Can i get the answer for task 3 please?

Noyers Ltd Audit Case Study Noyers Ltd Company Background The Entity Noyers Ltd, a company with its headquarters in Launceston, Tasmania, has been listed on the Australian Securities Exchange (ASX) since 2001. Noyers is an agribusiness company engaged in the following activities: Large scale cotton growing, processing and marketing; Large scale walnut growing, processing and marketing; and Livestock (cattle and sheep) grazing. Noyers Lid, through its antecedent businesses, has been in existence for over 120 years. It has predominantly been involved in the agribusiness industry over this time, mainly operating in Tasmania, but with farming interests in Victoria, New South Wales and Queensland. During its history, the company built up considerable interests in livestock agency and auctioneering, real estate agency, agricultural supplies, heavy vehicle parts and repairs, agribusiness consultancy services, and some cropping and pastoral operations. In the past 20 years, the company began to acquire interests in large scale cotton growing, processing and marketing operations in Queensland and New South Wales as well as significant pastoral operations (livestock grazing) in Victoria and Queensland. During this period Noyers also acquired the operations of Oignon Pty Ltd. This small company had been established by Mr Gill Peters as an onion grower, processor and exporter. However, it had diversified into walnut growing, processing and marketing, and at the time of acquisition by Noyers Ltd of its business, Oignon Pty Ltd had significant interests in walnut orchards in Victoria and New South Wales. In 2014, Noyers Led made the business decision to exit from its Tasmanian-based real estate agency, agricultural supplies and consultancy, heavy vehicle parts and repairs and related businesses in order to concentrate upon: large scale cotton growing, processing and marketing (and acquisition of associated water rights); large scale walnut growing, processing and marketing; and livestock grazing, in New South Wales, Victoria and Queensland. It therefore sold its Tasmanian-based businesses to other companies, whilst retaining a small walnut growing orchard in Gawler, North West Tasmania (now its only Tasmanian based operation). Although it still has its headquarters in Launceston, Northern Tasmania, its main business activities are in New South Wales, Victoria and Queensland and its senior executives are located in Sydney, with senior managers located in the various agribusiness operations throughout country New South Wales, Victoria and Queensland. Operations The principal activities of Noyers Ltd are the production, processing and marketing of cotton, walnuts and livestock. The company has considerable land holdings with associated water rights to grow cotton in New South Wales and Queensland and is engaging in an expansion program to develop further land for cotton growing. It has processing facilities and 3|PageNoyers Ltd Audit Case Study warehouse facilities for cotton at several locations. It also has significant orchards either mature, maturing or under development in Victoria and New South Wales. Again, most of these orchards have associated water rights. The company also has nut processing facilities and warehouses at several locations in Victoria and New South Wales. Investment is being made in expanding both orchards and associated facilities. Livestock rearing and grazing is conducted at several large pastoral holdings across the country. The company is investing in infrastructure on these properties such as dam building and livestock holding areas. Ownership, Governance Structure, Organisation's Structure and Financing The company has a highly experienced Board and management team, with expertise in the agribusiness sector, particularly in irrigated and dry land farming. In addition, through the acquisition of the business of Dignon Pty Ltd the company acquired considerable intellectual capital in the growing, processing and marketing of walnuts. There are currently five board members: Mr Stephen Patrick, Non-Executive Director and Chairman of the Board (experience in transportation, logistics and finance sectors); Mrs Leonie Curtain, Non-Executive Director (experience in rural property, horticulture and finance sectors); Mr Gill Peters, Non-Executive Director (experience in nut growing, onion growing and investment and finance sectors) Mr Butler Macintyre, Non-Executive Director (experience in irrigated and dry land farming); Mr Stefano Tornatore, Executive Director and Company Chief Executive Officer (former Chief Financial Officer and Company Secretary of Noyers Ltd). Unfortunately, during 2019 Mr Patrick was diagnosed with a serious illness and his son, Mr Ronald Patrick was appointed as his alternate whilst Mr Patrick (senior) recuperated. The Entity's Selection and Application of Accounting Policies (Selected Only) and Other Matters Inventories The company reports inventories on its statement of financial position as: 2019 2018 $000 Raw materials 2,008 2,081 Cropping inventories 1,699 36,052 Walnut inventories 16,383 12,439 Walnut nursery trees 2,975 1,200 Water allocation 3,219 26,284 51,772 4 PageNoyers Ltd Audit Case Study The company values inventories, under AAS8 102 Inventories, at the lower of cost and net realisable value except for walnut and cropping inventories which are measured at fair value less estimated cost to sell at the point of harvest. The company values cropping inventories and walnut inventories in accordance with AASB 141 Agriculture whereby the cost of the non-living (harvested) produce is deemed to be its fair value less cost to sell immediately after it becomes non-living. This valuation takes into account current walnut selling prices and current processing and selling costs. Biological Assets The company reports biological assets on its statement of financial position as: 2019 2018 $OOD $000 Cropping inventories 7,518 13,583 Walnuts 7,959 7,168 Livestock 7,773 7,838 23,250 28,589 At the end of each reporting period the company measures the unharvested produce of walnuts and other crops (e.g. cotton) at fair value less costs to sell. The company also measures livestock at fair value less costs to sell. The net increments or decrements in the market value of biological assets are recognised as either revenue or expense in the income statement in accordance with AASB 141 Agriculture. The fair value of sheep and cattle is determined by an independent valuation at each reporting date. Costs (i.e. planting, spraying etc) associated with the preparation for future crops are the best indication of fair value less cost to sell of walnuts and other crops Intangibles Goodwill The goodwill amounts recognised on the statement of financial position arose from the purchase of agricultural assets such as walnut farms. The company tests the recoverable amount of goodwill at least annually. The recoverable amount has been determined based on fair value less costs of disposal. Other Intangible Assets The other intangible assets arose from the purchase of another entity involved in irrigated cropping. These other intangible assets have an indefinite useful life and are not subject to amortisation and are tested annually for impairment. The recoverable amount of these intangibles is determined based on 'value in use' calculations. These calculations use cash flow forecasts by management covering a five year period and are based on crop yield rates taking into account past performance and predictions of future performance. Permanent Water Rights 5 PageNoyers Ltd Audit Case Study The value of permanent water rights is an integral part of the land and irrigation infrastructure required to grow walnuts and annual crops (cotton). The recoverable amount of permanent water rights is determined based on the fair value less costs of disposal. Permanent water rights are a tradeable commodity and therefore, the fair value of these permanent water rights is supported by tradeable market values. At 30 June 2019 the market prices for permanent water rights were higher than their carrying value. Other Matters Bank Balances Noyers Led has several local and overseas bank accounts. The overseas bank accounts, used to deposit receipts from overseas customers are in US dollars. The company accountant uses the exchange rate at the close of the last business day in the financial year to convert the bank accounts in foreign currency to the equivalent A$ value at the year end. Sales Noyers Ltd makes sales overseas on different conditions for different customers. When cotton bales are sold FOB (shipping point), revenue is recognised when the goods are shipped to the customer. When cotton bales are sold FOB (destination), revenue is recognised when the goods are received by the customer. Industry Factors During the 2019 financial year, the major activities of the company were severely impacted by the drought conditions being experienced in Queensland, New South Wales and Victoria. In particular: In 2019, 4,200 hectares of cotton was planted, compared to the previous year (2018) of 17,162 hectares. Planting was curtailed because of lack of rain and available water for irrigation. Significant use of water entitlements allowed the yield of walnuts to increase from 9,508 tonnes in 2018 to 9,808 tonnes in 2019. There was significant expenditure on purchasing feed for sheep and cattle despite decisions being made to drastically reduce sheep and cattle numbers to amounts commensurate with available feed. China and India are the two largest markets for Australian cotton. Prices of per tonne of walnuts declined by 25% during the year because of oversupply from other countries including Chile and the United States. Prices per kilogram fell from 2018 where it reached a peak of $2.87 Australian dollars per kilogram to $2.46 per kilogram in June 2019. Whilst domestic sales of walnuts make up some proportion of the total sales, most of the Australian walnut production is exported to the United Kingdom, other European countries and some Middle Eastern countries. Cattle live weight prices were 275.3 cents per kilogram of live weight at 30 June 2018 and 261.7 cents per kilogram live weight at 30 June 2019. 6|PageNoyers Ltd Audit Case Study Other External Factors Toward the end of the 2019 financial year, a Sovereign Wealth Fund of a European country purchased a significant shareholding in Noyers Ltd of 12%% of the issued shares. Whilst the directors of the company have indicated that it is too early to predict the intention of this Fund, market analysts have theorised that this may be the forerunner of a complete takeover of Noyers Lid, given the company's significant investment in water entitlements. Most of Noyers Ltd's export sales are conducted in United States dollars, so the company is exposed to fluctuations in exchange rates. The Australian dollar fluctuated significantly against the US$ in the 2019 year. There are other countries that compete with Australia in the overseas cotton and walnut markets. Key Stakeholder Influences The wife of the Chief Executive Officer of Noyers Led is the managing director of one of Noyers Ltd's major suppliers of agricultural sprays. This relationship has been disclosed to the Board. Mr Stephen Patrick and Mr Gill Peters are two key non-executive officers of the company. Their continuation with the company is critical to its future direction. To retain their services, the company has issued them both with significant share options during the year. One direct customer for walnut sales in the United Kingdom accounts for 25% of Noyers Ltd's total sales of walnuts. As stated above, a Sovereign Wealth Fund has purchased a significant shareholding in Noyers Ltd at 30 June 2019. Executive officers are paid bonuses based upon earnings before interest and tax and senior managers are paid bonuses based upon key performance indicators (generally business unit profit) of the business units that they manage. The Entity's Objectives and Strategies The company has the objective of continuing to invest for long term sustainable growth. It plans to continue to develop its cotton properties in order to increase the total amount of irrigated land available for cotton planting. It also plans to increase the size of both its mature walnut producing walnuts and its immature orchards and associated infrastructure. In addition, it is continuing to invest in grazing property infrastructure with the view to grow the livestock business. Financial Information The income statements and balance sheets for 2019, 2018 and 2017 are shown below: 7pageNoyers Ltd Audit Case Study Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2019 2019 2018 2017 $OOO 5000 too0 Revenue 116,995 145,263 166,087 Cost of sales (120,025) [123,883) (136,318] Gross profit (3,030) 21,380 29,769 Other income 37,001 61,999 109,674 Distribution expenses (3,538) (3,380) (3,552) Marketing expenses (321) (395) (426] Operational expenses (19,146) (29,784) (51,315) Administration expenses (3,517) (3,225) (4,100) Finance costs (5,273) (7,457) (7.976) Other expenses (58) (236) (102) Impairment loss (22,913] Profit before income tax expense 2,118 38,902 19,059 Income tax expense (11,228) (11,817) 9,225 Net (loss)/ profit for the year from continuing operations (9,110) 27,085 58,284 Total comprehensive (loss]/income for the year (9,110) 27,085 58,284 (Loss)/profit attributable to: Owners of the parent (9,110) 27,085 58,284 (9,110) 27,085 58,284 Total comprehensive (loss)/income attributable to: Owners of the parent (9,110) 27,085 58,284 (9,110) 27,085 58,284 |pageNoyers Ltd Audit Case Study Consolidated Statement of Financial Position For the year ended 30 June 2019 2019 2018 2017 $ODO sooD Current Assets Cash and cash equivalents (" ] 6,619 11,008 15,442 Trade and other receivables 11,947 17,735 24.593 Current tax receivable 1,093 Inventories 26,284 51,772 47 259 Biological assets 23,250 28,589 Other assets 444 218 811 Assets classified as held for sale 133,772 Total current assets 69,637 243,094 18,105 Non-current Assets Property, plant and equipment 370,796 327,773 305,587 Investments 112 91 78 Intangibles - water 186,031 161,952 212,871 Intangibles - goodwill 25,896 25,896 25,896 Intangibles - other 2,311 1,638 1,763 Total non-current assets 585,146 517,350 546,195 Total assets 654,783 760,444 634,300 Current Liabilities Trade and other payables 11,126 19,555 14,229 Borrowings 194 163,844 16 334 Current tax liability 3,120 3,796 Provisions 1,810 2,237 1,583 Other liability 7,090 1,433 Liabilities directly associated with assets classified as held for sale 2,905 Total current liabilities 13,130 198,751 37.375 Non-current Liabilities Borrowings 135,683 46,743 103,608 Net deferred tax liability 23,451 13,133 8,455 Provisions 171 133 85 Total non-current liabilities 159,305 60,209 112,148 Total liabilities 172,435 258,960 149,523 Net Assets 482,348 501,484 484,777 Equity Issued capital 477,865 477,865 477,865 Reserves [110) (921) (1,380) Retained earnings 4,593 24,540 8,292 Total Equity 482,348 501,484 484,777 Add tional Information *Mayors Lid han several local and everanas bank accounts. The overanun back accounts, used to deposit receipts from oversun customers are in US dollars. The company accountant uses the exchange rate at the close of the last business day in the financial year to convert the bank accounts in foreign cumercy to the equivalent As value at the year end. 9PageNoyers Ltd Audit Case Study High Medium Low High Lowest Lower Medium Inherent Risk Medium Lower Medium Higher Low Medium High Highest There is an inverse relationship between the ORA and detection risk (DR). Required (Spreadsheet tab Task 3 identifies six financial statement accounts and related assertions assessed as being at risk for Noyers Ltd. Note that the control risk for these accounts/assertions has already been assessed by other members of the audit engagement team as indicated in spreadsheet tab Task 3.} a. From the information that you have available to you about Noyers Ltd, assess the inherent risk for each of these five account/assertions (high, medium or low). b. Justify your assessment of the inherent risk level for each of the five account/assertions. C . Applying the qualitative audit risk model described above, determine overall risk assessment for each account/assertion and then determine the acceptable level of detection risk. Use the spreadsheet tab Task 3 in order to complete this task.Noyers Ltd Audit Case Study Other 5 & A Partners is an Australian accounting firm with offices located in each of the major cities. The firm has just been appointed to conduct the 30 June 2019 audit for Noyers Ltd. Appropriate client acceptance and quality assurance procedures under Australian Auditing Standards have been conducted by $ & A Partners for the audit of Noyers. You are employed by S & A Partners and the team that you are a member of has been assigned, by the audit partner, a number of tasks to complete in the audit of Noyers Led for the year ended 30 June 2019.Task 3 For each significant financial statement account assertion, the inherent risk and control risk are assessed. The work performed around understanding the business provides the inherent risk assessment, while the results of any control testing provides the control risk assessment. The combination of these two risks can be known as overall risk assessment (ORA). The ORA determines the nature, timing and extent of the substantive procedures to be performed - that is, the detection risk to be mitigated by auditors. The ORA is determined using the following table: Control Risk