Buacc 5935 Assessment Task 2 auditing PDF

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BUACC5935 AUDITING AND ASSURANCE SERVICES Semester 2 2021 Assessment Task 2 DUE DATE AND TIME: Sunday 26 September at 11:59pm (Week 10) PERCENTAGE OF FINAL GRADE: 30% (30 marks) of your total marks for this unit Assessment Instructions: 1. This is a group assignment. Students must form a group of 2 to 3 members. 2. Once you have formed a group of 2-3 students, please read and follow the document titled “Instruction on how to form a group’. It is placed under “Assessment Task 2: Group Assignment Information” folder. 3. Please use the APA referencing style: https://apastyle.apa.org/ 4. The assignment consists TWO parts. 5. Please monitor Moodle regulatory for any further instructions or announcements.

Assessment Feedback: Students who submit their work by the due date will receive their marks and feedback on Moodle site within 15 working days of the assignment submission due date.

Submission Instructions: 1. This assignment must be completed using MS Word. 2. This assignment is to be submitted online only. (You are NOT required to submit a hard copy). 3. The completed assignment must be submitted into Assignment Dropbox on Moodle on or before the DUE DATE. 4. This assignment is to be submitted online only. (You are not required to submit a hard copy). The completed assignment must be submitted into Turnitin Assignment Dropbox on Moodle on or before the due date. Only one submission per group is required. i.e. only one student submits on behalf of all other group members. 5. You are NOT required to upload an Assignment Cover Sheet. You are required to complete a Plagiarism declaration when you submit your assignment. Page 1 of 6

6. Once submitted you cannot take your assignment back but you can submit another version. The most recent version submitted will be marked. However, this must be submitted before the DUE DATE. You must keep a backup copy of every assignment you submit, until the marked assignment has been returned to you. In the unlikely event that one of your assignment works is misplaced, you need to submit your backup copy. Any work you submit may be checked by electronic or other means for the purposes of detecting collusion and/or plagiarism.

Work in a group: You are required to form groups of 2-3 members for this assessment. Your group must be set up on Moodle as per instructions found in the document called “Form your group members”. Once you form your group the next stage is to all meet up either in person or online using Skype, Zoom, WhatsApp, or a method of your choice. It is advised that the group keep a record of what was said at the meeting. Communication is very important when you work in a group. This assignment requires students to share their answers as some answers are dependent on the answer given to a previous question. Therefore, students are encouraged to use tools which allow them to share information and create documents collaboratively. Examples of these include OneDrive, Google Docs. Students are not limited to those and can choose their own tool. Students can find out more information about how to use OneDrive from the following link: https://studyskills.federation.edu.au/technology/office-365/one-drive If you are unable to resolve these issues, you are welcome to see your lecturer and tutor. We will try to sort out the problems together. Do this as soon as possible and certainly before the due date. In case of any dispute among the group members or if there are any free riders identified in the group, members should report to your lecturer in writing.

Important Notes: •

Discussion area for this assignment: There is a discussion area on Moodle titled ‘Group Assignment discussion Forum’. This area is for you to discuss the assignment. It is an area for students to help each other.

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General Guide to Writing and Study Skills: This assignment is to comply with the Federation University’s General Guide to Writing and Study Skills, General Guide to Referencing, and Assignment Layout and Appearance Guidelines, via the links below: https://studyskills.federation.edu.au/student-skills/ https://studyskills.federation.edu.au/student-skills/working-with-others/ https://studyskills.federation.edu.au/assessment/ Page 2 of 6

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Penalties for late submission: the marking penalties will apply if you submit an assessment task after the due date without an approved extension: 10% will be deuced from available marks for each calendar day up to ten days, and work that is submitted more than ten days after the due date will not be marked. Requests for extension of time must be made with the lecturer concerned and based on Special Consideration guidelines. For further information on Discretionary Assessment Extensions and Special Consideration, including access to the policy, procedures or associated forms, see https://federation.edu.au/current-students/essential-info/administration/specialconsideration

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Plagiarism: Students must fully reference the relevant sources of all materials (i.e., textbooks, journals, newspapers, or internet, etc), even if you have re-expressed the idea, facts, or descriptions, and not submit their work that has been researched and written by another person. Plagiarism and collusion are forms of cheating and are considered a serious academic misconduct, and severe penalties are associated with them. Please refer to the university policy for more information. https://policy.federation.edu.au/university/student_plagiarism/ch01.php https://studyskills.federation.edu.au/referencing/how-to-avoid-plagiarism/

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Turnitin: Students are strongly recommended to check originality through Turnitin, prior to submitting the final assessment. For more information about Turnitin and how to check for originality, refer to the following useful links: https://studyskills.federation.edu.au/technology/university-systems/turnitin/

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Assignment Task: This assignment has 2 parts.

Part A: Background: According to ASA 240 -The auditor’s responsibilities relating to fraud in an audit of a financial report (para. 27): ‘When identifying and assessing the risks of material misstatement due to fraud, the auditor shall, based on a presumption that there are risks of fraud in revenue recognition, evaluate which types of revenue, revenue transactions or assertions give rise to such risks.’ (https://www.auasb.gov.au/admin/file/content102/c3/ASA_240_Compiled_2019-FRL.pdf) Required: Write a letter to the Audit manager of ABC & Associates (A&A) audit firm, Mr John Foster, in which you address the following: 1. Relying on the information in ASA240 (refer to link above), explain the difference between the responsibility of management and those charged with governance and the responsibility of auditor in relation to the prevention and detection of fraud. 2. Discuss the misconception that exists in society surrounding the role of the auditor in relation to the prevention and detection of fraud in an audit of financial statements. 3. Provide two reasons why an auditor presumes that there are potential risks of fraud relating to revenue recognition in entities. Make sure that you explain your reasons clearly. 4. Provide two case examples of revenue misstatements that have been reported in the media. (750 words) (10 + 10 + 10 + 10 = 40 marks)

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Part B: Choose any one of the following five companies as your target company: 1. BHP Group 2. CSL Limited 3. Myer Holdings Limited 4. Qantas Airways Limited 5. Woolworths Group The 2020 Annual Report for these companies are provided in a separate file. Based on the company’s annual report that you choose, prepare a planning memorandum for the audit partner which includes the following: Required: 1. Identify four major business risks of the company and provide a detailed explanation of why each factor is identified as a risk to the business. 2. Results of analytical procedures. It is recommended that you prepare a horizontal analysis, vertical analysis, and prepare key ratios (Examples of analytical procedure analysis are available on Moodle). Identify and explain which changes in the horizonal analysis, vertical analysis, and ratio analysis would trigger further investigation in the audit for the company (Please include your workings in the Appendix). 3. Identify four inherent risks that you identify from business risk and analytical procedures in points 1 and 2. (Note: Business risks are not the same as inherent risks). 4. Identify a key account and a key related auditor assertion at risk of material misstatement based on the inherent risk you identify in point 3. (Note: Identify a key account and a key assertion for each of the four inherent risks identified in point 3). 5. Determine a number of methods the company can implement to overcome the high control risk. Assume the company’s control risk is high. (1,500 to 2,000 words) (12 + 20 + 12 + 8 + 8 = 60 marks)

Total of 100 marks will be scaled to a mark of 30%.

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Assessment Format: •

Title page: o Include the group number and the name and student number of team members.

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For Part A: o Heading 1: Introduction (not include in the word count) o Heading 2: Identification of management responsibility and auditor responsibility in relation to the prevention and detection of fraud o Heading 3: The misconception that exists in society o Heading 4: Case examples of revenue misstatements

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For Part B: o Heading 1: Introduction (not include in the word count) o Heading 2: Identification of business risks o Heading 3: Results of analytical procedures o Heading 4: Identification of inherent risks o Heading 5: Key account and key related assertion o Heading 6: Recommendations

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Reference list (not include in the word count)

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Appendix (not include in the word count) o Attach Tables for analytical procedures (essential)

Note: These headings are only a suggestion. The sooner you form a group and register the group, you can get started. Best wishes for this assessment.

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