Group Assignment Theme:
"Developing an Audit Program for a selected ASX listed Company"
The objective 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.
Introduction and Assignment Requirements
1. Students are required to form groups of three students and inform their session lecturer of their group members by completing the "HA3032 T2 2018 Group Form details".
2. If you have difficulties forming such groups, please contact your lecturer ASAP.
3. Each group of students will select, or have selected for them, a unique ASX listed company to use for progressive analysis in this group assignment.
4. Final approval of the company/client - i.e. any company listed on the ASX and which has not already been selected by another group - is required by your lecturer.
5. Prepare a detailed audit program Report [3,000 words] for the client/company in a group of 4 or 5 members.
6. Use publicly available online resources for research purposes.
7. Prepare an 8 - 10 mins oral presentation using power-point slides (10 marks).
Detail Assignment Tasks: Developing an Audit Program for a selected listed Company
1. Select a listed company from the current ASX List or this will be allocated to your group.
2. 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 x CR X 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?
3. Perform analytical procedures of the Statement of Financial Position and of Financial Performance over the last three years using appropriate ratios and metrics. Select four key ratios and provide a brief explanation in the report. This can be presented in a table format.
4. 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 and 7.)
5. Select up to ten different material account balances, at least five assets and five liabilities.
6. For each material account balance selected, list the relevant financial report assertions and explain why the selected assertions are applicable to each account.
7. 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)
8. 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 each test?
Attachment:- Group Assignment.rar