a. Briefly explain the main objectives of a financial statement audit.

b. How would you set about achieving these audit objectives?

c.In terms of a financial statement audit explain the difference between a compliance test and a substantive test. Is there a link between these two types of tests and if so, what is this link?

d. Is it true that auditors normally examine 100% of the transactions that are contained in the financial statements? Why or why not?

e.What is the risk of not examining 100% of the population and what techniques does the auditor use to reduce these risks?

f. Refer to pages 58 to 62 of the JB Hi Fi 2019 Annual Report. As part of the Auditor's Report there is a section entitled "Auditor's Responsibilities for the Audit of the Financial Report" where the auditor states that they need to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement.

(i) What do you understand by the term "reasonable assurance"?

(ii). What does it mean by the phrase ..."whether the financial report as a whole is free from material misstatement"?

Please see the attachments below. (In order from page 58-62)

Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group's audit. We remain solely responsible for our audit opinion. For personal use only We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant Laudit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 32 to 56 of the Directors' report for the year ended 30 June 2019. In our opinion, the Remuneration Report of JB Hi-Fi Limited, for the year ended 30 June 2019, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Deloitte Touche Tohmatsu DELOITTE TOUCHE TOHMATSU Sinki Travis Simkin Partner Chartered Accountants Melbourne 12 August 2019 61INDEPENDENT AUDITOR'S REPORT (continued) Other Information The directors are responsible for the other information. The other information comprises the Governance, Environmental and Social Statements, Directors' Report, Operating and Financial Review and additional securities exchange information which we obtained prior to the date of this auditor's report. The other information also includes the Chairman and Chief Executive Officer Report, which is expected to be made available to us after that date (but does not include the financial report and our auditor's report thereon). Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the Chairman and Chief Executive Officer Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and use our professional judgement to determine the appropriate action. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the director's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern. 60Key Audit Matter How the scope of our audit responded to the Key Audit Matter Carrying value of The Good Guys cash generating unit Our audit procedures included, but were not limited to: Refer to Note 11 Intangibles. assessing the design and implementation of key controls For personal use only The carrying value of The Good Guys cash generating unit relating to the preparation of the value-in-use model; contains $575.6 million of goodwill and $241.3 million of agreeing forecast cash flows to the latest Board indefinite useful life brand names, both of which are required approved budget and assessing the historical accuracy of to be assessed for impairment annually or where there is an management's forecasting; indicator of impairment. with the assistance of our valuation specialists, we: As disclosed within Note 11 to the financial statements, management have assessed The Good Guys cash generating assessed the management's value-in-use unit for impairment using a 'value in use' discounted cash flow methodology; model. The impairment assessment incorporated significant challenging key assumptions, including forecast judgments and estimates, specifically concerning factors growth rates by comparing them to historical results such as forecast cash flows, discounts rates and terminal and economic forecasts; growth rates. evaluated the discount rate used by assessing the cost of capital for the cash generating unit by comparison to market data; assessing the mathematical accuracy of the value-in- use model; and assessed management's sensitivity analyses around key assumptions used in the valuation model. We also assessed the appropriateness of the disclosures included in Note 11 to the financial statements. AASB 16 Leases: Presentation and disclosure Our audit procedures included, but were not limited to: Refer to Note 29(e) Significant accounting policies New testing the completeness of the lease data captured by accounting standards. management by agreeing a sample of rent expense in the The Group is required to apply the requirements of AASB 16 ledger to the lease data; Leases from 1 July 2019, being the start of the financial year testing the accuracy of the lease data captured by ending 30 June 2020. management, on a sample basis, by agreeing it to the As set out in Note 29(e), management has identified that the underlying lease documentation; adoption of AASB 16 Leases will have a significant impact on with the assistance of our treasury specialists, assessing the presentation of the Group's financial statements. the incremental borrowing rates used by management to The expected impact of adopting AASB 16 is reliant upon calculate the lease liability; a number of key estimates and judgements as set out in evaluating the estimates and judgement applied by Note 29(e). Additionally, there is risk that the lease data is management in determining the lease period for each incomplete or inaccurate. lease, including the probability of exercising options and the lease term assigned to leases in 'hold over'; and . recalculating the lease liability and right of use asset, on a sample basis, to test the mathematical accuracy of management's calculations. We also assessed the appropriateness of the disclosures included in Note 29(e) to the financial statements. 59DIRECTORS' DECLARATION The directors declare that: (a) in the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; (b) the attached financial statements are in compliance with International Financial Reporting Standards, as stated in note 1 to the financial statements; (c) in the directors' opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity; and (d) the directors have been given the declarations required by s.295A of the Corporations Act 2001. At the date of this declaration, the Company is within the class of companies affected by ASIC Corporations (Wholly-owned Companies) Instrument 2016/785. The nature of the deed of cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full of any debt in accordance with the deed of cross guarantee. In the directors' opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC Class Order applies, as detailed in note 22 to the financial statements will, as a group, be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee. Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001. On behalf of the Directors Greg Richards Richard Murray Chairman Group Chief Executive Officer Melbourne 12 August 2019 For pe 62INDEPENDENT AUDITOR'S REPORT Deloitte Deloitte Touche Tohmatsu ABN 74 490 121 060 550 Bourke Street Melbourne, VIC, 3000 Australia only Phone: +61 3 9671 7000 www.deloitte.com.au INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF JB HI-FI LIMITED Report on the Audit of the Financial Report Opinion We have audited the financial report of JB Hi-Fi Limited (the "Company") and its subsidiaries (the "Group") which comprises the consolidated balance sheet as at 30 June 2019, the consolidated statement of profit or loss, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of cash flows and the consolidated statement of changes in equity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: giving a true and fair view of the Group's financial position as at 30 June 2019 and of its financial performance for the year then ended; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. For Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte Network. 58