Answer question 5&6. About

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AUDIT RISK & PLANNING [20% of overall subject assessment) You are part of the audit team required to prepare a report to the senior partners of your auditing firm. This report will be used as part of the information provided to the audit team. You and your colleagues have been assigned to prepare a report based on your research of Billabong International Limited (Billabong). Assume that this is the first time that the audit will be conducted by your audit firm, La Trobe Partners. The report must cover the areas detailed below. This will require extensive research and critical analysis ofthe annual reports and any other information that you have obtained. htt : www.billabon biz.com hoenix.zhtml?c=154279& =irol-irhome In your report you must address the following issues: 1. Provide an overview of the client's business and industry in which it operates. The overview must include a discussion on recent developments. (5 marks) 2. What are the significant business and/or audit risks for Billabong? You need to explain at least FIVE (5) risks. DO NOT DISCUSS THE AUDIT RISK MODEL. (7.5marks} 3. Referring to the financial statements for 2016 0 Calculate and comment on the listed ratios below. Your comments must also include a comparison with the Industry figures. 0 Ratio Summary Table Ratio 2015 2016 Industry I. Current ratio 2 ii. Debt-to-equity ratio iii. Gross Profit Margin iv. Inventory turnover v. Trade Receivables turnover (10 marks) 4. Material misstatements 0 Based on your ratio calculations and assessment of the client's business and audit risks, identify 5 areas of risk of material misstatement in the financial statements. 0 Explain why these particular areas are risky. (7.5 marks} 5. Goingconcern 0 Given the financial results and based on the information you have gathered, is there a potential going concern issue? Explain. (5 marks} 6. Social Responsibility 0 You have also been requested to research the company's social responsibility information and provide a summary in your report. As part of the audit engagement, would you recommend an external assurance for the Sustainability Report? Explain. (5 marks} Grand total/40 marks Final mark/20 marks