MAA705 Corporate Auditing
Trimester 2 2019
Assessment task 1 Report
DUE DATE AND TIME: Thursday 29 August 2019 by 8pm AEST (week 7)
PERCENTAGE OF FINAL GRADE: 35%
HURDLE DETAILS: None for this task
Learning Outcome Details
Unit Learning Outcome (ULO) Graduate Learning Outcome (GLO)
ULO 1 Demonstrate knowledge of theories and regulation regarding audit and assurance services of both a financial and non-financial nature. 1
ULO 3: Evaluate appropriate audit and assurance procedures and responses that should be applied to different contemporary business scenarios. 5
ULO4: Use professional and ethical judgment in applying relevant legal and professional pronouncements to all stages of a given assurance engagement 8
ULO5: Communicate and justify accounting and auditing ideas in contexts involving both accountants and nonaccountants. 2
Students who submit their work by the due date will receive their marks and feedback on CloudDeakin by 20 September 2019 at 9am AEST.
Word limit: 3,500 words maximum (excluding references). In-text citations, the introduction, body and conclusion of the report are included in the word count.
Students who exceed 3,500 words will be penalised 1 mark (of the available 35 marks for this task) per 100 words over the word limit.
Description / Requirements
This assessment task consists of two parts. Each part is to be submitted to separate Dropboxes.
Part 1 (15 marks)
According to ISA/ASA 240 The auditor's responsibilities relating to fraud in an audit of financial statements (https://www.auasb.gov.au/admin/file/content102/c3/ASA_240_Compiled_2015.pdf):
'When identifying and assessing the risks of material misstatement due to fraud, the auditor shall, based on a presumption that there are risks of fraud in revenue recognition, evaluate which types of revenue, revenue transactions or assertions give rise to such risks.'
Draft an email to your Audit Manager – Mrs Williams in which you address the following:
1. Relying on the information in ISA/ASA 240 (refer to link above). Explain the difference between the responsibility of management, those charged with governance and the auditor in relation to the prevention and detection of fraud. (4 marks)
2. Discuss the misconception that exists in society surrounding the role of the auditor in relation to the prevention and detection of fraud in an audit of financial statements.
3. Provide three reasons why an auditor presumes that there are potential risks of fraud relating to revenue recognition in entities. Make sure that you explain your reasons clearly (3 marks)
4. Provide 2 examples (including some detail) of cases of revenue misstatements that have been
reported in the media. (4 marks)
Part 2 (20 marks)
Based on the 31 December 2016 Annual Report for Woodside Petroleum Limited (available on CloudDeakin), prepare a planning memorandum for the audit partner which includes the following:
a. Identification of four (4) major business risks of the company and a detailed explanation of why each factor identified is a risk to the business (Note: The Chairman’s and CEO’s report and the management discussion at the beginning of the report will assist you to identify these).
b. Results of analytical procedures. (Please include your workings in an appendix). It is recommend that you prepare a horizontal analysis and prepare key ratios. Identify and explain which changes in the horizontal analysis and which ratio results would trigger further investigation in the audit.
c. Your identification and explanation of four (4) inherent risks that you identify from the business risks and analytical procedures. (Note: business risk are not the same as inherent risks) 12 marks
d. Identification of a key account and a key related assertion at risk of material misstatement based on the inherent risks you identify in part (c). (Identify a key account and a key assertion for each
of the four inherent risks identified in part (c))
e. An assessment of the overall inherent risk including an explanation of the factors that lead to this assessment. 6 marks
f. Planning materiality in a $ amount. You must include a breakdown of your calculation and a justification of your choice of base, the percentage used and your assessment of detection risk.
Assume control risk is high. 8 marks
(16 + 20 + 12 + 8 + 6 + 8 = 70 marks which will be converted to a mark out of 20)
Suggested words for this part: 2,000 words. The calculation of the analytical procedures is not included in the word count. A rubric is not useful for this part of the assignment and therefore is not provided. This part provides evidence of ULOs 1, 3, 4 and 5, and GLOs 1, 2, 5 and 8).
Submit your work online to the assignment Dropbox on CloudDeakin.
• Students must submit a properly referenced assignment that complies with the Harvard referencing style.
• Part 1 of your report is addressed to the Audit Manager, therefore it must be written in a professional tone.
• Part 2 of your report is a planning memorandum to the Audit Partner and should be written in the appropriate format.
• You must keep a backup copy of the assignment you submit, until the marked assignment has been returned to you. In the unlikely event that one of your assignments is misplaced, you will need to submit your backup copy.
• Any work you submit may be checked by electronic or other means for the purposes of detecting collusion and/or plagiarism.
• When you are required to submit an assignment through your CloudDeakin unit site, you will receive an email to your Deakin email address confirming that it has been submitted. You should check that you can see your assignment in the Submissions view of the Assignment Dropbox folder after upload, and check for, and keep, the email receipt for the submission.
• Penalties for late submission: The following marking penalties will apply if you submit an assessment task after the due date and time without an approved extension: 5% will be deducted from available marks, each day up to five days, and work that is submitted more than five days after the due date will not be marked. You will receive 0% for the task. 'Day' means working day for paper submissions and calendar day for electronic submissions. The Unit Chair may refuse to accept a late submission where it is unreasonable or impracticable to assess the task after the due date.
• Please consider carefully the impact of late submission on achievement of the hurdle requirement on this assignment.
• For more information about academic misconduct, special consideration, extensions, and assessment feedback, please refer to the document Your rights and responsibilities as a student in this Unit in the first folder next to the Unit Guide of the Resources area in the CloudDeakin unit site.
• Building evidence of your experiences, skills and knowledge (Portfolio) - Building a portfolio that evidences your skills, knowledge and experience will provide you with a valuable tool to help you prepare for interviews and to showcase to potential employers. There are a number of tools that you can use to build a portfolio. You are provided with cloud space through OneDrive, or through the Portfolio tool in the Cloud Unit Site, but you can use any storage repository system that you like. Remember that a Portfolio is YOUR tool. You should be able to store your assessment work, reflections, achievements and artefacts in YOUR Portfolio. Once you have completed this assessment piece, add it to your personal Portfolio to use and showcase your learning later, when applying for jobs, or further studies. Curate your work by adding meaningful tags to your artefacts that describe what the artefact represents.