Required: form answer like the example below. Using the Inherent Risk Factors listed on pages 77-78 of ASA315, identify what you consider to be inherent risk-change that could have an impact on the audit of Woolworths for the reporting period ending 30th June 2024. don't identify more than one example for change inherent risk category.

the inherent risk-Change which happened between 1/7/23-30/6/24.

make sure to mention the pages used from reports for writing the task. and in text reference everything and provide reference list.

The example you identify need to be relevant to the reporting period encompassing the period 1/7/23 - 30/6/24. As the auditor you would be focusing on example that can potentially cause material misstatement(s) - this can mean material by amount or material by nature and you would be looking for the possibility that the numbers are wrong, or the disclosure is wrong.

Woolworths is used for this task. Find example which happened between 1/7/23 - 30/6/24 and which could cause material misstatement.

The final "level" of inherent risk analysis is to identify appropriate treatment of these issues in the financial reports. That is, once you have identified an event or issues that is relevant to Woolworths for the current reporting period, identify how this event will impact the financial reports - this means looking at what will be recognised, how will it be measured and finally, how will it be disclosed in the financial reports.

Example- follow this writing method.

Inherent Risk Factor 1 - Subjectivity Specific example of uncertainty relating to Woolworths - Valuation of Intangible assets including Goodwill

Intangible assets are subject to annual impairment reviews to ensure the amounts shown in the financial reports represent fair value(s) at reporting date. Intangibles in 2024 represented over 14% of total assets of the entity representing a material amount (2024 Annual Report, Page 108).

The determination of the fair value of intangibles and specifically, goodwill, includes numerous estimates and assumptions that are subject to risks and uncertainties. The group has a number of different intangible assets including: Brand names Internally generated intangible assets Software Customer contracts

The estimates, judgements, and assumptions used by Woolworths are "based on historical experience, adjusted for current market conditions and other factors that are believed to be reasonable under the circumstances, and are reviewed on a regular basis" (page 113, 2024 annual report).

Appropriate Treatment by the Accounting Standards Woolworths has two specific categories of intangible assets - goodwill and other intangible assets and will need to apply AASB136 Impairment of Assets covering goodwill and AASB138 Intangible Assets covering other intangible assets. Goodwill will be recognised and measured in accordance with paras 65 - 74 of AASB136.

In the case of other intangibles such as software and brands, measurement of intangible assets will be based on paras 72-75 of AASB138. Impairments of intangible assets are required to be applied when the carrying amount exceeds recoverable amount as per para 8 of AASB136. Hence the auditor will need to assess whether an impairment is appropriate. Specifically, paragraph 10 of AASB 136 requires focus on the applicability of paragraphs 80 - 99 for the annual impairment of goodwill.

Paragraph 134 of AASB136 outlines the estimates used to measure recoverable amounts associated with Goodwill. Specifically, paragraph 134 (d) identifies the assumptions that are used to determine the recoverable amount for goodwill. Annual reviews of the amortisation period for intangible assets will be made in accordance with paras 97 - 104 of AASB138. Retirement and disposal of intangible assets will be in accordance with para 112 of AASB138 with appropriate disclosures detailed in paras 118 - 123 of AASB138.