Company name: Abilene Oil and Gas Ltd

ASX code: ABL

Sector: Energy

Required

Understanding a Client to Plan a Financial Report Audit

As a part of the risk assessment phase for the financial report audit of above client company and in accordance with auditing standards (i.e., ASAs), you are required to gain an understanding of the structure and the business environment. By understanding the client's business, the audit team can identify potential risks that may have a significant effect on the financial report. This will assist the audit team to complete the financial report audit and fulfil a key responsibility.

Address the following six areas.

1. General and industry-specific economic trends and conditions
2. Competitive environment
3. Product, customer and supplier information
4. Technological advances and the effect of the internet
5. Laws and regulatory requirements.
6. Other area

Risk of Material Misstatement (Inherent Risk) at the Financial Report Level

From Part 1, identify one(1) specific account balance (not account classifications!) that you consider at significant risk of material misstatement. For your chosen account balance:

a)Explain why the account balance is at significant risk of material misstatement.

b)Explain one, key assertion at risk of not being valid.

c)Detail one (1) relevant substantive audit procedure to address the assertion at risk as identified in b) above.

d)Detail one (1) relevant practical internal control that would mitigate the risk in relation to the assertion at risk as identified in b) above.