NAME of The company considered for the discussion is

Company Bega Cheese Limited

DISCUSSION

FACTOR LOW MODERATE HIG

H

Initial versus Auditor gains knowledge and experience about Moderat

repeat audits the probability of misstatement after auditing a e
company for several years. Therefore, most
auditors set a high inherent risk in the first year
of an audit and reduce it in the later years.
Based on the annual report of the company it is
noted that the audit is performed in end of the
year which was done for June 2018, the auditor
has stated that the audit approach based on
three key aspects: materiality of the financial
transactions, scope of the audit and key audit
matters. ( Bekaert, 2016). The objective of
auditor rotation is to promote auditor
independence. reasonable assurance about
whether the financial report as a whole is free
from material misstatement, whether due to
fraud or error, and to issue an auditor’s report
that includes our opinion.Reasonable assurance.
Auditor rotation requirements apply to individuals
who have played a significant role in the audit of
listed companies or listed registered schemes.
The audit has been performed based on the
standards which have been set by AASB and
IFRS, the auditor has described in detail the key
audit aspects which are related to the goodwill &
intangibles and inventory valuation. Hence, the
risk associated with the initial vs repeat audits is
moderate as the company has complied with the
necessary laws and regulations

When recording transactions that occur

infrequently, the client may not have sufficient
Quantity of and adequate experience to record them
non-routine correctly. The client is more likely to make
transactions mistake(s) due to a lack of relevant experience.
It is logical for the auditor to estimate a high
inherent risk in this situation. No –routine
transactions which are unusual for the client are
more likely to be incorrectly recorded than
Hig
routine transactions as the client lacks
 experience to record them. h

One-off items in FY2018

 The Group completed the purchase of Bega

Foods business on 4 July 2017, which
incurred a number of one-off transaction costs
(including stamp duty and other costs) totalling
$12.9 million before tax in FY2018.
 On 17 August the Group acquired the Koroit
dairy manufacturing facility from Saputo for
$250.0 million, which incurred a number of
one-off transaction costs totalling $0.8 million
before tax prior to the end of FY2018, with
further transaction costs to be incurred
inFY2019, including transitional costs, stamp
duty, legal and advisory fees and other costs.

One-off items in FY2017

 The Group incurred legal, financial and

corporate advice and transaction costs relating
to the acquisition of the Mondelēz Grocery
Business totalling $11.5 million before tax.
 On 24 April 2017 the Group completed the
sale of infant nutritional assets to Mead
Johnson and formed the MJN Alliance, which
resulted in a material capital gain of $177.8
million after transaction costs and before tax.

References

Alexander, D. Britton, A., et al., (2017) International financial reporting and analysis. 7th ed. London:
Cengage. ISBN 978-1-473-72545-4

Bega. (2018). Annual report of Bega Cheese limited

Bekaert, G. J., & Hodrick, R.J., (2016), International Financial Management, 2nd Ed., Pearson,
London. ISBN-10: 129202139X (also available as e-book)