please finish the task 5.

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 Ltd, 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 Ltd 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 Noyers 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 Oignon 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: 2018 $000 Raw materials Cropping inventories Walnut inventories Walnut nursery trees Water allocation 2019 $000 2,008 1,699 16,383 2,975 3,219 26,284 2,081 36,052 12,439 1,200 51,772 Noyers Ltd Audit Case Study The company values inventories, under AASB 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 ASB 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 $000 2018 $000 Cropping inventories Walnuts Livestock 7,518 7,959 7,773 23,250 13,583 7,168 7,838 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 (.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 SI Page 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 Ltd 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 $2.46 per kilogram in June 2019. Whilst domestic sales of walnuts make up some proportion of the total sales, most of the Australian walnut production is exported to the United Kingdom, other European countries and some Middle Eastern countries. Cattle live weight prices were 275.3 cents per kilogram of live weight at 30 June 2018 and 261.7 cents per kilogram live weight at 30 June 2019. 6 Page Other External factors Toward the end of the 2019 financial year, a Sovereign Wealth Fund of a European country purchased a significant shareholding in Noyers Ltd of 12% of the issued shares. Whilst the directors of the company have indicated that it is too early to predict the intention of this Fund, market analysts have theorised that this may be the forerunner of a complete takeover of Noyers Ltd, given the company's significant investment in water entitlements. Most of Noyers Ltd's export sales are conducted in United States dollars, so the company is exposed to fluctuations in exchange rates. The Australian dollar fluctuated significantly against the US$ 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 Ltd 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: Noyers Ltd Audit Case Study Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2019 2019 Revenue Cost of sales Gross profit Other income Distribution expenses Marketing expenses Operational expenses Administration expenses Finance costs Other expenses Impairment loss Profit before income tax expense Income tax expense Net (loss/profit for the year from continuing operations Total comprehensive (loss]/income for the year (Loss/profit attributable to: Owners of the parent $000 116,995 (120,025) (3,030) 37,001 (3.538) (321) (19,146) (3.517) (5,273) (58) 2018 $000 145,263 (123.883) 21,380 61.999 (3,380) (395) (29,784) (3.225) (7,457) (236) 2017 $000 166,087 (136,318) 29,769 109,674 (3.552) (426) (51,315) (4.100) (7,976) (102) (22,913) 49,059 9.225 58,284 2,118 (11,228) (9,110) 38,902 (11,817) 27,085 (9,110) 27,085 58,284 19,110) (9,110) 27,085 27,085 58,284 58,284 Total comprehensive (loss)/income attributable to: Owners of the parent 19.110 (9,110) 27,085 27,085 58,284 58,284 8 Page Consolidated Statement of Financial Position For the year ended 30 June 2019 2019 5000 2018 5000 2017 5000 11,008 17.735 Current Assets Cash and cash equivalents (*) Trade and other receivables Current tax receivable Inventories Biological assets 15,442 24,593 6,619 11.947 1,093 26,284 23.250 47.259 51.772 28.589 811 218 133,772 243,094 88,105 112 327,773 91 161.952 25.896 1,638 517,350 760.444 305,587 78 212,871 25,896 1.763 546,195 634,300 Other assets Assets classified as held for sale Total current assets 69.637 Non-current Assets Property, plant and equipment 370,796 Investments Intangibles - water 186,031 Intangibles. goodwill 25,896 Intangibles. Other 2,311 Total non-current assets 585,145 Total assets 654,783 Current Liabilities Trade and other payables 11,126 Borrowings 194 Current tax liability Provisions 1,810 Other liability Liabilities directly associated with assets classified as held for sale Total current liabilities Non-current Liabilities Borrowings 135,683 Net deferred tax liability 23.451 Provisions 171 Total non-current liabilities 159 305 Total liabilities 172,435 Net Assets 482 348 Equity Issued capital 477.865 Reserves (110) Retained earnings 4.593 Total Equity 19,555 163,844 3.120 2.237 7,090 14,229 16,334 3,796 1,583 1,433 2.905 198,751 37,375 46,743 13,333 133 60,209 258,960 501,484 103,608 8,455 85 112,148 149,523 484,777 477.865 1921) 24.540 501,484 477.865 (1,380) 8,292 484,777 Additional information Noyers Lad has several local and overseas bart. The bank accoudoigts bonnes customers are in US dolas The company content uses the exchange rate at the dose of the last business day the face parte cont Sebarkannts in foreign currency to the equivalent A$value at the year and 91 Page Other S& 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 S & 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 Ltd for the year ended 30 June 2019. Task 5 This task requires you to carry errors found during the audit to the summary of audit differences. The errors in recorded amounts an judgemental differences encountered during the audit for which the client has not made a correction will need to be summarised to evaluate the materiality of their aggregate effect on the financial statements and their effect they may have on the overall conclusion (audit opinion). To enable you to complete the audit process, you are provided with a summary of key issues identified during the course of the audit, related discussions with management and resulting conclusions (refer to Appendix A below). Required a. Consider each of the findings provided in the additional information (See Appendix A below) and prepare a summary of audit differences (SADs) and identify/assess the overall impact of the unadjusted audit differences, assuming that the client has adjusted for the differences agreed with the auditor and NOT adjusted for the differences not agreed with the auditor (your assessment should show the impact of each difference on the current assets, non-current assets, current liabilities, non- current liabilities and the profit/loss for the year). b. Compare the net result with the materiality figures and assess the impact of the unadjusted differences on the audit report. c. Determine the type of audit report that should be prepared under Australian Auditing Standards (Note, you do not prepare the audit report, just determine the type of audit report that should be prepared). Reference this section with the relevant Audit Standard. Use the spreadsheet tab Task 5 in order to complete this task. Appendix A Summary of Key Matters Noted During the Audit of Noyers Ltd Matter Conclusion Related Accounts (Assertions! 1. Conversion of foreign currency band CEO The company holds bank accounts in US dollars The total of the US bank balances was Cash at bank balances Valuation which are used to deposit receipts from converted at an exchange rate of 1 US$ verse customers. During out, we 1.2224 AS The correct exchange rate noted that the company accountant used an US$ - 1.4222 A. This resulted incorrect exchange rate in converting the bank understatement of the cash and bank accounts in foreign currency to the equivalent balances and an erstatement of expenses AS valeat yearend of SA 112.000 Management agree with our calculation Foreign chap and has made in 2. Sales cut-off error The company els cotton bales on cerent During the review of cut off procedures, we Sales foto conditions. When cotton bales are sold os noted that there was one FOB destination Cost of sales of shoping point revered when we combles mounting to SA 370.000 the pools are shipped to the customer. When that was made on June 2010 and comon baleared to destination recognised as the books prior to revenue is recognised when the goods are year end. However, the shipment was received by the customer 2023. According the sale should not have been recognised. The related cast of sale recorded in the books was $112.000 Management refuses to make any Accounts receivable rights and ntal | Inventory accuracy. tion and 3. Under accrual provision of expemes The company provides for at Duding a niewol the red penses Operating temes comme year and based oncept of supplier invoices schedule prepared by management and the during the next month the cor for related supplier in, we noted that the June 2019 are based on receipt of soler company had under-cored for its by invoices in the month of July 2018, but for 512.000 which services were evided to the company prior to 20 June Management aprees and mode Acred nt | completature, wie 4. Valtion of Inventory The company holds an inventory of walnut Because the valuation of walnutstory the valuation that have been processed. These walnut using Tar value less estimated costs to ser inventories are valued by management at samatter of significant judgement, we have valueless estimated costs to sell. Based on engaged external specialists to review the their valuation, the value of the walnut valuation of walnut inventary Based on inventory is $16.380.000 their review, the air value les estimated costs to sell of the walnut invertory on hand 30 June 2019 is 16.000.000. Therefore Investored by S000 and expenses understand by 180,000 Management does not agree with the perces facul valuation and refuses to make an 5. Valuation of intangibles - Goodwill Goodall mounted for under the God has been allocated to cash impairment expense actual requirements of Arses and is impairment generating units of the company. We Dested under the requirements of AAS 136 re performed the impairment Desting of Impairment Testing these CGU Our testing found that the recoverable amount of growth one of the CGU had fallen below to carrying amount 14 Page Noyers Ltd Audit Case Study and therefore should tempored by $20.000 Management has agreed with the testing Goodwill valuation and has made the fired Noyers Ltd Audit Case Study Appendix B Tolerable Misstatement In addition to establishing planning materiality for the overall financial statements, materiality for individual financial statement accounts should be established. The materiality amount established for individual accounts is referred to as "tolerable misstatement." Tolerable misstatement represents the amount an individual financial statement account can differ from its true amount without affecting the fair presentation of the financial statements taken as a whole. Establishment of tolerable misstatement for individual accounts enables the auditor to design and execute an audit strategy for each audit cycle. Tolerable misstatement should be established for all balance sheet accounts (except "retained earnings" because it is the residual account). Tolerable misstatement need not be allocated to income statement accounts because many misstatements affect both income statement and balance sheet accounts and misstatements affecting only the income statement are normally less relevant to users. The objective in setting tolerable misstatement for individual balance sheet accounts is to provide reasonable assurance that the financial statements taken as a whole are fairly presented in all material respects at the lowest cost 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 Ltd, 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 Ltd 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 Noyers 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 Oignon 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: 2018 $000 Raw materials Cropping inventories Walnut inventories Walnut nursery trees Water allocation 2019 $000 2,008 1,699 16,383 2,975 3,219 26,284 2,081 36,052 12,439 1,200 51,772 Noyers Ltd Audit Case Study The company values inventories, under AASB 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 ASB 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 $000 2018 $000 Cropping inventories Walnuts Livestock 7,518 7,959 7,773 23,250 13,583 7,168 7,838 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 (.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 SI Page 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 Ltd 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 $2.46 per kilogram in June 2019. Whilst domestic sales of walnuts make up some proportion of the total sales, most of the Australian walnut production is exported to the United Kingdom, other European countries and some Middle Eastern countries. Cattle live weight prices were 275.3 cents per kilogram of live weight at 30 June 2018 and 261.7 cents per kilogram live weight at 30 June 2019. 6 Page Other External factors Toward the end of the 2019 financial year, a Sovereign Wealth Fund of a European country purchased a significant shareholding in Noyers Ltd of 12% of the issued shares. Whilst the directors of the company have indicated that it is too early to predict the intention of this Fund, market analysts have theorised that this may be the forerunner of a complete takeover of Noyers Ltd, given the company's significant investment in water entitlements. Most of Noyers Ltd's export sales are conducted in United States dollars, so the company is exposed to fluctuations in exchange rates. The Australian dollar fluctuated significantly against the US$ 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 Ltd 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: Noyers Ltd Audit Case Study Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2019 2019 Revenue Cost of sales Gross profit Other income Distribution expenses Marketing expenses Operational expenses Administration expenses Finance costs Other expenses Impairment loss Profit before income tax expense Income tax expense Net (loss/profit for the year from continuing operations Total comprehensive (loss]/income for the year (Loss/profit attributable to: Owners of the parent $000 116,995 (120,025) (3,030) 37,001 (3.538) (321) (19,146) (3.517) (5,273) (58) 2018 $000 145,263 (123.883) 21,380 61.999 (3,380) (395) (29,784) (3.225) (7,457) (236) 2017 $000 166,087 (136,318) 29,769 109,674 (3.552) (426) (51,315) (4.100) (7,976) (102) (22,913) 49,059 9.225 58,284 2,118 (11,228) (9,110) 38,902 (11,817) 27,085 (9,110) 27,085 58,284 19,110) (9,110) 27,085 27,085 58,284 58,284 Total comprehensive (loss)/income attributable to: Owners of the parent 19.110 (9,110) 27,085 27,085 58,284 58,284 8 Page Consolidated Statement of Financial Position For the year ended 30 June 2019 2019 5000 2018 5000 2017 5000 11,008 17.735 Current Assets Cash and cash equivalents (*) Trade and other receivables Current tax receivable Inventories Biological assets 15,442 24,593 6,619 11.947 1,093 26,284 23.250 47.259 51.772 28.589 811 218 133,772 243,094 88,105 112 327,773 91 161.952 25.896 1,638 517,350 760.444 305,587 78 212,871 25,896 1.763 546,195 634,300 Other assets Assets classified as held for sale Total current assets 69.637 Non-current Assets Property, plant and equipment 370,796 Investments Intangibles - water 186,031 Intangibles. goodwill 25,896 Intangibles. Other 2,311 Total non-current assets 585,145 Total assets 654,783 Current Liabilities Trade and other payables 11,126 Borrowings 194 Current tax liability Provisions 1,810 Other liability Liabilities directly associated with assets classified as held for sale Total current liabilities Non-current Liabilities Borrowings 135,683 Net deferred tax liability 23.451 Provisions 171 Total non-current liabilities 159 305 Total liabilities 172,435 Net Assets 482 348 Equity Issued capital 477.865 Reserves (110) Retained earnings 4.593 Total Equity 19,555 163,844 3.120 2.237 7,090 14,229 16,334 3,796 1,583 1,433 2.905 198,751 37,375 46,743 13,333 133 60,209 258,960 501,484 103,608 8,455 85 112,148 149,523 484,777 477.865 1921) 24.540 501,484 477.865 (1,380) 8,292 484,777 Additional information Noyers Lad has several local and overseas bart. The bank accoudoigts bonnes customers are in US dolas The company content uses the exchange rate at the dose of the last business day the face parte cont Sebarkannts in foreign currency to the equivalent A$value at the year and 91 Page Other S& 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 S & 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 Ltd for the year ended 30 June 2019. Task 5 This task requires you to carry errors found during the audit to the summary of audit differences. The errors in recorded amounts an judgemental differences encountered during the audit for which the client has not made a correction will need to be summarised to evaluate the materiality of their aggregate effect on the financial statements and their effect they may have on the overall conclusion (audit opinion). To enable you to complete the audit process, you are provided with a summary of key issues identified during the course of the audit, related discussions with management and resulting conclusions (refer to Appendix A below). Required a. Consider each of the findings provided in the additional information (See Appendix A below) and prepare a summary of audit differences (SADs) and identify/assess the overall impact of the unadjusted audit differences, assuming that the client has adjusted for the differences agreed with the auditor and NOT adjusted for the differences not agreed with the auditor (your assessment should show the impact of each difference on the current assets, non-current assets, current liabilities, non- current liabilities and the profit/loss for the year). b. Compare the net result with the materiality figures and assess the impact of the unadjusted differences on the audit report. c. Determine the type of audit report that should be prepared under Australian Auditing Standards (Note, you do not prepare the audit report, just determine the type of audit report that should be prepared). Reference this section with the relevant Audit Standard. Use the spreadsheet tab Task 5 in order to complete this task. Appendix A Summary of Key Matters Noted During the Audit of Noyers Ltd Matter Conclusion Related Accounts (Assertions! 1. Conversion of foreign currency band CEO The company holds bank accounts in US dollars The total of the US bank balances was Cash at bank balances Valuation which are used to deposit receipts from converted at an exchange rate of 1 US$ verse customers. During out, we 1.2224 AS The correct exchange rate noted that the company accountant used an US$ - 1.4222 A. This resulted incorrect exchange rate in converting the bank understatement of the cash and bank accounts in foreign currency to the equivalent balances and an erstatement of expenses AS valeat yearend of SA 112.000 Management agree with our calculation Foreign chap and has made in 2. Sales cut-off error The company els cotton bales on cerent During the review of cut off procedures, we Sales foto conditions. When cotton bales are sold os noted that there was one FOB destination Cost of sales of shoping point revered when we combles mounting to SA 370.000 the pools are shipped to the customer. When that was made on June 2010 and comon baleared to destination recognised as the books prior to revenue is recognised when the goods are year end. However, the shipment was received by the customer 2023. According the sale should not have been recognised. The related cast of sale recorded in the books was $112.000 Management refuses to make any Accounts receivable rights and ntal | Inventory accuracy. tion and 3. Under accrual provision of expemes The company provides for at Duding a niewol the red penses Operating temes comme year and based oncept of supplier invoices schedule prepared by management and the during the next month the cor for related supplier in, we noted that the June 2019 are based on receipt of soler company had under-cored for its by invoices in the month of July 2018, but for 512.000 which services were evided to the company prior to 20 June Management aprees and mode Acred nt | completature, wie 4. Valtion of Inventory The company holds an inventory of walnut Because the valuation of walnutstory the valuation that have been processed. These walnut using Tar value less estimated costs to ser inventories are valued by management at samatter of significant judgement, we have valueless estimated costs to sell. Based on engaged external specialists to review the their valuation, the value of the walnut valuation of walnut inventary Based on inventory is $16.380.000 their review, the air value les estimated costs to sell of the walnut invertory on hand 30 June 2019 is 16.000.000. Therefore Investored by S000 and expenses understand by 180,000 Management does not agree with the perces facul valuation and refuses to make an 5. Valuation of intangibles - Goodwill Goodall mounted for under the God has been allocated to cash impairment expense actual requirements of Arses and is impairment generating units of the company. We Dested under the requirements of AAS 136 re performed the impairment Desting of Impairment Testing these CGU Our testing found that the recoverable amount of growth one of the CGU had fallen below to carrying amount 14 Page Noyers Ltd Audit Case Study and therefore should tempored by $20.000 Management has agreed with the testing Goodwill valuation and has made the fired Noyers Ltd Audit Case Study Appendix B Tolerable Misstatement In addition to establishing planning materiality for the overall financial statements, materiality for individual financial statement accounts should be established. The materiality amount established for individual accounts is referred to as "tolerable misstatement." Tolerable misstatement represents the amount an individual financial statement account can differ from its true amount without affecting the fair presentation of the financial statements taken as a whole. Establishment of tolerable misstatement for individual accounts enables the auditor to design and execute an audit strategy for each audit cycle. Tolerable misstatement should be established for all balance sheet accounts (except "retained earnings" because it is the residual account). Tolerable misstatement need not be allocated to income statement accounts because many misstatements affect both income statement and balance sheet accounts and misstatements affecting only the income statement are normally less relevant to users. The objective in setting tolerable misstatement for individual balance sheet accounts is to provide reasonable assurance that the financial statements taken as a whole are fairly presented in all material respects at the lowest cost