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A role, reporting obligations and negligence of auditors –

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Executive Summary

The report is based on the auditing roles, obligation report and the negligence issues that are
faced by the organization. This report provides detail discussion on the assessment approach that
is generally used by the auditor to perform their task. The methodology part of the report
provides the basic view on the assessment approach and the auditing concept along with the
standard that is being utilized by the auditor to perform their systematic approach within the
organization. The report also discusses regarding the various issues and the problems that are
faced by the organization due to the lack of performance level of the auditors and for that various
recommendation are also provided to the auditor to perform their activity in the organization.
The report focuses on the development of the financial report by the auditor with the process of
Australian Auditing standard to understand the working process of the firm and to provide the
valuable factor for the firm.

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Table of Contents
Introduction.................................................................................................................................................3
Type of risk faced by the firm.................................................................................................................3
Methodology...............................................................................................................................................4
The risk-based auditing approach............................................................................................................4
Auditing standard....................................................................................................................................5
Procedure.................................................................................................................................................6
Findings.......................................................................................................................................................6
Implications of findings...............................................................................................................................8
Recommendations.......................................................................................................................................9
Conclusions...............................................................................................................................................10
References.................................................................................................................................................11

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Introduction
An audit is the official inspection of the account and the operation of the organization and it is

performed typically by the independent body (Leung et al., 2014). An auditor is a person who

carries out the audit function within the organization and prepares the audit report for the firm.

This report is essential for the financial statement of the firm. The organization BC Iron limited

is being selected to understand the issues regarding the role, obligation reporting as well as the

negligence of the auditor within the organizational system. The paper provides a basic view on

the various issues that are faced by the organization if the auditor did not perform their required

task for the company. The paper also discusses the working role of the auditor in the

organization and their consequences if they did not follow the rules and the proper working

procedure in the organization.

BC Iron or the BCI mineral is the Australian organization that is creating value with the portfolio

of mineral discovery, then de-risking as well as various transactions. The portfolio of the

organization currently involves the interest in the salt, iron ore, potash as well as gold projects.

The organization is primarily focused on the two projects that are 100% owned by the company

and they are Buckland Iron Ore as well as the Mardie Salt (Bciminerals.com.au. 2018). The

company was listed on ASX in 2006 and in the year 2009 the organization established the

Fortescue Metals Group along with the Nullagine Joint venture. Due to this the organization has

achieved the significant milestone for becoming the very first junior mining organization that

have utilized both the third party port as well as rail infrastructure. In the year 2014, the

organization provided the offer to take over the off-market Iron ores holding limited. In the mid-

session of 2016, the organization commenced for resetting their strategy to focus on the growth

and the portfolio of the firm. A successful of the 25.5 million Australian dollar entitlement offer

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to support the strategy is being completed in November 2016. In the year 2017, the organization

changed its name as the BCI Minerals Limited which reflects the diverse portfolio of the asset.

Type of risk faced by the firm

regarding the risk of the firm. The risk faced by the organization are as follows:

Business risk: This risk is associated with the economic health of the firm, then the price

fluctuation as well as the government policies of the country.

Control risk: This risk occur for the material misstatement that could take place due to the

frauds or the errors performed within the organization. The majority of this risk is detected by

the internal management of the firm.

Inherent risk: This risk is associated with the probability of developing out of some situation

that generally is the part of the operational environment of the organization. The inherent risk

that is faced by the firm is the rapid depletion of the resources as well as increasing of the

pollutants.

Methodology
The Risk-based Auditing Approach
The risk-based auditing approach is the process is generally directed towards the areas where the

financial statement which might contain misstatements as to the consequence of the challenges

that is faced by the organization. It can be seen that every audit assignment that is present is

different from others. It is clear that there is only one single approach to the auditing which

ensures the performance level of the perfect audit (Griffiths, 2016). In general, it can be seen that

the risk-based audit approach have the ability to minimize the possibility of the audit objectives.

For maintaining the risk-based approach the auditor needs to make the risk assessment for the

material misstatement at the level of the financial statement as well as assertions. It is also based

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on the suitable understanding of the entity along with its environment that includes the internal

control (William et al., 2016).

The auditor needs to emphasize on the entity along with its environment at the time of risk

assessment is known as the top down. This approach helps the auditor in identifying the day to

day risk that is being faced by the business. And by this, they are able to consider the impact of

the risk on the business. The top-down approach helps the auditor to perform their task within

the organization and maintain a suitable working function for the firm. With this approach, the

auditor has the ability to get access different working function within the organization and

provide the suitable activity for the firm (Auasb.gov.au 2018). It can be seen from the facts that

the auditor is highly essential to maintain the activity of the firm and for that, they are required to

perform a day to day analysis of the organization. In this case the auditors not only take into

account the verification of the degree but they also look for the internal operation of the firm

along with the control of the organization. This analytical process helps the auditor to identify

the risk that is associated with the organization and provide an appropriate solution for the risk.

If the auditor did not perform this step in their actions then it might be negatively impacted on

the organization and for that their working function might get easily affected.

Auditing standard
Auditing standard within the organization represents the measures for the quality of the audit

work that is being performed by the company (COSTELLO, 2018). They are the broad and the

conceptual guidelines that are required for the auditor to perform their function within the

organization. In this, the Australian Auditing Standard is being utilized to understand the various

process of an audit that is being used by the auditor in the organization. The Australian Auditor

standard provides the view on the responsibilities of the auditor when they are engaged in

undertaking an audit of the financial report (Carson et al., 2016). This standard also provides the

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view on the form as well as the content of the report that is formed by the auditors. In this

standard, there is a various process which helps the firm as well as the auditors to understand the

various process and the method at the time of performing the audit report (Simunic et al., 2017).

The standard also allows the firm to maintain their working facility and the formation of the

report for understanding the situation of the organization in the market. It provides the financial;

view of the firm and as this standard is being used in the international market and also the

organization is from Australian, therefore, the Australian Auditing standard is being used by the

auditors. The ASA450 provides the view on the evaluation of the misstatement in the

organization and it is essential that the auditor maintain the function effectively for the

organization (Rezaee et al., 2018). It will help the auditor to evaluate the risk associated with the

firm and for that, the report regarding the financial statement would be suitable for the firm. It is

clear from the various facts that the organization and the auditor need to maintain their activity

within the organization for providing a suitable working function to the firm and maintaining

their growth in the market. Audit sampling and other function is also the part of the audit and for

that, the organization needs to develop a suitable activity for the firm and prepare the variable

function that would help the organization to maintain their activity (Backof et al., 2017). The

Australian standard of Auditing is the process that needs to be used by the auditor in the BCI

mineral firm to maintain their activity and their working function.

Procedure
It can be seen from the ASA 315 that there are numerous requirement for the auditor to perform

the audit function within the organization and maintain their job role. The entire requirement of

the firm is as follows:

 Suitable as well as analytical inspection along with the process is required by the auditor

to conduct the audit

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 The entire enquiry within the organization is required to be done with the help of the

management as well as other executives of the firm

 The auditor need to maintain the best material regarding the knowledge and the process

for the maintenance of the financial statement

 The entire information and knowledge regarding the facts need to be gather from the

clients and also from the employee of the firm.

Findings
The role of the auditor under the company act can be seen that they are required to express the

opinion on the facts that the annual report of the company provides the true as well as the fair

view of the firm. From the Companies Act, 1956 section 227 provides the view that the auditor is

highly required to work on the reasonable skill as well as the care for the specialized knowledge.

It can be seen that the role of the auditor in the organization is huge for the formation of an

annual report of the organization (Aguilera et al., 2015). In this case, it can be seen that the

auditor of the BCI mineral limited is having an issue regarding the facts and the figure that is

being utilized by the organization. There are various reservation regarding the value of carrying

the intangible assets and the value stood at the 23.53 million dollar. In this the auditor have

found various reservation due to the fact that there was absence of explanation in the term of this

facts. It allows the firm to understand their day to day work in the progression and also the

process by which the firm can maintain their activity and their ability for the working capacity

(Leader et al., 2018). It can be understood from the various facts of the organization and also

from the Australian Auditing standard that the organization needs to maintain a suitable auditing

skill for their working process within the workplace. It is clear from the facts that the auditors do

not have any concern with the policy of the firm that is provided for the betterment of the

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organization. The role of the auditor did not provide the view that they have any kind of

responsibility for providing advice to the director or the shareholders. Their primary duty is to

gather the information from various part of the organization and provide the annual audit report

for the firm.

The annual report of BCI mineral limited provides the view that the annual report is well

maintained by the firm (BC Iron Limited Annual Report 2017). The provision regarding the

benefits of the employees can be seen that decreased significantly from the year 2016 to 2017. In

the year 2016 it was 295 and in the year 2017 the reduction in the employee benefit is 415 and

this is due to the work force in the organization. It is essential for the firm like BCI mineral that

deals with the various project to have a proper audit of the working function. This will allow the

firm to understand their working process and also the future need of the organization. The role of

the auditor is to provide a suitable working function to the company and they deal with the

various facts and the figure regarding the concept and the issues faced by the organization

(Helalat, 2016). The annual report of the firm is based on the vital and the crucial information

that of the company that is being gathered by the auditor. It can be seen that the financial health

of the firm is not suitable as in some of the areas there are cash flow from the operating activities

specifically in the customers segment and it reduces to 66000 from 100000 in the year 2016. For

the big organization, an audit report is essential to understand the expense as well as the profit

and loss of the organization (Lessambo, 2016). It helps them to maintain their product in the

market and provide suitable value to the marketers regarding their working function. It is clear

from the various facts and the figure of the financial report that the role of the auditor is essential

within the organization to maintain their system and their working process.

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The Australian accounting standard of the ASA 315 provides the view that the auditor needs to

identify as well as access the risk of the material misstatement by the help of understanding the

entity along with its environment. It is clear that if the organization did not follow this system

then they might get an issue with the entity and their environment for the working function of the

organization (O'Donoghue, 2015). The organization is facing some of the foreign risk due to the

facts that they are working in the foreign market with the foreign currency by the help of cash. It

can be seen that the organization in their every deal in the foreign market tries to settle the

foreign claim regarding their trade and their activity. The ASA 320 of the Australian standard

also provides the view that the planning, as well as the performance of the audit, is essential for

the organization to maintain their future growth within the market (Tricker, and Tricker, 2015).

The fact is that the organization BCI mineral limited is having the suitable as well as profitable

growth within the market and for that, the essential fact is to maintain the day to day working

function of the organization. This is done by the auditor of the organization and if they did not

perform this then the organization will not be able to understand the various issues that are

associated with the organization. The issues are huge in the organization is the auditing process

is not performed in the suitable way for the firm to maintain their working function.

Negligence of the auditor may lead to the financial issue for the organization. It can be seen that

the auditor is the one who has the entire information of the organization and they have to

perform some of the risk assessment to maintain the financial report (Adam, 2014). The

negligence of the auditor is that they are not maintaining the working function within the

organization on the regular and for that, it might create a huge problem for the organization. It

can be seen that the organization is getting loss of almost 43000 dollar in the year 2016 after they

have taken into account the income tax expenses. But in the year 2017 it can be seen that they

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have reported a profit within the firm of around 7000 dollar. It is clear from the various facts

that the firm needs to maintain their project and their activity with the help of the organization

for the future growth of the organization (Grenier et al., 2017). Any kind of negligence in the

auditing of the organization might lead to the liquidation of the company. It can be seen that the

firm with a false balance sheet and the error within the profit and loss amount along with the

financial statement have the process to perform liquidation on the firm. The fact is that there is a

huge issue if the auditor did not perform their role as well as the responsibility effectively within

the organization.

Implications of findings
The findings are based on the financial report of the firm and also the activity of the auditor

within the organization. It can be seen that the auditor is maintaining their performance level

with the various actions that are essential for them. But in most of the cases where the auditor of

the firm did not follow any of the roles and the responsibility the organization has to face a

various issue in the market. It can be understood from the above facts that the organization

maintains their activity and their financial report to sustain a profitable growth within the market.

The auditor of the firm is quite essential to perform their duty and for that, they are able to

maintain the working stuff of the organization. It can be seen that various issues are faced by the

firm if the auditor did not follow their task in the prescribed way. The issues have the primary

target to provide a huge problem for the organization regarding their financial statement, their

profit, and loss ratio and also regarding the balance sheet of the firm. It can be seen that the

organization is maintaining their working process for the betterment of the firm and providing

them suitable view that is efficiently required by the firm.

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The finding provides huge implication on the working status of the auditors and their actions that

might be effective to understand the various role and the activity of the firm. It is clear from the

various concept as well as a standard of the auditing that the organization need to maintain their

activity and their function to perform. The auditor needs to maintain their activity within the

organization for providing a suitable function for the firm. It is the duty and the responsibility of

the auditor to perform various research within the organization to establish the facts and the

working process within the firm. It is clear that the organization needs to take suitable obligation

for performing a various task within the organization and opt to provide a suitable function for

the firm. Findings provide the view of the various function of the auditor that they need to

maintain within the organization. They are able to provide the working function and also the

suitable process for the annual report of the firm. The findings help the researcher to understand

the various issues that are associated with the firm if the auditor did not follow their rules and the

regulation.

Recommendations
The auditor of the firm needs to maintain their working performance level within the business

and provide the best to the market. It is recommended that the auditor of the firm is highly

required to perform a suitable inquiry for the management as well as others to gain the

appropriate information regarding the issues within the organization. It is further suggested for

the firm that they need to evaluate as well as understand the working process of the internal

control system within the organization. It can be seen that auditor is directly not associated with

the organization but they are a vital part of the firm and for them, the company is able to

maintain their financial system within the market. Furthermore, it is recommended for the

auditor of the firm that they need to perform the analytical approach on the expected as well as

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the unexpected variables that are present in the account balance. This would help the firm to

maintain their expense and their asset in the market and will allow them for the future plan

within the organization. The fact is clear and it provides the view that the organization is highly

required of the suitable auditing process. Moreover, it is recommended to the auditor that they

need to provide the clear information on the management of the risk that is associated with the

firm to the sub-committee. It is essential for the auditors in the organization to provide the

valuable information to the management committee and maintain their job role within the

organization. It is also suggested for the auditor that they need to observe the physical inventory

unit within the organization for providing a suitable working function to the company. The fact is

clear that the auditor within the organization plays the vital role in the development of the

variable process within the organization.

Conclusions
The paper eventually evaluates that the organization highly required the suitable working

function of the auditors. It is essential for the firm to maintain the working condition and the

valuable process within the business. With the help of the auditor, the organization is able to

maintain their annual report and understand their expense within the organization. It can be also

concluded from the various fact of the paper that the auditor needs to maintain their roles and

their regulation within the business or else it might create a huge disturbance for the

organization. If the auditor did not follow their rules and their regulation for performing the task

then there is a huge chance for the organization that they lead to the liquidation of the

organization. It can be evaluated from the various concepts that the auditor is not directed by the

policy of the organization but they have the ability to perform for the betterment of the firm in

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the market. It allows them to maintain their work and their development process within the

market and for that, the organization can maintain their activity.

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