ACC6030 - Altium Ltd: Case Study Report

• Problem Statement

In order to investigate and report on the “true and fair” status of the financial statement of Altium Ltd.’s for the year ended 2020, special focus will be made on “Key Audit Matters” by the company’s Auditor. The auditor’s report will be analyzed using risk-based auditing approach and auditing concepts based on Auditing Standards like ASA 315, ASA 320, ASA 330, ASA 560, ASA 570. ASA 700, ASA 705, ASA 706 and APES 110. As mentioned in the financial report 2020, the auditor of Altium Ltd. is PricewaterhouseCoopers with its headquarters in Barangaroo NSW, Australia. 

The analysis will be conducted based on detailed financial and non-financial information presented in the current annual report. The Key Audit Matters area will be scrutinized for understanding the key business operations and auditor’s concerns on the company’s financial statement’s truth and fairness. The aim is to ensure that the impact of business risk, corporate governance, ethics, control risks, whistle-blowing, internal control, reporting to agencies, auditor’s negligence, auditor’s independence, accounting policies and fraud are considered and analyzed in detail while forming an opinion by the auditors on the firm’s financial statement. 

• Methodology

This report will utilize the qualitative analysis based on secondary data obtained from annual reports, Australian Standards of Auditing (ASA) issued by Auditing and Assurance Standards Board (AUASB) and various internet sources. Thus, this research will utilize the risk based approach for analyzing the audit success. In order to do so, the documentation and data sourcing will be done with due diligence so that the financial statements be reviewed in light of truth and fairness. 

Risk based auditing process utilizes the risk assessment as the basis of conducting an audit. It aids the reviewer in addressing the key risks faced by the company, critical systems that could impact the operations of the firm and assessment of assets in order to mitigate the risks (Koutoupis & Tsamis, 2009). The RBA allows the auditors to perform the risk assessment by inquiring the management using analytical procedures, observation and inspections for obtaining the understanding of the firm and its surrounding environment. This approach lets the reviewer to identify key risks and assess the risks of any material misstatement (Koutoupis & Tsamis, 2009). Through RBA, the auditors assess overall risk management framework in order to provide assurance regarding firm’s risk management process and the risk appetite of the company (Robson, Humphrey, Khalifa, & Jones, 2007). Auditors would likely look at the foundational issues (including system inventory, data inventory, best practices and oversight). 

In the annual report of 2020, the Auditing Standards were undertaken and reviewed before issuing reasonable assurance based on AAS as expressed by PwC. The annual report provided the clear application of auditing assurances including ASA 320- Materiality in Planning & Performing an Audit, Corporations Act-2001, APES 110- Code of Ethics, ASA 315- Identifying & Assessing the Risks of Material Misstatement through Understanding the Entity & its Environment, AASB 112- Income Taxes, AASB 136 – Impairment of Assets and AASB-15 Revenue Recognition (Altium Ltd, 2020). Furthermore, the key audit matters will be reviewed for analyzing the carrying value of goodwill, calculation of deferred tax balance, revenue recognition and subjective judgments made by group regarding uncertain future events.