Reference no: EM132644001 , Length: word count:2000

MA611 Auditing - Melbourne Institute of Technology

Company - Black Cat Syndicate Ltd BC8

Assessment - Understanding a Client to Plan a Financial Report Audit

Learning Outcome 1: Explain and apply the principles, practice and process of auditing to practical situations.
Learning Outcome 2: Interpret the legal and ethical requirements involved in an audit and apply them to diverse situations.
Learning Outcome 3: Compare and contrast the organisation's and the auditor's responsibilities for an audit.
Learning Outcome 4: Explain the importance of planning an audit and distinguish the steps involved.
Learning Outcome 5: Identify and critically evaluate the risks inherent in an audit.
Learning Outcome 6: Research, critique, interpret and communicate current and future auditing issues to specialist and non-specialist audiences.

Assessment Task

 Part 1:Understanding a Client to Plan a Financial Report Audit
 Part 2: Risk of Material Misstatement (Inherent Risk) at the Financial Report Level
 Part 3:Format and Presentation Quality

Part 1: Understanding a Client to Plan a Financial Report Audit

You have recently completed your Bachelor of Business Degree - Accounting Stream at MIT and now working as a graduate auditor for a major accounting firm, Ernie and Youngster (EYS). EYS has just won the tenders for the financial report audits of the following ASX listed top 500 companies (as at 1 May 2019).

Your group's choice of company must be approvedby your lecturer such that each group is the only audit team for one of the above, Campus specific, ASX listed companies.

Having formed the audit team (i.e., assignment group), and assigned to the financial report audit of one of the above clients, (by your lecturer), your primary task is as follows.

As a part of the risk assessment phase for the financial report audit of your new client and in accordance with auditing standards (i.e., ASAs), your audit team (group) is required to gain an understanding of the structure and the business environment. By understanding the client's business, the audit team can identify potential risks that may have a significant effect on the financial report. This will assist the audit team to complete the financial report audit and fulfil a key responsibility.

Required

For your audit team's (group's) chosen client (as approved by your lecturer), address the following six areas.

1. General and industry-specific economic trends and conditions
2. Competitive environment
3. Product, customer and supplier information
4. Technological advances and the effect of the internet
5. Laws and regulatory requirements.
6. Other area

Your task is to research your client's sector and report back to your audit team leader. Your report will form part of the overall understanding of client's structure and its environment, which will help you plan for the financial report audit of this client.

You should concentrate your research on providing findings from those areas that have a financial reporting impact and are considered probable given your client's operations. In conducting your research, you should consider the following key market forces, as they relate to your client's operations.

Part 2: Risk of Material Misstatement (Inherent Risk) at the Financial Report Level

From your Understanding of the Client (i.e., Part 1), identify one(1) specific account balance (not account classifications!) that you consider at significant risk of material misstatement. For your chosen account balance:
a) Explain why the account balance is at significant risk of material misstatement
b) Explainone, key assertion at risk of not being valid
c) Detail one (1) relevant substantive audit procedure to address the assertion at risk as identified in b) above
d) Detail one (1) relevant practical internal control that would mitigate the risk in relation to the assertion at risk as identified in b) above.

Part 3: Format and Presentation Quality

As mentioned above, Part 1 should be presented in a ‘report' format.

A key aspect in your audit team's (group's) choice of format/layout should be to ensure you impart your key messages effectively (i.e., complete the requirements) and efficiently (i.e., it should be succinct and take into account the word limit).

As per the Submission Guidelines on page 1, the report also should be coherent, and so consistency is expected throughout (e.g., formatting, language style, linkages between the parts, page numbering).

Note, groups who split up the requirements and work independently are likely to have more difficulty accomplishing this objective compared to groups who work on each of the parts collaboratively (i.e., as an ‘audit team'). An assignment that has been put together last minute will be obvious to the marker and, therefore, will not earn many marks for this part.

Make sure all pages are numbered, and the text fits within the margins of your pages. Start each part on a new page and start each requirement of a part on a new page, making sure to include the relevant heading.

In terms of this part (worth 4 marks out of 40 marks), your ‘report' for this part must have a/an;
(i) Executive Summary (around 100 to 150 words - not included in word count),
(ii) Introduction that succinctly outlines the main theme (s) and requirements of this part of the assignment (around 150 to 200 words),
(iii) Body that specifically addresses the requirements of
Part 1 (around 1800 words) and
Part 2 (around 300 words),
(iv) Conclusion that specifically addresses (summarizes) Parts 1 and 2 (around 100words),
(v) Referencelist containing all cited works and
(iv) Proper English grammar, appearance.

Attachment:- Auditing.rar