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Assessment Details and Submission Guidelines MA611Auditing School Business Course Name Bachelor of Business Unit Code MA611 Unit Title Auditing Trimester 1/2020 Assessment Author Dr Mac Wright...

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Assessment Details and Submission Guidelines

MA611Auditing

School

Business

Course Name

Bachelor of Business

Unit Code

MA611

Unit Title

Auditing

Trimester

1/2020

Assessment Author

Dr Mac Wright

Assessment Type

Assignment [Group]

Assessment Title

Understanding a Client to Plan a Financial Report Audit

Unit Learning OutcomesAddressed:

a. Explain theorganization’sand the auditor’s responsibilities for an audit

b. Discuss reasons for performing different types of audits

c. Understand the importance of planning an audit and distinguish the steps involved

d. Explain and apply the auditing standards, practice and process of auditing to practical situations

e. Identify and evaluate the risks inherent in an audit, and report on current auditing issues

Weight

20%

Total Marks

40marks

Word limit

2,000words

Release Date

Week7

Due Date

Week 11, Sunday 7thJune, 2020 at 11.59PM.

Submission Guidelines

•All work must be submitted on Moodle by the due date along with a completed Assignment Cover Page.•The assignment must be in MS Word format, 1.5 spacing, 11-pt Calibri (Body) font and 2 cm margins on all four sides of your page with appropriate section headings. •Reference sources must be cited in the text of the report, and listed appropriately at the end in a reference list usingAPA6theditionfor the School of Business.

Extension

If an extension of time to submit work is required, an Application for Special Consideration and supporting documentation must be submitted directly to the School's Administration Officer via your MIT AMS login

[https://online.mit.edu.au/ams/default.aspx?ReturnUrl=%2fams%2f]. You must submit this application no later than three working days after the due date of the specific piece of assessment or the examination for which you are seeking Special Consideration. Further information is available at:

http://www.mit.edu.au/about-mit/institute-publications/policies-procedures-and-guidelines/specialconsiderationdeferment

Academic Misconduct

Academic Misconduct is a serious offence. Depending on the seriousness of the case, penalties can vary from a written warning or zero marks to exclusion from the course or rescinding the degree. Students should make themselves familiar with the full policy and procedure available at:http://www.mit.edu.au/about-mit/institute-publications/policies-procedures-and-guidelines/Plagiarism-Academic-Misconduct-Policy-Procedure.For further information, please refer to the Academic Integrity Section in your Unit Description.

Assessment TaskDescription

In addition to the Submission Guidelines appearing on page 1, the assignment is to be completedby groups ofFOURstudents. The submission into theMelbourne or Sydney Campus specific assignment drop boxin Moodle is to madeby ONLY one group member.

This assignment is comprised ofthree parts (Part 1,Part 2, and Part 3), worth40marks.

•Part 1:Understanding a Client to Plan a Financial Report Audit, worth 30marks•Part 2:Risk of Material Misstatement (Inherent Risk) at the Financial Report Level, worth 6marks•Part 3:Format and Presentation Quality, worth 4marks

The firsttwopartsmust be completed and thethirdpart addressedthroughoutthe submission.

Pages 1 and 2 of your submissionMUST be the Assessment Cover Sheet, signed by all group members.The Assessment Cover Sheet is downloadable from the Moodle site, or can be copied andpasted from pages 6 and 7 of this document.

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

(30marks;around1800words)

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).EYShas just won the tenders for the financial report audits of the following ASX listedtop 500companies(as at 1 May2019).

Company Name

ASX Code

Sector

1

AEROMETREX LIMITED

AMX

Commercial services

2

ADAIRS LTD

ADH

Retailing

3

ALLIANCE AVIATION SERVICESLTD

AOZ

Transportation

4

AMP LTD

AMP

Financials

5

3P LEARNING LTD

3 PL

Consumer Services

6

CLASS LTD

CL1

Software Services

7

CVC LTD

CVC

Diversified Financials

8

DATADOT TECHNOLOGY LIMITED

DDT

Automobiles and components

9

GALE PACIFIC

GAP

Consumer Durables Apparel

10

GAGE ROADS BREWING LTD

GRB

Food Beverages and Tobacco

11

GENETIC TECHNOLOGIES LTD

GTG

Pharmaceuticals etc.

12

GENEX POWER LTD

GNX

Utilities

13

GI DYNAMICS LTD

GID

Healthcare Equipment etc.

14

HELLO WORLD TRAVEL LTD

HLO

Consumer Services

15

JOHNS LYNG GROUP LTD

JLG

Capital Goods

16

MAYNE PHARMA GROUP LTD

MYX

Pharmaceuticals etc.

17

MCPHERSONS LTD

MCP

Household and Personal Products

18

R3D GLOBAL LTD

R3D

Media and Entertainment

19

VILLAGE ROADSHOW LTD

VRL

Media and Entertainment

20

YELLOW BRICK ROAD HOLDINGS LTD

YBR

Banks

Yourgroup’schoice of company must beapprovedby your lecturer such that each group is the only audit team for one of theabove, Campus specific,ASXlistedcompanies.

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 forthe financial report audit ofyournewclient and in accordance with auditing standards (i.e., ASAs), your audit team (group)is requiredto 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 auditand fulfil a key responsibility.

Required

For your audit team’s (group’s) chosen client (as approved byyourlecturer), address the followingsixareas.

(6x 5 marks =30marks)

1.General and industry-specific economic trends and conditions2.Competitive environment3.Product, customerand supplierinformation4.Technological advances and the effect of the internet5.Laws and regulatory requirements.6.Other area

Note, to help you address the above areas, see the prescribed textbook (Moroney et al, Chapter 3, Case Study – Cloud 9 forspecificquestions.Not allthosequestions may be relevant for understanding your client, andtheremay be “other” questions your audit team considers important toaddressspecificto your client, i.e.addressedunder the “Other” area.

Your task is to research your client’s sector andreportback to your audit team leader. Yourreportwill 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

(6marks; around300 words)

Fromyour Understanding of the Client (i.e., Part 1), identifyone(1) specific account balance(not account classifications!) that you consider at significantrisk of material misstatement. Foryour chosen account balance:

a) Explainwhy the account balance is at significantrisk of material misstatement(3 marks)

b) Explainone,keyassertionat risk of not being valid(1 mark)

c) Detailone (1) relevantsubstantive audit procedureto address the assertion at risk as identified in b) above (1 mark)

d) Detailone (1) relevant practical internal control that would mitigate the risk in relation to the assertion at risk as identified in b) above. (1 mark)

XXXXXXXXXX = 6 marks)

You MUST provide your answers toPart 2in the following table format.

Specific account balance:[INSERT NAME HERE]

(a) Explain why the account balance is at significant risk of material misstatement.(3 marks)

(b)Explain the key assertion at risk of not being valid.(1 mark)

(c) Detail one (1) relevant substantive audit procedure to address the assertion at risk as identified in b) above.(1 mark)

(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.(1 mark)

To obtain 70 percent or more for this requirement, there must bestrong evidencethat your responses to thispartarebased on (i.e., connected)to the results of your Part 1: Understanding a Client to Plan a Financial report Audit.

Part 3: Format and Presentation Quality

(4marks)

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

A key aspect in youraudit team’s (group’s)choice of format/layout should be to ensure you impart your key messageseffectively (i.e., complete the requirements)andefficiently(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,pagenumbering).

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 partscollaboratively(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 earnmany marks for this part.

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

In terms ofthis part(worth 4marks out of 40 marks), your ‘report’for this part must have a/an;

(i)​Executive Summary(around 100to 150words– not included in word count),

(ii)​Introductionthat succinctly outlines the main theme (s) and requirements of this part of the assignment (around150 to200 words),

(iii)​Bodythat specifically addresses the requirements of

Part 1 (around1800 words)and

Part 2 (around 300 words),

(iv)​Conclusionthat specifically addresses(summarizes)Parts1and 2(around 100words),

(v)​Referencelistcontaining all cited works and

(iv)​Proper English grammar, appearance.

MarkingCriteria andRubric

Marking Rubric

The following details the marking criteria that will be used to assess how you have addressed the four assignment requirements.

Requirement 1

(out of 20 Marks)

Met requirement to an excellent level

(80 to 100%)

Met requirement to a very good level

(70 to 79%)

Met requirement to a good level

(60 to 69%)

Met requirement to a satisfactory level

(50 to 59%)

Did not met requirement

(0 to 49%)

Requirement 2

(out of 20 Marks)

Met requirement to an excellent level

(80 to 100%)

Met requirement to a very good level

(70 to 79%)

Met requirement to a good level

(60 to 69%)

Met requirement to a satisfactory level

(50 to 59%)

Did not met requirement

(0 to 49%)

Requirement 3

(out of 21 Marks)

Met requirement to an excellent level

(80 to 100%)

Met requirement to a very good level

(70 to 79%)

Met requirement to a good level

(60 to 69%)

Met requirement to a satisfactory level

(50 to 59%)

Did not met requirement

(0 to 49%)

Requirement 4

(out of 4 Marks)

Met requirement to an excellent level

(80 to 100%)

Met requirement to a very good level

(70 to 79%)

Met requirement to a good level

(60 to 69%)

Met requirement to a satisfactory level

(50 to 59%)

Did not met requirement

(0 to 49%)

GRAND TOTAL

(out of 65)

TOTAL UNIT MARKS

(out of 20)

For Requirements 1 and 2;

Note, to obtain 70 percent or more for either of these two requirements, there must be evidence of ‘material’ (i.e.,qualityandquantity) research. By research, this includes finding information about the company and its industry / business from reputable sources / websites (e.g., the company’s own website, IBIS (see library), the ASX, (financial) newspapers and academic/professional journal articles, as available from the library’s databases, etc. Therefore, and as per the submission guidelines (on the cover sheet to this assessment task document), it is important thatallreference sources / websites used are cited in the text of your report and listed appropriately at the end of the report in a reference list using APA referencing style.

For Requirement 3;

To obtain 70 percent or more for this requirement, there must bestrong evidencethat your responses to this requirement arebased on (i.e., connected)to the results of your analytical procedures and assessment of inherent risk at the financial report level (i.e., Requirements 1 and 2).

Marker’s overall comments/feedback

For Assessor Use Only (if not marked on Moodle)

Name:

Position

Date

Signature

Marks/Grades

Part 1*

(out of30marks)

Part 2**

(out of6marks)

Part 3

(out of4marks)

Met requirement to an excellent level

(80 to 100%)

Met requirement to a very good level

(70 to 79%)

Met requirement to a good level

(60 to 69%)

Met requirement to a satisfactory level

(50 to 59%)

Did not met requirement

(0 to 49%)

GRAND TOTAL

(out of 40)

UNIT MARKS

(out of 20)

* For Part 1

To obtain 70 percent or more forthis requirement, there must be evidence of ‘material’ (i.e.,qualityandquantity) research. Therefore, and as per the submission guidelines (on the cover sheet to this assessment task document), it is important thatallreference sources used are cited in the text of your report and listed appropriately at the end of the report in a reference list using APA referencing style.

** For Part 2

To obtain 70 percent or more for this requirement, there must bestrong evidencethat your responses to thispartarebased on (i.e., connected)to the results of your Part 1: Understanding a Client to Plan a Financial report Audit.

Answered Same Day May 25, 2021 MA 611

Solution

Preeta answered on Jun 03 2021
133 Votes
Executive Summary:
Before starting the audit procedure it is important to know about the business of the client, the industry the client is operating in as well as about the competitors. It is important to understand several internal as well as external factors related to the business. In this report, it has been assumed that audit is to be conducted on Genex Power Ltd. Before the start of that audit research is being made on the company. Based on the research risk area has been identified and the substantive measure which can be used for that risk has been discussed.
Contents
Executive Summary:    1
Introduction:    2
Part 1: Understanding a Client to Plan a Financial Report Audit    2
1.1 Economic trends and conditions of the company:    2
1.2 Industry Trends:    6
1.3 Competitive Environment:    6
1.4 Product, customer and supplier information:    7
1.4 Technological advances and the effect of the internet:    8
1.6 Laws and regulatory requirements:    8
Part 2: Risk of Material Misstatement    9
Conclusions:    10
References:    10
Introduction:
Genex Power Ltd is a power generation company based in Australia. It is listed on ASX with the code GNX. It was founded in 2011 and it headquarter is at New South Wales, Australia. But it got listed on ASX just in 2020. The company is generating electricity using renewable resources. Till now its operation is confined within the geographical boundary of Australia.
It is compulsory for ASX listed companies to conduct audit of the company. This report has been prepared from the perspective of the auditor collecting necessary information to conduct the audit procedure.
Part 1: Understanding a Client to Plan a Financial Report Audit
1.1 Economic trends and conditions of the company:
The trends and the conditions of the company can be understood by ratio analysis. Liquidity, profitability and solvency ratios can be used to understand the situation of the company. The annual report of the company has been used for the calculation of the ratio.
Liquidity Ratios:
These ratios help to check the short-term debt paying capacity of the company (Saleem & Rehman, 2011). Cu
ent Ratio and quick ratio have been used to check the liquidity position. The liquidity position of the company is not good since in two years the ratio was extremely low and the situation is fluctuating. So, the company might face difficulty in paying off its short-term obligations.
i. Cu
ent Ratio:
Cu
ent ratio checks if the cu
ent assets of the company are adequate to cover the cu
ent liabilities of the company. The formula is:
        Cu
ent Ratio = Cu
ent Assets/ Cu
ent Liabilities
The cu
ent ratio of Genex Power Ltd of past three years are follows:
    Particulars
    2019
    2018
    2017
    Cu
ent Assets
    56,17,045.00
    1,27,17,623.00
    1,26,17,420.00
    Cu
ent Liabilities
    77,14,887.00
    45,91,923.00
    2,31,62,721.00
    Cu
ent Ratio
    0.73
    2.77
    0.54
The cu
ent ratio of the company is constantly fluctuating. The ideal cu
ent ratio should be 2. In 2018, the company was able to reach that level but for other two years, it is much below the level.
ii. Quick Ratio:
This ratio checks the ability of the company to pay off its cu
ent liabilities with the marketable securities. The formula is:
Quick Ratio = (Cu
ent Assets – Inventory)/ Cu
ent Liabilities
The quick ratio of Genex Power Ltd of past three years are follows:
    Particulars
    2019
    2018
    2017
    Cu
ent Assets
    56,17,045.00
    1,27,17,623.00
    1,26,17,420.00
    Inventory
    0.00
    6,92,417.00
    0.00
    Quick Assets
    56,17,045.00
    1,20,25,206.00
    1,26,17,420.00
    Cu
ent Liabilities
    77,14,887.00
    45,91,923.00
    2,31,62,721.00
    Quick Ratio
    0.73
    2.62
    0.54

There is not much difference between cu
ent ratio and the quick ratio since the company do not maintain inventory consistently. The ideal quick ratio is 1 but the ratio of the company is lower than that in years.
Profitability Ratios:
These ratios check if the company is producing adequate profit (Rutkowska-Ziarko, 2015). Net profit margin and return on assets ratio can be used to understand the profitability position of the company. The company is not generating adequate profit. In fact, for the past...
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