To Improve Your Grade We Always Ready To Help You

  • 60,000+ Completed Assignments

  • 3000+ PhD Experts

  • 100+ Subjects

Accounting Theory and Current Issues

Questions:

Discuss about the Accounting Theory and Current Issues. 

Answers:

Introduction

According to the study, it is found that BSF limited is a “Bio Research Company” which is situated in Australia. It is also listed over Australian stock exchange as per the market overview report. Their experts are attached with one of the most creative research activities related to sustainable aqua culture and processing them from last two decades. These researches activities are based on the feeding based on plantation become failed (AASB.gov.au, 2016). The ongoing research activities of the company are showing that they are using several types of bacteria for producing fish. The primary reason behind failure of this research is due to lower conversion rate of plants in comparison to higher value of fish. The primary reason behind discussing the topic is on total rate of conversion of their previously done research for fish food on plant with greater valuation.

The profit made by conversion principally influenced the rich but poor and vulnerable people faced the consequence of malnutrition and hunger and the main aim concerning the quality of human food crop in order to grow the luxurious varieties of fish was executed at the price of poor people’s health. There are also several issue which is considered as matter of concern like company is used bacteria for producing fish, which is almost cost $160 million to them and also $200 million cost is required for the development of their business activities. The company BSF also received monetary grant of $500 million by CSIRO.  The grant has been made for the research which is done on aqua culture feeds which is in progress (Blay, Notbohm & Valencia, 2014).This monetary support is provided to the organization almost three years ago, that the total amount decided to provide was $700 million for the total expenditure expected by the Bio Sustainable Feeds Limited.

Now, the auditing of the current research is required to be done of BSF Ltd. However, the firm will be benefited by the audit as it will be done keeping the characteristics of the company in mind.

Steps Required Following Before Auditing Process

There are certain paraphernalia which an auditor should consider before auditing the firm.

An investigation should be done of the potential client, owners and stakeholders of the firm, regarding its business accomplishments. The auditors should be keen in identifying any risks involved in the process which can raise questions on the client’s integrity which are sacrosanct for the object which is being audited. The clients have to come through with the due diligence (Kinney, 2015). The threat on the ethical front which concerns the firm in the purview of audit is to be looked into. By doing this surety has to be established that no conflict of interest is there and confidentiality is not jeopardized (Oresegun & Bernard, 2016). As the BSF Ltd is a research oriented firm, evaluation should be done by the auditor about the potential and capacity of the firm to conduct any research work.

There are various discussion pre-requisites related to the company required to be audited are following in nature:

  • Assessment of the type of business and additional information which is relevant related to the client is to done by the auditor. The capacity of the firm as in potential expertise and required skill to conduct a research should be ensured at first by the auditor keeping in mind that these kinds of audits would not cause any harm in the clientele of the firm.
  • All the rules and regulations should be in compliance of the framework applied in preparing the financial report. Evaluation should be done by the auditor regarding their concerns.
  • The authorized internal auditors should be aware about taking the better afford to understand their responsibility towards business process and management activities (Natale, Hofherr & Virtanen, 2013).
  • The report of the financial statements should be free from errors such as misstatement and frauds. This is to be ensured by the auditors.
  • The fee of audit is to be considered according to the requirement of ethics in the work and the auditors evaluate the level of their work.

The information about the clients can be obtained from the media, financial reports and reports of financial auditors (Laining & Kristanto, 2015). It is most prime responsibility of an auditor to support the auditing activities through declining the numbers of barriers which is creating hindrances in auditing process of the management.  

Assessment of the Audit Risk

Association of audit risk comes into play when there is an unqualified opinion regarding the audit report, which is created due to the incompetence of the auditors to point out material misstatement existing due to the errors and frauds (AASB.gov.au, 2016). Therefore, any auditor should aim to decrease the level of audit risk to minimum or an acceptable level.

The different types of risks related to the audit of the BSF Ltd are as follows:

Inherent risk= 88%

Control risk= 4%

Detection Risk= 83%

As per the research activities, it is found that evaluated detection risk of the company is higher almost 83 percent of chances of being commence the fraudulent activity and misrepresentation in the financial statement of the concern firm which is reducing the materiality scenario of the organization. However, the reduction of detection risk to zero is not possible as it is not feasible to check the accounts of balances with 100% accuracy. The aim of the auditor should be to work in the most efficient way and try to reduce the risk as far as possible. The above mentions three risks are taken from the audit risk model to evaluate the audit risk. The financial statement of the company is does not get affected due to inherent and controlling process risks.  The factor of inherent risk sways the effort of auditing.

Auditor judges and accepts the performance of the audit by calculating on the basis of audit risk model which provides with overall risk.  .

The formula based on the model is:

Audit risk = (Control risk* Inherent risk *Detection Risk)

Audit risk= (0.8 * 0.9 * 0.05) = 0.36 = 3.6 %

The calculated value of audit risk of BSF is 3.6%  while the acceptable risk value is 10%, so the risk can be accepted. Therefore it can be stated that the auditor should comply for auditing BSF Ltd (Khan  & Ghosh, 2013).

Required Items for the Audit Program

Before conducting the audit program, the auditors will check the control system and different types of activities of the business operations of the firm. The audit module contains the list of audit program and audit procedures are also listed to deliver sufficient information (Cpaaustralia.com.au, 2016). The auditor conducts substantive checking regarding the controls which are included in the audit program. The working paper contains the audit program which holds its significance in justifying the audit’s opinion.

The objects recorded below would relate to one financial year and more. The below mentioned objectives will be covered by the audit program:

  • The performance record of the audit will be kept by the auditor and the formulation of the working paper will also be done. The permanent audit files and the present one are used for preparing the working paper. The following listed objects would contain the audit files of permanent nature that effects the performance of audit;
  1. Organizational structure of the firm (BSF Ltd) need to be provided
  2. Internal control and accounting of the firm should be considered
  3. Letter of engagement of audit
  4. Listing of stakeholders of BSF Ltd should be done.
  5. Copy of the Memorandum of Association of the firm
  6. Minutes, extracts of agreements and legal documents that are relevant of BSF Ltd
  7. List of bankers of concern firm 

The documents regarding the financial year which would be considered for preparing the present audit file:

  1. Bank accounts of BSF Ltd should be analyzed and evaluated.
  2. The internal control system and accounting for auditors to understand should be contained in the current file.
  3. The effect of audit strategies of BSF Ltd, timing, nature and degree of the audits.
  4. Files having the records of the previous audits done of the BSF Ltd should be provided.

Other miscellaneous things which are to be included in the compilation of the audit program are

  • Entities such as time taken to accomplish the task and the list of assistants who are assigned to help are registered in the audit program, which is to be attested after the completion of the audit.
  • The pattern of the audit of the firm is analyzed by using performance indicators and key ratios.
  • The structure of the capital, business line, address and the objectives of BSF Ltd with all the required constitutional documents will be recorded. 

Issues Concerning Journal Entries for Auditors

“Journal entries for the Research & Development transactions from 2013 to 2016”

There are several issues which are encountered in keeping record of the financial transactions of BSF Ltd. To maintain the authenticity and transparency of the research firm a record of all the financial transactions is kept in books. There may be some glitches in the records of journal entries which an auditor might face that lead to financial discrepancies. These types of discrepancies occur due the difference in time of actual financial transaction and recoding the transaction in the accounts book (Bobek, Daugherty & Radtke, 2012). The impact of these audits will be observed on the entire set of journal entries of the years 2013 and 2014. The operational policy is to be followed in recording the job roles, journal entries that has to be in alignment in the records of policy operation. An intensive study that would relate to the firm’s policy of operation would be conducted to evaluate the operational strategies of the BSF Ltd. The auditors would get help from this to understand the present financial situation of the firm.

The auditor has the prime responsibility of treating the amount of resource granted by CISRO and divide the amount for the different operational section by proper measurement. Evaluation of the proper utilization of the granted fund by CISRO should be done by the auditor. Therefore, to establish that, through investment of the funds in relation with expenses made in production and distribution of research is to be scrutinized.

It is the responsibility of the auditor to allocated proper resources for the research and development activities and ensuring the proper utilization of the resources in all operational departments aligned with the production. Any extra expense which is not accounted should be investigated by the auditor (Louis, Robinson & Sun, 2015). These kinds of expense can lead to embezzlement of stakeholder’s funds which have direct effect on financial reporting (Jamal & Tijani, 2014). Certain prominent measures are to be inculcated by the auditors in order to maintain the organizational growth and sustainability.

Hiding and concealing information is the most pressing issue related to the responsibilities and roles of auditors. In order to have the transparency and authenticity in the area of accounting, complete synchronization is needed between the management of the firm and team developed for auditing. Moreover, auditors are also responsible to find out the flaws in the firm’s management.

Judgment of the BSF Statement Regarding Being Socially Responsible

Social responsibility of BSF Ltd in the purview of environment friendly and social responsibility should be certified by a signed document from the auditors. This judgment depends upon assessment of numerous documents, financial statements, evidence supporting and account books containing all the firm’s activities (Daugherty, Dickins & Higgs, 2012).   

There are some social environmental factors which are considering by the firm while perform their business operations. The firm has employed a robust internal audit system that monitors these scenarios. An efficient business policy has been developed and being used by the firm for maintaining the social values. The workers employed in production and distributions are provided with daily amenities for their job.

The auditing process is done for scrutiny of discrepancies and should not be prejudiced to any entity or a department and needs to be fair. The firm is quite informed about the other factors that are why the social responsibility is adequately fulfilled by the firm. Moreover the firm is quite keen in accomplishing the aims of the research as it can be observed that the investment is quite handsome (Gong, Sophia & Wang, 2016). For BSF Ltd. long term objectives and goals are the matter of concern in business by executing research procedures.

The firm keeps track of the rules and regulations of the research procedures as it cares that people are not getting negatively affected by the impacts of the research. It is strongly indicated by the CISRO in the grants to BSF Ltd to apply latest technology mechanism so that the research assessment for firm’s growth should be accurate.

Assessing the Exclusive Control of the BSF Ltd

The above discussion can conclude that BSF Ltd. conducts the business over the technology of bacteria based feeds. Recently the company has updated the technological area of their business operations, which helped it to face a rapid growth in the business. The company has succeeded to establish their name in the international market with the help of the updated technology. Technology has benefited the firm and its customers as the productivity and customer satisfaction has also risen. It can be concluded that the sole benefit of the research reflects in the innovation of bacteria based feed (Jamal, Saheed & Ruqayyah, 2015). The result of the research has allowed the firm to use bacteria in the production of fish from wood chips, methane gas and sugar cane residue. BSF Ltd with the help of its technology makes optimum utilization of time and resources. The procedure of research has paved way for the use of new technology. In comparison to the strategic alliances that operate in the same line of business BSF Ltd is way ahead. While taking the research to a next level BSF Ltd is incurring an expense of $200 million AUD to enhance its research technology.

Conclusion

The research firm has established itself in the hearts and minds of its customers by applying technological advancements and has become a leading name in its genre of business. The organization is facing rapid growth in the business as bacteria feeding technology sector is having high popularity. This high popularity is helping the firm to efficiently compete with the others in the intensive market. Therefore, it may be concluded that BSF Ltd. has set a new benchmark in fish supplying business which has made it easier. This has resulted in increased market productivity and customer demands. It can be finally concluded that BSF Ltd. has an authority over patent feed technology.

Reference

AASB.gov.au (2016). [online] Available at: http://www.aasb.gov.au/admin/file/content102/c3/AASB1011_5-87.pdf [Accessed 14 Sep. 2016].

AASB.gov.au. (2016). Accounting standards. [online] Available at: http://www.aasb.gov.au/Pronouncements/Current-standards.aspx [Accessed 14 Sep. 2016].

Ato.gov.au. (2016). Research and development tax incentive - offset | Australian Taxation Office. [online] Available at: https://www.ato.gov.au/General/New-legislation/In-detail/Direct-taxes/Income-tax-for-businesses/Research-and-development-tax-incentive---offset/ [Accessed 14 Sep. 2016].

Blay, A.D., Notbohm, M., Schelleman, C. & Valencia, A., (2014). Audit quality effects of an individual audit engagement partner signature mandate.International Journal of Auditing, 18(3), pp.172-192.

Bobek, D.D., Daugherty, B.E. & Radtke, R.R., (2012). Resolving audit engagement challenges through communication. Auditing: A Journal of Practice & Theory, 31(4), pp.21-45.

CBC. 2016. Shift to plant-based fish feed could hurt health, environment, CBCNews Technology & Science, (23 Mar/16), Retrieved on 11 Jul/16 from: http://www.cbc.ca/news/technology/aquaculture-feed-1.3262922

Cpaaustralia.com.au.(2016).[online]Availableat:https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/notforprofit/grants-in-australia.pdf?la=en [Accessed 14 Sep. 2016].

Daugherty, B.E., Dickins, D., Hatfield, R.C. & Higgs, J.L., (2012). An examination of partner perceptions of partner rotation: Direct and indirect consequences to audit quality. Auditing: A Journal of Practice & Theory,31(1), pp.97-114.

Gong, J.J., Sophia, I. & Wang, L., (2016). Changes in the value relevance of research and development expenses after IFRS adoption. Advances in Accounting.

Jamal, P., Saheed, O.K., Jaswir, I. & Ruqayyah, T.I., (2015). Bioconversion of Seaweed with White Rot Fungi for Production of Protein Enriched Fish Feedstock. Jurnal Teknologi, 77(24).

Jamal, P., Saheed, O.K., Jaswir, I. & Tijani, R.I., (2014). Solid state bioconversion of seaweed for production of protein enriched fish feedstock.

Khan, A. & Ghosh, K., (2013). Evaluation of phytase production by fish gut bacterium, Bacillus subtilis, for processing of Ipomea aquatica leaves as probable aquafeed ingredient. Journal of Aquatic Food Product Technology,22(5), pp.508-519.

Kinney, W.R., (2015). Discussion of “Does the Identity of Engagement Partner Matter? An Analysis of Audit Partner Reporting Decisions”. Contemporary Accounting Research, 32(4), pp.1479-1488.

Laining, A. & Kristanto, A.H., (2015). Aquafeed development and utilization of alternative dietary ingredients in aquaculture feed formulations in Indonesia. Myanmar (pp. 1-3). Aquaculture Department, Southeast Asian Fisheries Development Center.

Lothe, R. 2013. Fish feed-research may help reduce world hunger, ScienceNordic, 17 Mar/13, Retrieved on 11, Jul/16 from: 20 http://sciencenordic.com/fish-feed-research-may-help-reduce-world-hunger.

Louis, H., Robinson, D. & Sun, A.X., (2015). Perceived Audit Quality and Firm Value: Evidence from Investors’ Reaction to the First Disclosure of Limiting Liability Agreements between Auditors and Their Publicly Traded Clients. Available at SSRN 2447446.

Natale, F., Hofherr, J., Fiore, G. & Virtanen, J., (2013). Interactions between aquaculture and fisheries. Marine Policy, 38, pp.205-213.

Nmfs.noaa.gov(2016).[online]Availableat:http://www.nmfs.noaa.gov/aquaculture/docs/feeds/casestudy2_alternative_diets_for_trout.pdf [Accessed 14 Sep. 2016].

Nmfs.noaa.gov. (2016). Feeds for Aquaculture :: Office of Aquaculture. [online] Available at: http://www.nmfs.noaa.gov/aquaculture/faqs/faq_feeds.html [Accessed 14 Sep. 2016].

Oresegun, A., Fagbenro, O.A., Ilona, P. & Bernard, E., (2016). Nutritional and anti-nutritional composition of cassava leaf protein concentrate from six cassava varieties for use in aqua feed. Cogent Food & Agriculture, 2(1), p.1147323.

Rust, M., Barrows, F., Hardy, R., Lazur, A., Naughten, K., & Silverstein, J. 2011. The Future of Aquafeeds, NOAA/USDA Alternative Feeds Initiative, NOAA Technical Memorandum NMFS F/SPO-124, Retrieved on 11 Jul/16 from: http://www.nmfs.noaa.gov/aquaculture/docs/feeds/the_future_of_aquafeeds_final.pdf.

Sarker, P.K., Kapuscinski, A.R., Lanois, A.J., Livesey, E.D., Bernhard, K.P., Coley, M.L. 2016. Towards Sustainable Aquafeeds: Complete Substitution of Fish Oil with Marine Microalga Schizochytrium sp. Improves Growth and Fatty Acid Deposition in Juvenile Nile Tilapia (Oreochromis niloticus). PLOS ONE, 2016; 11(6), Retrieved on 11, Jul/16 from: http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0156684.

Van Huis, A., (2013). Potential of insects as food and feed in assuring food security. Annual Review of Entomology, 58, pp.563-583.

Zadek, S., Evans, R. & Pruzan, P., (2013). Building corporate accountability: Emerging practice in social and ethical accounting and auditing. Routledge.

 

MyAssignmenthelp.co.uk takes pride in announcing that thousands of students in UK have chosen us as the best assignment help provider. The main reason behind overwhelming popularity of our assignment writing services is we understand students’ needs and fulfill them in the best possible manner. Students, taking up our assignment writing help, are guaranteed to get top-notch quality content, on-time delivery of the paper and expertly written plagiarism-free assignments in their accounts.  

Place Your Order

Get help to our Experts
- +

Why Student Prefer Us ?

Top quality papers

We do not compromise when it comes to maintaining high quality that our customers expect from us. Our quality assurance team keeps an eye on this matter.

100% affordable

We are the only company in UK which offers qualitative and custom assignment writing services at low prices. Our charges will not burn your pocket.

Timely delivery

We never delay to deliver the assignments. We are very particular about this. We assure that you will receive your paper on the promised date.

Round the clock support

We assure 24/7 live support. Our customer care executives remain always online. You can call us anytime. We will resolve your issues as early as possible.

Privacy guaranteed

We assure 100% confidentiality of all your personal details. We will not share your information. You can visit our privacy policy page for more details.

Upload your Assignment and improve Your Grade

Order Now