Audit Assignment
“Paddy power”
QUESTION #1
Conduct the necessary “background research” you deem necessary to prepare for the audit of the company, including a summary of the industry in which the company operates. Detail the various sources of information you have consulted in addition to the annual report.
Answer: 1
Introduction of the company
Paddy Power is an Irish company, which was founded in the year 1988 by three Irish bookmakers. They started the company with 40 betting shops and soon it became the world’s largest betting enterprise.The company has chain of more than 600 shops in the UK and Ireland and it opened 73 new shops in 2014 alone. In addition to this,Paddy Power is listed on the stock exchanges of both UK and Irish as well as it conducted business through both online and offline medium.
The company operates its business through a chain of betting shops in Ireland and the United Kingdom.It offers betting facility to the public at large. The company is also operating through its website. This makes the company a worldwide betting company as in 2009 the company expanded its operations by purchasing an online betting company, Sports Bet of Australia. In the year 2012, the company entered Italian market in order to take advantage of attractive regulated new betting avenue.
The auditor should know all the core and threshold activities of the company and the manner in which the company operates and the major operations and markets of the company to know the proper knowledge about the company.
Understanding of Entity’s Operations and its Environment
The entity is a company involved in betting and gambling through its online website and worldwide chain stores in order to reinvent the betting as a source of entertainment. The company is expanding continuously and rapidly with the help of launching Smartphone app and it enjoys a far greater following on Facebook and Twitter compared to its competitors. The company has a competitive edge of introducing first ever online gambling facility. In addition to online betting facility, the company is operating its worldwide betting stores across UK, Ireland, Australia, Italy and Belgium.
Hence, the auditor needs to review the company and the financial statements of the company and the auditor has to gather the information required to understand the entity and its environment (Fottrell, 2011). Moreover, it is important to conduct the audit of the company effectively and efficiently as well as to analyze the productivity and performance of the company.
The auditor needs to find the operations of the company and the environment in which it operates. The environment of the entity depends on the attitude of the management of the company and the size of the company. Making an understanding is very important as the auditor has to form an opinion on the company, its operations and its financial statements. The credibility of the financial statements depends on the understanding of the entity and its controls.
Industry trend and Analysis
The auditor needs to understand the industry in which Paddy Power operates; i.e. the betting and gambling industry. The industry is huge as it has both international and local players. Furthermore, the competitive rivalry among the players is intense; also many bookmaking companies from all around the world have also followed the lead of Paddy Power and have launched their own versions of various online betting websites.However,Paddy is at a clear advantage with greater revenue and profit margin.(Power, Online Betting from Paddy Power – Bet on iPhone, iPad, n.d).
In order to understand the market trend of betting and gambling industry, the company’s information from the competitors’ financial statements, annual reports and public views about other companies could also be used in order to compare with the competitors. Auditors could use stakeholders’ analysis in order to understand the company’s preferences, market conditions, consumer behaviors and general public view affecting directly or indirectly from company’s operations.........................
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