The paper "Inherent Risk and Auditing Risk of OneTel Limited" is a great example of a finance and assignment case study. One. Tel was an international telecom organization that was started in Sydney. The telecom service provider was well known for the international standard services that it provided to its subscribers. The range of telecommunication services that the company provided to its customers included international and domestic calls, internet services, postpaid and prepaid service subscription, and GSM cellphone services. The firm’ s corporate strategy aimed at growing sustainably in the global telecommunication industry by investing in the customer-centric initiative.
In this regard, the company provided high standard and innovative telecom services at a relatively low price. Based on their financial report for the year ended 20 June 2000, the company reported total revenue of $678.2 million, with the Australian subsidiary being the highest earner. A closer look at the telecommunication industry in Australia shows that the industry had been experiencing immense changes. The Australian telecom infrastructure is well developed based on the fact that it consists of a sophisticated and extensive digital network. Prior to the deregulation of the telecom sector in 1997, only two carriers existed in the market.
Nonetheless, the industry has seen an increase of carriers now standing at 35 since deregulation. Among the players in the Australian market, Optus, Telstra, and Vodafone among are the dominant ones. The increased number of different sizes of service provider has increased the competition within the Australian market. Apart from the increased influx, the competition has also stiffened because most of the telecommunication services provided are common to all. Perse, finding a competitive advantage over the other companies is a difficult endeavor. Apart from the external factor of the market, the company also has unique management.
Its board of directors is made up of nine members, of which four are executives while the others are non-executives. With the changes and growth in the telecommunication industry, it is required that they possess vital managerial competencies and experience. This is also important for the management handles significant functions such as the appointment of high-level managers and approves One. Tel’ s financial plans and corporate strategies. Auditing Risk As it is with any organization, periodical auditing is important as it has a positive payoff of establishing the company’ s current status and improves its operations (Reding, 2013).
In addition to this, the auditing process is important as it helps an organization achieve its strategic objectives through a disciplined and systematic model to assess and enhance the efficiency of risk management and governance process. In carrying out an audit, an auditor may be faced with the risk of offering an opinion based on financial reports that have been misstated. This risk is defined as the audit risk. In the One.
Tel case, audit risk is an essential part of the audit process based on the fact that the auditor is not in a position to verify all transactions comprehensively. Given the fact that the telecommunication industry in Australia has been growing, and the services being provided have increased it is evident that One. Tel Limited has many transactions taking place daily. Although it is possible to evaluate the transaction, the risk model of auditing is usually adopted due to its convenience.
List of References
Boynton, W. and Johnson, R. 2006. Modern auditing. 1st ed. New York, NY [u.a.]: Wiley.
Gay, G. and Simnett, R. 2015. Auditing and assurance services in Australia. 6th ed. McGraw Hill Education.
Purvis, S. 2010. Auditing & assurance services. 1st ed. [Place of publication not identified]: Irwin Mcgraw-Hill.
Reding, K. 2013. Internal auditing. 1st ed. Altomonte Springs, Fla.
Ricchiute, D. 2006. Auditing. 1st ed. Mason, Ohio: South-Western/Thomson Learning.
Ruhnke, K., & Schmidt, M. (January 01, 2014). Misstatements in financial statements: The relationship between inherent and control risk factors and audit adjustments. Auditing, 33, 4, 247-270.