ACC3AUD Audit Assignment Homework Answers AUDIT RISK & PLANNING 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 Ratio Summary Table Ratio 2015 2016 Industry I. Current ratio 2 ii. Debt-to-equity ratio 1 iii. Gross Profit Margin 60% iv. Inventory turnover 4 times v. Trade Receivables turnover 6 times 4. Material misstatements 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. Explain why these particular areas are risky. 5. Going concern Given the financial results and based on the information you have gathered, is there a potential going concern issue? Explain 6. Social Responsibility 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.