Please answer all questions. (Note: 100 word limit for each questions below).
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. Do 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 Auditors Report there is a section entitled Auditors 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?
INDEPENDENT AUDITOR'S REPORT Deloitte Deloitte Touche Tormatu ABN 74 490 121 000 560 Bouwe Streer Melboum, VC, 3000 Phone: +61 3 671 7000 www.deloitte.com.au Kuo son en Buesada 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 francial report of Bed Commandes de the God which comprises the consolidated balance shot at 30 June 2010, the concedente proftorom, the consoldated statement of profit or low and other comprehensive income, the consolidated statement of cash fows and the consolidated statement of changes in equity for the year then ended and not to the financiamente, including a summary of significant accounting policies and the directors' declaration har opinion, the accompanying francia report of the Group is in accordance with the Corporations Act 2001, including ging a true and tar view of the Group's francaposton 30 June 2010 and of the francal perfomance for the your the ended and complying with Australian Accounting Standards and the Corporations Regulations 2001 Basis for Option We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under the standards are the described in the Author'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 Erical Standards Boards PES 110 Code of Ethics for Professional Accountants the Code that are relevant to our audit of the financial report in Australie had our other thical responsibilities in accordance with the Code We confirm that the independence declaration red by the Coporations Act 2009, which has been given to the directors of the Company, would be in the same formgiven to the directors as the time of this auctor's repot We believe that the audit evidence we have obtained is sufficient and propriate to provide a basis for our opinion Kay Audit Matters Kay audit matters are those matters that in our professional Judgement were 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 fracal report as a whole, and in formag our opinion thereon, and we do not provide a separate prin emas. Labied by a scheme aproved under Passion Standards Maribor fotosPacle Lied and the Doctor 58 For personal use only Key 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 Roberto Note 11 tag ng the design and implementation of control The carrying value of The Good Guys cash generating unit relating to the preparation of the valuese mode contains $575.6 million of goodwill and $2413 million of agreeing forecast cash fows to the west Board indefiniteuse brand names, both of which are required approved budget and on the historical curacy of to be assessed for impairment mually or where there is an managements forecasting Indicator of imporment win the assistance of our valuation specialists, we As disclosed within Note 11 to the financial statements, management have assessed The Good Guys cash generating . sed the management' value unit for impairment using a value nuse discounted cash flow model. The imporment assessment incorporated significant challenging key assumptions, including forecast judgments and estimates specifically concerning tactors growth rates by comparing them to historical results such as forecast cash fows, discounts rates and terminal and economic forecasts leted the discourt rate used by assessing the cost of capital for the cash regnt by comparison to market data . sessing the mathematical accuracy of the value se model and assessed management's seativity analyses word keyptions in the valuation model We also assessed the appropriateness of the disclosures included in Note 11 to the francial statements AASS 16 Leases: Presentation and disclosure Our audit procedures included, but were not limited to: Refer to Note 2 Significant accounting policies Now testing the completeness of the lease data captured by accounting standarde management by agreeing a sample of rent expert in the The Group is required to apply the requirements of MSB 16 ledger to the lease date Lees from 1 July 2019, being the start of the francial year testing the accuracy of these data captured by ending 30 June 2020 management, on a sample bass, by agoong it to the As set out in Note 2010. management has identified that the underlying documentation adoption of AAS 16 Lesses will have a signicart impact on with these of our treasury Specials the presentation of the Group's financial statements. the incremental bonowing notes wed by management to The expected impact of adopting AASS 16 is relant upon calculate the lone lability a number of kay estimates and judgements as set out in evaluating the estimates and judgement applied by Note 29. Additionally, there is the lowe data is management in determing the period for each incomplete or inaccurate ease, including the probability of exercising options and the lease term assigned to eases in thoid Over and recalculating the stability and right of uneset, on a sample basis to out the mathematical accuracy of management actions We also used the progress of the disclosures ncluded in Note 29 to the fnancial statements 59 INDEPENDENT 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 change information which we cbtained prior to the date of this auditor's report. The other informations includes the Chairman and Chief Executive Officer Report, which is expected to be made avale to use that we fout 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 mytom of nurance conclusion thereon In connection with our audit of the financial report our responsibly is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the fnancial report or our knowledge obtained in the audit, or otherwise appears to be materially missed. It based on the work we have performed on the other information that we cbtained 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 the Becutive Officer Report, Iwe conclude that there is a material isstatement therein, we are required to communicate the matter to the directors and use our profesional judgement to determine the appropriate action Responsibilities of the Directors for the Francia Report The directors of the Company are responsible for the preparation of the trance reportatges a true and to view in accordance with Austration Accounting Standards and the Corporations Act 2009 and for such internal control as the directors determine is necessary to enable the preparation of the francial reportatges a true and tirview and is free from material mistatoment whether due to troud or error the preparing the francial report the directors are reportering the bly of the Group to continue na going concern dacioning applicable matters related to going concom and using the going concern basis of accounting unless the directors other intend to date the Group or to cane cerations or has no realistic strative but to do 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 enter and to be an actor'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 wil always detecta material misstatement when tests. Misements can ase from brador amor and are considered material individually or in the agregato, they could reasonably be expected to runce the economic decisions of users taken on the basis of this financial report As part of an audie in accordance with the Australien Auditing Standards, we sercise professional agement and maintain professional sceptic toughout the audit Wels dentity and assess the risk of material statement of the financial report whether due to trador eor, design and perform audit procedures responsive to thoseisis, and an audience that is sufficient and propriate to provide a basis for our opinion. The risk of not detecting a materialistatement resulting from fraud is higher than for one resulting from emor, as fraud may involve collusion, forgery, intentional missions, mutations, or the override of internal control Obtain an understanding of internal control over to the audit in order to design audit procedures that are appropriate in the Groumstances, but not for the purpose of expressing an ion on the effectiveness of the Group'sintomal control Evaluate the appropriateness of accounting policies used and the morbeness of accounting estimates and related disclosures made by the directors Condude 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 sed to events or conditions that may cast significant doubt on the Group's ability to continue as a going concom. If we conclude the material uncertaintys, we are required to draw attention in our auditor's report to the rated disclosures in the financial report of such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audience and up to the date of our auditor's report. However, future events or conditions may cause the Group to come to contine a going concom For 60 Evoluto the owwal presentation, whichure and content of the racial report, houding the disclosures, and whether the francial report represents the underlying transactions and events in a manner that achieve for presentation Cotan suficient appropriate audit evidence regarding the francia formation of the entities or business activities within the Group to express an opinion on the francial report. We are responsible for the direction, supervision and performance of the Goup's ad. We remains responsible for our audit opinion We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant dicencies in internal controlat we entity during our audit We also provide the directors with a statement that we have compled with relevant ethical requirements regarding independence and to communicate with them al 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 the 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 bereits of such communication Report on the Remuneration Report Opinion on the Remuneration port We have audited the Portuneration Report included in pages 32 to 66 of the Directors report for the year ended 30 June 2013 In our oprion, the Retureration Report of B Limited for the year ended 30 June 2010. complies with section 300 of the Corporations Act 2001 For personal use only Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300 of the Corporations Act 2007. Our responsibility is to express an opinion on the remuneration Report based on Du audit conducted in accordance with Australien Auditing Standards Deloitte Touche Tohmahan DELOITTE TOUCHE TOHMATSU Travis Skin Partner Chartered Accountants Melbourne 12 August 2019 61 DIRECTORS DECLARATION The directors declare that in the directors corion, there are reasonable ground to believe that the Company will be able to pay to debts as and when they become due and peable by the attached financial statements are in compliance with international Francial Reporting Standards, as stated in noho 1 10 he financial statements: in the directors opinion, the anached financial statements and notes thereto are in accordance with the Corporations Act 2001. including compliance with accounting standards and giving a true and fairview of the financial position and performance of the consolidated ently, and Ich the directors have been given the deciarations required by s.296A of the Corporations Act 2001 At the date of this declaration, the Company is within the class of companies affected by ASIC Corporation (holy-owned Companies instrument 2016/785. The nature of the deed of crons guarantee is such that each company which is party to the deed guarantees to each creditor payment in tal of any date in accordance with the deed of croos guarantee in the directors' opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC Class Order apples, as detailed in noto 22 to the financial statements will as a group, be able to meet any bigations orbis 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.2009 of the Corporations Act 2001 On behalf of the Directors hel fue en Puested dem Greg Richards Chaman Richard Murray Group Chef cutive Office Melbourne 12 August 2010 62
