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Write a case analysis assess and understanding of capital raising by Australian companies through an initial public offering (IPO) and its impact on firm’s performance.

The Case Analysis assesses students’ understanding of capital raising by Australian companies through an initial public offering (IPO) and its impact on firm’s performance. The focus is on the four puzzles identified in academic literature concerning IPOs:

  • Costs of IPOs are very high.
  • On average, IPOs appear to be under-priced.
  • The number of IPOs are cyclical.
  • The medium to long run performance of a new public company (3 – 5 years from the date of issue) is poor.

identify any three Initial Public Offerings (IPOs) on the Australian Securities Exchange (ASX) of an amount of at least $100m that occurred during the 8-year period from 2007 to 2013. They should be from different industries. Using information from annual reports and other sources such as analysts’ reports, evaluate whether the funds raised from the IPO were used to finance viable investment projects.  If some of the funds raised contributed to working capital needs, you should highlight that

i. Explain and differentiate between planning, performance and specific materiality levels.

  1. Explain and differentiate between planning, performance and specific materiality levels. You are not required to include references to relevant paragraphs of ISA (NZ)s. You must use your own words (i.e. you can paraphrase but not copy from the standards and other material. You need to cite your information sources).

(6 marks)

 

  1. Calculate a planning materiality level and a performance materiality level for the coming year audit. Justify your calculations.

(5 marks)

 

  • Calculate specific materiality levels and specific performance materiality levels for the current assets – trade account receivables and inventory, and explain it is important to calculate these specific materiality levels.

(5 marks)

 

 

 

PART B – 10 marks

 

Following the planning stage of the audit you carry out the following steps:

 

  1. Gain an understanding of LQFL’s accounting information system and related internal controls.

 

  1. Perform walk-through procedures.

 

  • Assess the internal control risks.

 

  1. Test the “strengths” of the internal controls by carrying out tests of controls.
  2. REQUIRED:

 

Describe and explain the objective of each of the above steps in the audit process.