Reference no: EM132334812

INTRODUCTIONS

In this assignment you are assumed to be an auditor who has just been appointed by your auditing firm to perform the audit at a particular client. You are in the process of understanding the client and produce part of an audit strategy to help plan the audit for the 2017-2018 financial year, in accordance with the guidance on Australian Standard on Auditing (ASA) 315 (paragraph A25 to A49).

A unit's intended learning outcomes (ILOs) are one of three inter-related components of a constructively aligned unit, the others being the assessment tasks and the teaching and learning activities. Upon completion of this assessment task you will achieve the ILOs for a unit that you are expected to achieve.

This assessment task directly relates to the following unit intended learning outcome.

- Analyse the client's business structure, environment and assess the related business risks for a given financial audit (ILO c as per the Unit Outline).

This assessment task directly relates to the following graduate attributes.

- GA1 - Discipline Knowledge and Skills: Students are expected to demonstrate their understanding and application of audit planning, including acquiring an understanding of the company's business structure and environment, assessing the related business risks to prepare an audit strategy that auditors produce in their conduct of the audit.

- GA4 - Information literacy and analysis and problem-solving skills: Students are expected to develop their capacity to be critical in their way of thinking, and to demonstrate their skills that help them identify and define problems, develop processes to address and eventually solve the problem within the discipline.

Company - Target Energy Limited TEX

II. ASSESSMENT TASK
A. Timeline for assignment: Students are highly recommended to follow this timeline to ensure they achieve their best performance and results.

Session (as per Unit Outline)	Activities	Notes
2.2	Students form a group of 3 to 4 students in class.	Students choose their group members and place their names on a registration list, if they cannot, the lecturer will get involved in the process. Students who do not come to class will be informed via Moodle.
3.1	Assignment requirement and instruction are handed out to students.	Each group needs to choose 1 company (preferably from the list provided) which is listed on the Australia Securities Exchange (ASX). If the group prefers a company that is not on the list, they need to discuss with the lecturer.
3.2	Marking       rubrics       are handed out and discussed	Students are guided on how to work on assignment based on the template and rubrics provided.
From 3.2 to 5.1	Students work on their own group assignment papers	Lecturer's instructions on assignment are discussed in more depth in class for every session and with individual group (via consultation times).
5.2	Assignment       submission via Moodle	A word file needs to be submitted - 1 file for the whole group. The maximum number of words is 3,000.

Choosing a client: The client is chosen by your group.

The client must be (and is highly suggested to be) a public company which has its shares listed on the Australian Securities Exchange (follow the instruction on pages 6 to 8 to choose a company). If you would like to choose any company in your own country, please discuss with your lecturer before making the decision. The reporting period is the 2017-2018 financial year, unless otherwise approved by the unit coordinator. Be aware of the fact that the company that is not on the list must also have information which can be freely publicly accessible via internet. If your chosen client is neither on the list nor approved by your lecturer, your group assignment will NOT be marked. One specific company can only be chosen by a group; therefore the first-in-first-served basis applies.

References to support your assignment:

Students are expected to dig into the relevant literature to support their ideas/arguments/findings in the assignment. References are cited and presented correctly in accordance with the Victoria university Harvard referencing style.

An important part of references that you can use is the client's annual report for the relevant year. Other sources of references available such as those on the internet/newspaper or academic journals or other sources are also necessary. However, Wikipedia is NOT considered an academic reference.

Please note that in the financial reports included in the client's annual reports might have actually been audited. However, to make things simple, please consider this as unaudited financial reports (i.e. the report that have NOT been audited), and therefore, the auditor's report attached (if any) to the financial report is considered irrelevant.

Developing an audit strategy:
Below are the issues and topics that I would like you to address in your assignment. Please be noted that the assignment should be divided into 2 parts: Part A contains information relating to the client, most of which can be easily derived from the client's annual report; whereas in part B you are expected to do some research to provide a deep understanding and assessment of the related information that might have an impact on the future audit work.

Assignment format
Assignment cover sheet with all names listed and declaration signed.

The assessment must be in one single Microsoft Word document and should be written in 12 point font size and should use 1.2 line spacing between each line.
Assignment content
Assignment Title: Audit Strategy Part A: The Client:
Information about the client
Name
Address
Year of establishment
Field of operations
Period of financial report period under consideration
Type of financial report (consolidated or single)
Industry, regulatory and other external factor
Economic condition (upturn or downturn), overall and within the sector
Law and Regulations applicable to the client

Level of competition
Name of main competitors
Level of government's support
Level of demand for goods or services provided
Is there any current or potential significant barriers to entering the client's industry or market
Nature of the entity
Its operations (i.e. area or types of products or services)
Major customers
Is the client heavily dependent on any specific customers or class of customers
Major suppliers,
Ownership's structure and details about corporate governance to some extent (Board of Directors, audit committee, etc.)
Operational structure (any branches within and outside Australia, location of warehouses, etc.)
Accounting policy
Main accounting policies may include:
Policies regarding property, plant & equipment (PPE) (e.g. cost or revaluation model)
Policies regarding inventory (perpetual or periodic, FIFO, average etc.)
Policies regarding account receivables
Policies regarding financial instruments
Policies regarding intangible assets
Policies regarding revenue recognition.

Etc.

Related parties and transactions with related parties
Controlled entities (names and percentage of financial benefit or voting right)
Non-controlled entities (names and percentage of financial benefit or voting right)
Other related parties (names and their relationship with the client)
Transactions with related parties in the financial year
Part B: Analysis of the client and impacts on the future audit work:
Changes in accounting policies and the impact of changes

Any changes in the year compared to prior years and the possible or actual impact of these changes on the financial report.
Any expected impact as a result of the changes in accounting standards in the future.
Discuss the potential impact of those identified on the future audit work

Preliminary analytical procedures
Provide at least 5 ratios (using formulas provided by the text book or lecture notes) for the current and the prior year. Of the three ratios, three below are compulsory: current ratio, quick asset ratio, debt to equity.
Comments on the ratios and any anticipated impact on the future audit work.
Comments on the client's ability to operate as a going concern.

Measurement and review of financial performance
Identify the measurement and review of financial performance (e.g. Director's remuneration, employees' performance measure and incentives, loans with conditions such as maintaining a specific liquidity ratios, etc.).
Discuss the potential impact of those identified on the future audit work.

Objectives, strategies and related business risks
Identify the objectives or strategies (any plan to develop new products or services, or to expand the business locations, use of information technology)
Identify the related business risks (the risk that that an entity's business objectives will not be attained as a result of external and internal forces brought to bear on an entity)
Discuss the potential impact of those identified on the future audit work