Reference no: EM132404844

BBAC601 - Auditing & Assurance - CIC Higher Education

Assignment - Audit strategy

Case No. 16 - Auckland International Airport with all accounting Policies and Audit

I. 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 2019 financial year (1/7/2018 to 30/6/2019), in accordance with the Australian Standard on Auditing (ASA) 315 Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and Its Environment, and guidance (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.

II. ASSESSMENT TASK

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

B. 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 2019 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.

C. 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.

D. 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 research to provide a deep understanding and assessment of the related information that might have an impact on the auditor's future work.

1. 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.
2. 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.
- 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.

Attachment:- Auditing and Assurance.rar