of Evolution Mining Ltd looks into the process of disclosure and the process of financial reporting, monitor the alternative of selecting specific principles, and polices that the firm will need for the preparation of the financial statement (Cohen,  Krishnamoorthy & Wright, 2017).

The auditing committee of the company Evolution Mining Ltd has various important functions like reviewing of control mechanism and fiscal reporting. The yearly report reveals the composition of the company’s audit committee and it is notable that the company has non-executive directors in the committee. In the company Evolution Mining Ltd, the non-executive directors are Mr. Freestone and Thomas McKeith. Both of them are present in the audit committee of the company. In the committee, Mr. Freestone is chairperson, whereas Mr. Collins Johnstone is the lead independent director. Moreover, charter is not essentially found in the Audit committee.

Independent Auditors report to the members (shareholders)

The duty of the directors, auditors and the managers of the organization are different in the financial report of the company. From the company Evolution Mining Ltd’s self-governing auditor report, it is clearly stated that the tasks of the management and the other personnel are different from the duties that are in context of the financial report. The managers and directors of the company Evolution mining Ltd have the responsibility of ensuring that the financial report made by the management is accurate and true. Any frauds or unreliable means used in the report must not be overlooked during reviewing the report. The primary duty of the director of the organization is to review and grant the consolidated financial statements. Moreover, the directors are also responsible for assessing the ability of the group to continue its operations as ongoing apprehension. As per the role of auditor is concerned then their primary role is to evaluate the financial statements and form opinions on the authenticity of the financial statements and is not along with issuance of the auditors’ report with the inclusion of the opinion. The evaluation of the independent auditor report in connection to the function of the auditor, managers and the directors of the company Evolution Mining Ltd points out this differentiation.

As per the annual report of Evolution Mining Ltd’s analysis, there are no circumstances or matter has taken place in the material subsequent post the period of reporting. This may influence the operations and consequences of the group and can expect the following significant events-

  • The company evolution Mining Ltd settled on a subscription to $2.5 million shares based on the organization’s allocation in the upcoming Public Offering of Riversgold Ltd. Riversgold Ltd is a new company exploring the gold-focused.
  • The projects within Australia that the company Riversgold is deciding to sell or do a joint venture will have its first refusal right from the company Evolution Mining Ltd.

Review all the key audit matters noted and associated audit procedures

The company Evolution Mining Ltd’s independent auditor’s report points out its key audit cases and the procedures of audit related to it. The key audit matters determined are to account for Ernst Henry Mine has an upfront payment of $880 million that has been developed as the mine development asset post the audit of Group’s results. Moreover, the deferred tax assets have been recognized to be $57.744. On the other hand, the impairment losses are amounting to $148.6 million in connection to the carrying worth of the non-assets of Mr. Carlton. Given below are the key audit cases and their respective auditing procedures considered by the audit committee of the company.

  • Accounting for Ernest Henry Mine- the needs pointed out by the Australian Accounting Standards, which are the adequacy of the disclosures stated in note number 21 and the revenues has been recognized.
  • Impairment reversal of the non-current assets of Mr. Carlton- The group’s capability in usage of the deferred tax assets that has been made through achieving the computations of the taxable income’s forecast and the forecast of the latest budget of the board. Also, the reasonability of forecasting the taxable revenue is assessed and the accepted forecast and budget is evaluated with appropriate adjustments. Further, for the balances of the deferred tax assets, recalculations for it have been carried out.
  • Deferred tax assets recognition- the present year prices of the gold has been considered when the harm happened. Apart from that the present price of gold has been compared, the computations of the group are considered; analysis of the market data and lastly as per the need of the AAS, the competence of the disclosures has been carried out.

Conclusion

This study has all the discussions that is made in the report, which can be concluded that complying and implementation the requirements of the auditing that have been set in the nation important for the listed organizations of Australia. Further, it is also concluded that the company Evolution Mining Ltd has complied all the requirements of the audit as mentioned under the Australian standards and  the IAASB. The third party stakeholders, it is analyzed about the material information, which has been recorded by the company’s auditor that must be effective in nature. In addition, the way in which the auditing procedures has been executed, there must not be any hope of, missing or partly disclosed and explained material information and under-reporting. In the yearly general meeting of the company Evolution Mining Ltd, the audit of the company’s, financial statements must be improved is the follow-up question. From the overall report of this study, it can be stated the company Evolution Mining Ltd has embraced the important needs of audit in order to meet the auditing requirement and the set standard of auditing along with the essential information disclosure and independent auditor’s declaration.

References:

Asare, S. K., & Wright, A. M. (2012). Investors’, auditors’, and lenders’ understanding of the message conveyed by the standard audit report on the financial statements. Accounting Horizons26(2), 193-217.

Badolato, P. G., Donelson, D. C., & Ege, M. (2014). Audit committee financial expertise and earnings management: The role of status. Journal of Accounting and Economics58(2-3), 208-230.

Cohen, J., Krishnamoorthy, G., & Wright, A. (2017). Enterprise Risk Management and the Financial Reporting Process: The Experiences of Audit Committee Members, CFO s, and External Auditors. Contemporary Accounting Research34(2), 1178-1209.

Evolution Mining – Australian Gold Company. (2018). Retrieved from https://evolutionmining.com.au/

Griffiths, P. (2016). Risk-based auditing. Routledge.

Gul, F. A., Wu, D., & Yang, Z. (2013). Do individual auditors affect audit quality? Evidence from archival data. The Accounting Review88(6), 1993-2023.

Knechel, W. R., & Salterio, S. E. (2016). Auditing: Assurance and risk. Routledge.

Louwers, T. J., Ramsay, R. J., Sinason, D. H., Strawser, J. R., & Thibodeau, J. C. (2015). Auditing & assurance services. McGraw-Hill Education.

Reid, J. E., Mnguni, L., & Le Bone, N. (2017). Company information.

Simnett, R., & Huggins, A. (2014). Enhancing the auditor’s report: to what extent is there support for the IAASB’s proposed changes?. Accounting Horizons28(4), 719-747.

Stafford, T., Reans, W., Est, D. H. T., & Park, D. (2015). About the AGM.

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