Assignment_ACCT5015 Your assessment 2 is the submission of a written assignment through Turnitin. The link for submission will be available from October 01, 2018 on blackboard under the Assessments...

INTRODUCTION:
    This project has been made on the topic of audit and assurance. Two case studies have been analyzed thoroughly to answer the attached questions. The first case is on Travel X Pty Ltd, which is a retail Suburban Travel agency. It is expanding, the sales are also increasing but the profit margin is very low. It is planning to apply for loans for expansion and the bank require audited financial report. So, questions related to the audit planning are discussed for the company. International and Australian audit standards have been thoroughly followed.
    The next case study is on Electronic Enterprise Limited which is the manufacturer of electronic components. This case involves the questions if the budgeting and the variance analysis can be trusted in big organizations where mostly these are controlled by managements. So, the answers to the related questions have been tried to be found with reference to the International and Australian audit standards.
TRAVEL X PTY LIMITED:
1. Analytical process is a part of the audit process which help the auditor to understand the business of the client. Analytical procedure is very efficient in assessing the risk of an organization (Messier et al., 2012). Audit planning involves both establishing an overall strategy for audit i.e the direction in which the audit will be carried out and developing a guide for audit plan and developing the audit plan i.e the nature, time and extent of the audit procedures to be carried out. The following steps are to be followed to conduct the audit:
· Obtain proper knowledge about the business and its activities.
· Assess the risks involved with the business.
· Materiality estimates.
· Evaluating the control environments in the organization.
· Making the audit plan as to how to proceed with the auditing.
· Assigning the staffs.
2. Planning materiality is the amount by which the auditor believes that the financial statement has been misstated. The misstatement can be known or unknown; fraud or error. Auditor must have enough data for planning audit materiality and forming judgment (Houghton et al., 2011).
    For Travel X Pty Ltd, the materiality will be 3% of Sales Revenue. Then $ 428,409.6 will be set aside as the planning materiality amount of the financial statement. Sales revenue has been chosen as the base since sales revenue is of the highest amount in the whole financial statement. Sales revenue is even more than the total assets. 3% have been chosen as the percentage on sales revenue. Normally, 1% to 5% is taken on sales revenue, so 3% have been taken here which is middle of the normal range. Actually, as per the analysis of the relevant company, the level of risk in the firm is medium.
3. Key business risks associated with Travel X Pty Ltd are as follows:
· The industry in which the company is operating is changing slowly, so the other firms are finding it difficult to maintain the margin, so they are aligning with larger groups to be collective and increase the profits. Three major companies are already dominating the market. But the relevant company is yet to join any group.
· Large airline companies are integrating with online booking sites. This is working like a travel agency only electronically, ultimately enhancing the experience of the customers and making things easy for them.
· A lot of US airlines are giving flat commission...