HI6026 Audit, Assurance and Compliance
HOLMES INSTITUTE
FACULTY OF
HIGHER EDUCATION
Group Assessment Details and Submission Guidelines
Trimester T2 2020
Unit Code HI6026
Unit Title Audit, Assurance and Compliance
Assessment Type Group Assignment
Assessment Title Auditors and Legal Liability
Purpose of the
assessment (with ULO
Mapping)
Students are required to research a recent legal case where an Audit firm was sued for
professional negligence. Students are required to analyse the root causes and the
pertinent issues from their selected case and then specify what measures can be taken
y auditors in the audit approach and in other ways, to minimise the risk of litigation
and ensure professional integrity and reputation.
Learning Outcomes:
• Demonstrate an understanding of the reporting requirements of
auditing standards (ULO 1)
• Demonstrate an understanding of the auditor's professional, legal and
ethical responsibilities to their clients and third parties (ULO 2)
• Understand the audit planning procedures, evaluate the business risk
and assess the internal control (ULO 4)
• Prepare auditing procedures for transactions and balances by
conducting control and substantive tests (ULO 5)
Weight 40% of the total assessments
Total Marks 40
Word limit 3, XXXXXXXXXXwords
Due Date Week 10
Submission
Guidelines
• All work must be submitted on Blackboard by the due date along with a completed
Assignment Cover Page.
• The assignment must be in MS Word format, single spacing, 12-pt Times New Roman
font and 2cm 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.
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HI6026 AUDIT, ASSURANCE AND COMPLIANCE
Purpose
Assignment Specifications
This assignment aims to enhance students’ critical thinking skills and higher order application abilities
y researching and analysing a legal case involving the litigation of an audito
audit firm. Students
will need to propose and document mitigating measures to address the risk of litigation and make
appropriate recommendations to the audit approach, in terms of the audit strategy adopted, the
audit procedures required in the audit program and other appropriate ways for the auditor to
mitigate against both professional reputational damage and financial losses.
The assignment structure must be as follows:
1. Holmes Institute Assignment Cover Sheet – Full Name, Student No., Campus, Session No.
2. Executive Summary
• The Executive summary should be concise and not involve too much detail.
• It should make commentary on the main points only and follow the sequence of the report.
• Write the Executive Summary after the report is completed, and once you have an overview
of the whole text.
• The Executive Summary appears on the first page of the report.
3. Contents Page – This needs to show a logical listing of all the sub-headings of the report’s
contents. Note this is excluded from the total word count.
4. Introduction – A short paragraph which includes background, scope and the main points raised
in order of importance. There should be a
ief conclusion statement at the end of the
Introduction.
5. Main Body Paragraphs with numbered sub-headings – Detailed information which elaborates on
the main points raised in the Introduction. Each paragraph should begin with a clear topic
sentence, then supporting sentences with facts and evidence obtained from research and finish
with a concluding sentence at the end.
6. Conclusion – A logical and coherent evaluation based on a thorough and an objective assessment
of the research performed.
7. Appendices – Include any additional explanatory information which is supplementary and/ or
graphical to help communicate the main ideas made in the report. Refer to the appendices in the
main body paragraphs, as and where appropriate. (Note this is excluded from the total wordcount.)
Page 3 of 6
HI6026 AUDIT, ASSURANCE AND COMPLIANCE
Assignment Topic – Auditors and Legal Liability
Read the following extract from the ACCA (the Association of Chartered Certified Accountants)
website, which is the global body for professional accountants, as stated:
“Over the past two decades the bill for litigation settlements of Big Four audit firms alone has run
into billions of dollars. Examples include Deloitte’s 2005 settlement of $250m regarding its audit of
insurance company Fortress Re and PwC’s $229m settlement in the lawsuit
ought by the
shareholders of audit client Tyco in 2007.”
“Auditor liability is increasingly concerning, both in terms of audit quality and the reputation of the
profession but also in terms of the cost to the industry and the ba
iers this creates to competition
within the audit market.” (Source: www.accaglobal.com)
Required
Given the importance of professional liability to auditors and the negative publicity this creates for
the profession as a whole, research a recent case (Post 2000) where an audito
audit firm was sued
for professional negligence. Students may research cases from the UK, USA, NZ or Canada in addition
to Australian cases.
With reference to the facts of the selected case, the significant Auditing and Accounting issues and
the final judgement handed down in your selected case:
• Provide a
ief description of the key events and the factual issues behind the case
• Explain the culpability or which parties were deemed responsible and why. Outline the
damages imposed or the penalties and consider whether they were appropriate.
• investigate and explain the relevant issues in Auditing and Accounting raised by the case,
• The root-cause of the issues such as; market pressure, organisational culture, fraud etc.
• any problems, mistakes or misrepresentations made by the defendants, which contributed to
the adverse judgement and the awarding of damages,
• Finally, provide recommendations and possible improvements to:
o the Audit Strategy,
o the Audit Program,
o Other effective measures;
which would prevent the recu
ence of the same litigation in the future and maintain
the professional reputation of auditors.
Resources and Reference Links:
1. https:
asic.gov.au
2. https:
www.accaglobal.com/g
en.html
3. “Are Auditors fit for purpose?”- https:
www.
c.co.uk/programmes/m0002mg6
4. Textbook: Gay & Simnett, Auditing & Assurance Services in Australia, 6th Edn, McGraw Hill
Education, 2017
5. Students may explore the following high-profile cases (Students are not allowed to select the
following cases):
o Deloitte’s 2005 settlement of $250m regarding its audit of insurance company
Fortress Re.
o PwC’s $229m settlement in the lawsuit
ought by the shareholders of audit client
Tyco in 2007
o Royal Bank of Scotland (RBS) vs Bannerman Johnstone MacLay (Bannerman) (2002)
http:
www.accaglobal.com
https:
www.accaglobal.com/g
en.html
http:
www.
c.co.uk/programmes/m0002mg6
Page 4 of 6
HI6026 AUDIT, ASSURANCE AND COMPLIANCE
Group Formation and Group Assignment
Students are required to work on the assignment in groups of 4
Both assessment items must be submitted on Blackboard. The written assignment must be in a report
format and submitted through safe-assign prior to final submission. The originality percentage
should be as low as possible. The written submission must be double-checked, edited and rephrased
if the originality percentage and plagiarism risk is noted as high, as per safe-assign.
Marking Criteria
Group Assignment Marking Criteria Weighting
Executive Summary 5%
Main Body of the Report 25%
Conclusion 3%
Punctuation, Spelling, Grammar, Word Choice, Academic English Expression 2%
Report presentation, formatting and effective use of any additional materials 2%
Co
ect referencing, In-text citation, acknowledgement of sources, consistency 3%
Weight 40%
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HI6026 AUDIT, ASSURANCE AND COMPLIANCE
Marking Ru
ic
Excellent
(80-100%)
Very Good
(70-79%)
Good
(60-69%)
Satisfactory/
(50-59%)
Unsatisfactory
(0-49%)
Executive
Summary (5
marks)
Very effectively
written synopsis
with clear
communication of
the main points in
a concise
paragraph.
Competently
composed a
strong synopsis.
The main points
are
communicated
well.
Synopsis is well
written with all
the expected
points raised.
Synopsis is
clearly
written, but it
is
ief or has
some e
ors.
Synopsis is
deficient and
poorly written.
Too
ief.
Main Body
Including
Introduction
(25 marks)
Excellent. Well
organised. Main
points are logically
ordered; sharp
sense of structuring
and a
angement of
key information.
Supporting details
are specific to the
main points and
adequate facts and
other evidence is
provided and well-
articulated.
There are valid
points raised with
a good argument
thesis
statement,
paragraphing is
noted, and the
points in the
introduction are
explained in more
detail with
supporting
evidence.
There are valid
points raised,
paragraphing is
noted, and the
points in the
introduction are
explained in
more detail with
supporting
evidence.
Some
organization;
main points
are there but
they are
disjointed;
Minor
structuring
issues.
Poorly organized;
no logical
progression;
eginning and
ending are vague.
No structure.
Lacks substance.
No research
noted.
Conclusion
(3 marks)
Very well
composed
conclusion with a
clear and logical
evaluation with
conclusive and
persuasive
statements based
on an intelligent
assessment of the
evidence acquired.
Conclusion is well
written as a
concise summary
which logically
evaluates the
main argument
with evidence
used and
examples.
Conclusion is
logical and an
evaluation is
made, but there
is some lack of
evidence or
depth of
analysis, which
would have
improved the
overall
persuasiveness
of the report.
Conclusion is
noted and an
evaluation is
presented,
ut it is
lacking in
sufficient
detail or
supporting
evidence.
Requires more
analysis and
some proof-
eading.
Conclusion is
poorly written
with no
evaluation and no
logical coherence.
No evidence of
analysis. Poor
effort.
Spelling and
Grammar (2
marks)
No e
ors. Well
proofread. Clearly
edited and refined
prior to