“Developing an Audit Program for a selected publically listed Company”
Purpose of the assessment (with ULO Mapping)
Students are required to: 1.1- Identify and distinguish between tests of controls, substantive tests of transactions and substantive tests of balances. 1.2- Identify and understand when the auditor will undertake substantive audit procedures in response to specific assessed risks of material misstatement. 1.3- Understand how assertions relate to account balances 1.4- Understand how to select the most efficient and effective combination of audit procedures that allows them to achieve the audit objective 1.5– Active participation in an “audit team context” with professional group discussions The following Unit Learning Outcomes are applicable: Demonstrate a thorough understanding of the reporting requirements of auditing standards relating to auditors’ reports.Explain how the audit planning process directs the auditor to obtain adequate evidence to support audit findings and address the importance of materiality in an audit;Explain the process of audit planning to determine risk assessments and an overall audit strategy;Explain the auditors’ obligations with regards to understanding the client’s business and internal controls, and assessing business risks.Achieve a high level of competence in applying prescribed auditing techniques in gathering evidence to satisfy audit assertions
40% of the total assessment
Maximum 3,000 – 3,500 words
Guidelines on Submission
All work must be submitted on Blackboard by the due date along with a completed Holmes Institute Assignment Cover Page.The assignment must be in MS Word format, single spacing, 12-pt Arial font and 2 cm margins on all four sides of your page with appropriate section headings and page numbers.Reference sources must be cited in the text of the report, and listed appropriately at the end in a reference list using Harvard referencing style.
HA3032 Auditing – Group Assignment Specifications
The aim of this group assignment is to provide you with an opportunity to design a “risk- based” audit program for a real world company and focus on the “Substantive tests of balances”, which involves substantiating the ending balance of an account(s), which is comprised of multiple transactions, as at a certain year-end date.
Assignment Requirements and Structure
Students are required to form groups of 4 students group members by completing the “HA3032 Group Form details”.
Each group of students group have been provided by unit coordinator, a unique
ASX listed company to use for progressive analysis in this group assignment.
Prepare a detailed audit program Report [3,000-3500 words] for the client/company in a group of 4 students. Students must use a Report Format with an Executive Summary and Table of Contents.
Use publicly available online resources for research purposes.
Detail Assignment Tasks: Developing an Audit Program for a selected listed Company
Gain an understanding of the nature of the entity and its industry and then identify key business risks. After this is completed, assess where the risks of material mis- statements could be in the financial report. Consider the factors affecting both Inherent Risk and Control Risk. Finally, apply the Audit Risk Model [AR = f (IR, CR, DR)] to the selected company. Which risk rating would you apply (Low, Medium or High) to the company’s inherent risk assessment and control risk assessment? How does this affect your assessment of Detection Risk and Audit Risk?
Perform analytical procedures of the Statement of Financial Position and of Financial Performance over the last three years using appropriate ratios and/or metrics. Select four key ratios and provide a brief explanation in the report. This should be presented in a table format.
Discuss with your group members which account balances are considered “material”. Explain how you calculated materiality for planning purposes and provide appropriate justification for your decision-making.
(Note – Use a table format to structure your answers to questions 5, 6, 7 & 8)
Select up to ten different material account balances, at least five assets and five liabilities.
For each material account balance selected, list the relevant financial report assertions and
explain why the selected assertions are applicable to each account.
Design a comprehensive set of audit work steps for each material account balance, which addresses the selected assertions and which will result in sufficient and appropriate audit evidence being collected for your selected client company. (Assume that a predominantly substantive approach is being adopted)
Include a sampling plan, which details how you will use sampling for each material account balance to be tested. How many items will be tested for eachtest?
Audit Risk Model – Assessment of Inherent Risk, Control Risk, Detection Risk
Analytical Review of the selected company, including ratio analysis in a table
Material Account Balance Identification (Minimum 5 x Assets and 5 x Liabilities)
Assertions identified – Correct Assertions are stated and explanations are noted
Audit Program – Audit work steps / procedures are clearly stated and listed.
Sampling Plan for each material account balance with samples sizes.
40 Marks 100%
HA3032 Auditing Group Assignment – Marking Rubric
HA3032Auditing Group Assignmen t– Marking RubricPart
Key Business Risk Identificatio n (4 marks)
Relevant Business Risks have been clearly stated and are appropriate after considered analysis. (80% – 99%)
Business Risks are well stated and appropriate to the company selected. (65% – 80%)
Business Risks are noted and stated, but they are only generic in nature. (50% – 65%)
Business Risks have not been adequately addressed. There is insufficient or irrelevant information noted. (0 – 49%)
Audit Risk Model (4 marks)
The Audit Risk Model has been very well understood and applied. All risk components are correctly stated and the Audit Risk Model has been applied correctly to the company selected. (80% – 99%)
The Audit Risk Model has been correctly understood and all the risk components are noted. The analysis is sound, but detail is lacking. (65% – 80%)
The Audit Risk Model has been satisfactorily applied, but either some minor mistakes are noted or there is a lack of detail in some areas. (50% – 65%)
The Audit Risk Model has not been understood, considered or analysed in the report. There is minimal or no real grasp of the concept or it is missing from the report. (0 – 49%)
Analytic al Review (4 marks)
The Analytical review has been very well performed and includes three years of ratios. All four key ratios are appropriate and presented in a table with sound commentary. (80% – 99%)
The Analytical review has been well performed and includes four key ratios. They are relevant and presented in a table with some good commentary. (65% – 80%)
The Analytical review has been satisfactorily performed. Ratios are noted and there is some commentary , but there are some minor errors. (50% – 65%)
The Analytical review is sub- standard. There are ratios missing. There is no commentary or it is poorly written. The requirements have not been understood. The analytical review is missing from the report. (0 – 49%)
Material Account Balance Identificatio n (10 marks)
Materiality has been correctly calculated using an appropriate base with explanation. Five Asset accounts and five Liability accounts have been selected and they are appropriate to the company. This section is presented in a table. (80% – 99%)
Materiality has been correctly calculated with some explanation. Five Asset accounts and five Liability accounts have been selected. This section is presented in a table. (65% – 80%)
Materiality has been stated with some explanation. Asset accounts and liability accounts have been provided, but some are not material. Some Formatting is noted. (50% – 65%)
Materiality has not been calculated and it is missing. Account balances are either only partially stated or missing. Accounts selected are not asset or liability accounts or they are not material account balances. There is a lack of understandin g. (0 – 49%)
Assertions Identificatio n (4 marks)
Each of the material accounts selected has the correct financial report assertions associated with it. A clearly written and correct explanation has been provided. It is well presented in the table. (80% – 99%)
Each of the material accounts selected has financial report assertions associated with it. A correct explanation has Been provided (65% – 80%)
The accounts selected have financial report assertions associated with them. A minimal explanation has been provided. (50% – 65%)
No financial report assertions have been provided or they are clearly incorrect. There is a lack of understanding of the requirements. (0 – 49%)
Audit Program (10 marks)
A comprehensive set of appropriate audit procedures have been provided and they are very well stated for each of the material account balances. There is a logical linkage with the financial report assertions. This section is clearly and well formatted in a table. (80% – 99%)
A set of appropriate audit procedures have been provided and they are effectively stated for each of the material account balances. There is a linkage with the financial report assertions. This section is well formatted in a table structure. (65% – 80%)
Audit procedures have been provided and they are stated for each of the material account balances. There is an association with the financial report assertions. This section is appropriately presented in a table structure. (50% – 65%)
Audit procedures have not been provided or they are mis-stated or incorrect for the account balances. There is no association with the financial report assertions or the assertions are missing. This section has not been presented in a table structure. It is not presented well. There is a lack of understanding. (0 – 49%)
Sampling Plan (4 marks)
For the material account balances, a well -constructed sampling plan has been included which states the sampling method selected, the appropriate sample sizes of items to be tested, as well as other important sampling information for evaluating the results of the sample. This is included in a table. (80% – 99%)
For the material account balances, a good sampling plan has been included which states the sampling method selected and the sample sizes of items to be tested. (65% – 80%)
For the material account balances, a satisfactory sampling plan has been included which includes the sample sizes for each account. (50% – 65%)
A sampling plan has either not been included or is only partially provided. There is a lack of understanding of basic sampling concepts and there is some incorrect included. (0 – 49%)
Holmes Institute is committed to ensuring and upholding Academic Integrity, as Academic Integrity is integral to maintaining academic quality and the reputation of Holmes’ graduates. Accordingly, all assessment tasks need to comply with academic integrity guidelines. Table 1 identifies the six categories of Academic Integrity breaches. If you have any questions about Academic Integrity issues related to your assessment tasks, please consult your lecturer or tutor for relevant referencing guidelines and support resources. Many of these resources can also be found through the Study Sills link on Blackboard.
Academic Integrity breaches are a serious offence punishable by penalties that may range from deduction of marks, failure of the assessment task or unit involved, suspension of course enrolment, or cancellation of course enrolment.
Table 1: Six categories of Academic Integrity breaches
Reproducing the work of someone else without attribution. When a student submits their own work on multiple occasions this is known as self-plagiarism.
Working with one or more other individuals to complete an assignment, in a way that is not authorised.
Reproducing and submitting the work of another student, with or without their knowledge. If a student fails to take reasonable precautions to prevent their own original work from being copied, this may also be considered an offence.
Falsely presenting oneself, or engaging someone else to present as oneself, in an in-person examination.
Contracting a third party to complete an assessment task, generally in exchange for money or other manner of payment.
Data fabrication and falsification
Manipulating or inventing data with the intent of supporting false conclusions, including manipulating images.