Myassignment.live is not sponsored or endorsed by this college or university
Key audit matters are those issues which are most significant in the specialized judgment of audit. In other words, key audit matters are those matters which affect opinion on audit report in a big way(Sirois, Bédard and Bera 2018).
The Key Audit Matter is essential in the annual report of the flight centre travel group to communicate significant matters which will help to increase the communicative value of the audit report by providing making the audit more apparent.
Impairment Testing of Goodwill and Other Intangibles is relevant as it is a significant part of the Audit Report of the flight centre travel group that should be reported to the company shareholders, regulatory authorities, investing public and other stakeholders. This item shows the goodwill and other intangible assets allocated to each unit producing cash. An annual impairment assessment of intangible assets by auditors is a vital auditing matter due to the value of immaterial assets relative to the total assets and the extent to which the forecasts and expectations for future estimated cash flows are taken into account. Taking into account the impact of the COVID-19 on business operations and financial results, the Goodwill and Other Intangible Impairment Tests are becoming even more relevant as the global pandemic is expected to deteriorate in a lowered business cycle during a consequential leisure business disruption in 2019.
Moreover, the flight centre travel group operates in geographical areas where COVID-19 infection rate continues to escalate and is expected to increase Impairment Testing of Goodwill and Other Intangibles in the future(www.fctgl.com, 2020).
Impairment of contractual assets is one significant item that needs to be addressed in the audit report of flight centre travel group because of its importance relative to total assets and the extent of appraisal and expectations relating to the right of consideration for reward volume payments obtained by the suppliers in advance for the achievement of annual targets and the other services provided to the consumer(Castka, Searcy and Fischer 2020). When services are transferred to a customer before or before payment of the compensation is due, a contractual benefit would be remembered for a conditional consideration received. But this item is vulnerable to significant risks such as credit risk, interest rate risk and currency risk, which are difficult to foresee and challenging to hedge from to reduce the possible financial harm. Due to the short-term existence of the contractual properties, its fair value is considered to be approximated and a necessary supplement to the audit report.
An audit report of the flight centre travel group should include the changes that management should pursue to soften the adverse consequences of COVID-19 to the business operations and financial results of the company. These changes may consist of the forecasted operating results or cash flow projections; changes in the assessment of its short-term liquidity or the ability of the company to access capital or obtain funding; and the impact of external conditions, unviable long-term commitments, need to revise overall business operations and the dependence on a particular business segment(www.ifac.org). In identifying conditions or events which pose significant doubts about the company's ability to continue as a business enterprise, management should consider whether its plans to mitigate the substantive doubt by mitigating certain relevant conditions or events. Except to the degree that the mitigating impact of management strategies is considered
Castka, P., Searcy, C. and Fischer, S., 2020. Technology-Enhanced Auditing in Voluntary Sustainability Standards: The Impact of COVID-19. Sustainability, 12(11), p.4740.
Sirois, L.P., Bédard, J. and Bera, P., 2018. The informational value of key audit matters in the auditor's report: Evidence from an eye-tracking study. Accounting Horizons, 32(2), pp.141-162.
www.fctgl.com, 2020. [online] Fctgl.com. Available at: <https://www.fctgl.com/wp-content/uploads/2019/10/FLT-Annual-Report-FY19.pdf> [Accessed 1 September 2020].
www.ifac.org, 2020. Summary Of Covid-19 Audit Considerations. [online] IFAC. Available at: <https://www.ifac.org/knowledge-gateway/supporting-international-standards/discussion/summary-covid-19-audit-considerations> [Accessed 1 September 2020].
To export a reference to this article please select a referencing stye below:
My Assignment Help. (2022). Accounting Principles II. Retrieved from https://myassignment.live/free-samples/acct2023-accounting-principles-ii/financial-statements-of-the-business-file-A1D39FE.html.
"Accounting Principles II." My Assignment Help, 2022, https://myassignment.live/free-samples/acct2023-accounting-principles-ii/financial-statements-of-the-business-file-A1D39FE.html.
My Assignment Help (2022) Accounting Principles II [Online]. Available from: https://myassignment.live/free-samples/acct2023-accounting-principles-ii/financial-statements-of-the-business-file-A1D39FE.html
[Accessed 06 September 2022].
My Assignment Help. 'Accounting Principles II' (My Assignment Help, 2022) < https://myassignment.live/free-samples/acct2023-accounting-principles-ii/financial-statements-of-the-business-file-A1D39FE.html> accessed 06 September 2022.
My Assignment Help. Accounting Principles II [Internet]. My Assignment Help. 2022 [cited 06 September 2022]. Available from: https://myassignment.live/free-samples/acct2023-accounting-principles-ii/financial-statements-of-the-business-file-A1D39FE.html.
Are you confident that you will achieve the grade?
Our best Expert will help you improve your grade
If you are the original writer of this content and no longer wish to have your work published on Myassignment.live then please raise the content removal request.