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ACCT3600 Accounting and Auditing in Practice

Semester 2 2024

Group Assignment Report Questions & Guidance

Question ONE Analysis of Business Risks and Impact on Audit Planning

REQUIRED LO1, LO2

The Media Article supplied on Canvas indicates your selected company faces potential business risk/s, which, as a consequence, suggest that the auditor could face potential ‘audit risks’ .

Explain how the information in the Media Article for your selected company presents ‘business risk/s’ to the company and how those risk(s) would affect the audit planning process.    [5 marks]

GUIDANCE

Your answer should as a minimum make some reference  to staff assigned to  the audit and required audit strategy. Suggest a 1-1.5 page short answer analysis here and the use of headings to navigate is always a good idea.

Other information and/or media articles could be referenced. Media articles should come from a reputable source such as Financial Review,  The  Sydney Morning  Herald,  The  Age,  Business News, Business Acumen, The Australian, ABC, Australian Business Journal. Your analysis as a minimum should address at least two business risks the auditor would consider.

Question TWO Understanding the Audit Client and its Environment

REQUIRED LO4, LO5

Demonstrate your understanding of the selected company by providing a critical overview of its business operations. As a minimum your group report must include a description of its revenue streams,  products  and  services,  the  company’s  competitive  environment,  and  any  market capitalisation trends.   [4 marks]

GUIDANCE

Refer ASA 315 ‘Identifying and Assessing the Risks of Material Misstatement’ (including Appendix 1&2) to help guide your response. Your answer should be reflective ofyour in-depth understanding of the company’s operations, not merely a summary of the company’s latest annual report. Again, you could use relevant media articles or information from analysts.

Suggest 2-2.5 pages and short answer style with headings - be creative and use charts, graphs etc. if it adds to your analysis. Your analysis is from the auditor’s perspective, so think about it and ask questions. For example, were there any significant events influencing market capitalisation in the  last 12  months?  Any  changes to their  competitive environment? Any  new/discontinued products or services that the audit team needs to consider when planning the audit? Think like an auditor!

Question THREE Analytics as a Risk Assessment Procedure

REQUIRED LO4, LO5

ASA315 A27-31. states “analytical procedures as part of risk assessment procedures help identify inconsistencies, unusual transactions, events, amounts, ratios, and trends that may have audit implications” and “analytical procedures can be performed using a number of tools, which may be automated such as data analytics”.

Considering the above, and Big4 claims that “current audit tools and emerging technologies such as advanced data analytics, artificial intelligence help audit teams focus on key issues and enhance audit quality”. In the context of your selected company:

Select one (1) Data Analytics/AI tool that is used by a Big4 professional service firm and explain how it could be utilised by your audit team to provide further insights into at least two  (2) key risk areas  (not  necessarily from Question  1) and  how  it will improve audit quality. [5 marks]

GUIDANCE

Your analysis and ideas here on how the selected tool can be used in the context ofyour selected company should as a minimum include:

 Reference to what is meant by ‘audit quality’. Academic and professional literature can help here.

 Reference to at least one recent academic journal article on emerging technologies to demonstrate that your group has undertaken some research into insights and challenges (journal article must be published post 1 January 2022). There can be some overlap with business risks from Q1 but this analysis should delve deeper into specifics such as  what account(s)/risks can tools expose?

 Reference to one Big4 website (i.e. KPMG, EY, Deloitte or PwC … website reference can be Australian or an international Big4 website) and introduce the tool as a minimum.

 Suggest 2-2.5 pages and short answer style with headings - be creative and use charts, graphs, relevant ratios or Data Analytics extracts if it adds to your analysis.

Question FOUR Corporate Governance and Internal Audit

Australia’s Minister for Cyber Security, Hon Clare O’Neil MP said business leaders, boards and directors have important obligations to protect their organisations and customers from cyber risks.

“Australians rightly expect businesses to take cyber security seriously.  The explosion of cyber incidents over the past two years has shown that we cannot be complacent, and all Australian organisations need to embrace better cyber governance from the board down”.

AICD Media Release 28 February 2024.

REQUIRED LO4, LO5, LO6

Considering  the  above  statement  and   research  into  your  selected  company,  what   is  your assessment of their control environment and how well does your group believe the internal audit function is contributing to addressing cybersecurity risks? In your analysis here, consider whether there are any deficiencies the external audit partner needs to be aware of when planning the audit?

[4 marks]

GUIDANCE

Utilise ASA315 A59-60, and ASA315 Appendix 3 & 4 to assistyour group in answering the required, as the auditing standard provides detailed guidance on what the control environment includes-and while your answer cannot address every element in suggested 2 pages - so select two elements as a minimum to form your assessment of their control risk environment (that is, whether it is strong? Effective or not? Are there any issues?). Explain why with supporting evidence for example from the Company’s Corporate Governance Statement, and/or website or any additional research.

Question FIVE                                           Audit Reporting & Communication

REQUIRED LO1, LO4

Based on your selected company and any additional research, identify one (1) key account that would warrant a key audit matter (KAM) disclosure in addition to what is already reported in KAM section in the most recently published Annual Report.

[4 marks]

GUIDANCE

Refer to ‘ASA  701  Communicating Key Audit Matters in the Independent Auditor’s Report’ for guidance on KAMs.  Your KAM must include  the  following  details  in  context of your selected Company key account:

 Explanation as to why the account warrants a KAM in the Auditor’s Report and inclusion of $ amounts from the most recent Annual Report.

 Identify one key assertion that the auditor might select to prioritise in their audit plan.

 Details of at least 3 audit procedures/substantive tests to illustrate how your audit would address the key audit matter. Allow for about 1-1.5-pages.

Group Assignment Report

Consistent Consideration of Structure, Formatting, Referencing, audience, grammar, and appropriate use of appendices

Your Group Assignment Report should be submitted in a format as if it were to be presented to a meeting with an audit partner at your accounting firm and designed to impart your key messages.

It should be succinct, and use of tables, charts, graphs etc. is encouraged. The report should also be coherent as a group submission and so consistency is expected throughout (e.g., formatting, language style, in-text referencing, and linkages between the questions). Note that groups who split up the tasks and work independently are likely to have more difficulty accomplishing this objective compared to groups who work on each of the parts collaboratively. To gain full marks, student will  need to  present  their  report  not  only  in  a  highly  professional  manner,  but  also demonstrate group cohesion and some creativity.

[3 marks]

GUIDANCE LO4

Student often ask me ‘what do you mean by creativity?” … . I am not sure, but I know it when I see and read it. It should have impact and I would really present it to my audit partner colleagues. Take your time and proof-read your report carefully before submission.

Group Assignment Report Further Guidance

The purpose of this group assignment is for you and your group to apply the learnings, the concepts acquired during the unit (and to research some on your own) and apply them to your selected company context. This will not only assist you and your group in understanding the audit content, but to also explore how contemporary issues in business such as cybersecurity and emerging technologies will impact audit practice now and in the future. The report if completed authentically, will demonstrate students’ ability to think critically, analyse and communicate in a professional manner (like an auditor). The group formative feedback on this assessment and generic feedback on Canvas, will provide students with constructive comments to assist in preparing for the final examination.

The group assignment report should adhere to the following requirements:

 Cover Page must include group name, all students’ names & SIDs, the selected company. Design the cover page and you can be creative here.

 Page numbers must be included at the bottom of each page.

 The written report should not exceed  12 pages (excluding Cover Page, Reference List & Appendices).

 Main analysis at minimum 11-point font size and use font of your groups’ choice. Headings may be bigger for impact and use of different colour font is encouraged.

 Minimum 1.15 line spacing and moderate margins.

 Use of short answer style analysis, headings, graphs, tables and bulleted  lists  are encouraged. However, the assignment should still be largely based on text in paragraphs to build an analysis/narrative that an audit partner would value.

 Referencing must conform to APA 7th  referencing style: see Library Reference Guide

oFor the purposes of in-text referencing of Accounting and Auditing Standards, you may use: (ASA701 para. 12). For in-text referencing of companies’Annual Reports you may use: (XXX AR 2024, p.12) for example.

 Appendices are acceptable but will not be marked and are not to be used to circumvent the restrictions on the length of the assignment. The appendices are not counted towards the 12- page limit.

 All  assignments  must  be  word  processed.   Footnotes  should   be  reserved  for  points  of clarification only. Marks will not be awarded for footnotes and appendices.

Group Assignment Report Submission Details see Canvas for more details

 The assignment can ONLY be lodged via the TURNITIN link in the canvas site.

 The FULL Group Assignment Report is Due Monday 14 October 23:59 (AEST) 2024 via Turnitin, with submission date and time will be determined by the TURNITIN system.

 Penalty for late assignment submissions: for every calendar day up to and including ten calendar days after the due date, a penalty of 5% of the maximum available marks will be applied to late work.

 Assignments submitted after the closing date of 28 October 2024 will receive a mark of zero for all group members.

 Only ONE submission per group allowed in Turnitin. Any resubmissions by other group members will not be marked.