AUDITING AND ASSURANCEPRESENTED BY

Jaya Sidhu Dian Wang Smita Sinha

AUDIT RISK

Inherent risk

Detection risk

Control risk

INHERENT RISK WOOLWORTHS LTD

• Closing inventory value for supermarket and wine business;

• Cash balances for potential misappropriation; and

• Purchase transactions for all business units

TOTAL ENDING BALANCE

Account Balance(in millions)

% of error allowed

Inventories $849.2 2

Cash $4,205.4 5

Accounts payable $4,080.0 5

ASSERTIONS

AccountAssertion

testedAudit evidence

Audit procedure

Inventories

• Completeness of inventory

• Valuation• Existence of closing

balance

• Purchase order• Receipts• Recalculate

inventories

• Trace opening• Vouch purchase

order• count inventory

Cash• Occurrence of sales

and payments• Existence• Completeness

• Bank Statements• Bank Confirmations• Cash receipts and

payments journal.

• Obtain written confirmation

• Trace cash

Accounts payables

• Occurrence of purchases

• Existence of invoices• Completeness of

purchasing procedures

• Invoices• Bank Statement• Journals and

liabilities account• Written confirmation

from creditors

• Trace opening balance

• Obtain lists of suppliers

• Inspect invoices

CONCERNED AREAS

Items 2013 2012 2011 2010 2009

Selling, general and admin expenses

$9378.6

$8671.6 $8417.7

$8053.9

$7768.8

Receivables $985.2 $894.4 $778 $672 $467

Net cash flow $4 -$674.4 $806.2 -$33.3 -$7.9

AUDIT PROCEDURE

AccountAssertion

TestedAudit Evidence

Audit procedure

Selling and general

expenses

• Occurrence of expenses

• Accuracy of expenses

• Presentation disclosure

• Invoices• Journal entries

• Trace expenses• Vouch for entries• Inspect invoices

Receivables• Occurrence of sales• existence of

customers• Accuracy of amount

• Written confirmation from debtors

• Bank Statements

• Trace opening receivables

• Re-perform calculations

Net Cash flow

• Existence of cash receipts and payments

• Classification of payments and receipts

• Sales of business units

• Interest paid on liabilities

• Trace opening cash flow to previous years

• Inspect documents

AUDIT OPINION• Unqualified opinion: clean opinion without any

wrongdoing.

• Qualified opinion: encountered one or two situation with misstatement.

• Disclaimer opinion: considerably misstated and have extensive impact.

• Adverse opinion: lack of independence and conflict of interest.

AUDIT OPINION

• Issued Opinion: Unqualified

• Qualified opinion could be issued based on the inherent risks we encountered and concerned arrears we found out.

AUDIT COMMITTEE

• The Board establishes the Board Committee to perform certain of its functions

• Nomination Committee• Audit, Risk Management and Compliance

Committee• People Policy Committee

• Woolworth's audit committee is composed of majority of non-executive directors such as Ralph Waters, John Astbury, Jillian Broadbent, Ian Macfarlane.

• More important to consider the qualities and skills of the members of the committee.

BENEFITS OF AUDIT COMMITTEES

• To provide high level of assurance and check, enhance internal audit function and stronger external audit function.

• To review and monitor internal control results and financial reports

• Works with professional accounting body to increase company’s operational value and long term development.

• Promotes an effective and efficient audit process

• Helps the company to assure the integrity of the financial statement based on true and fair value.

THANK YOU