Semester 1 2018
Total Marks: 60 marks and to be weighted @ 20%
Length: Maximum 3,000 words
Submission Requirements.
This assignment may be submitted at or before 11.59pm (CST) Sunday, 6 May 2018, Study Week 9
Assignments are to be submitted by one of the following means;
DO NOT LODGE BY FAX nor EMAIL nor at LECTURER'S OFFICE KEEP A COPY
· The assignment must be lodged on or before the due date indicated in the assignment details.
· Submit your Assignment as one document, using PDF or Word doc format1 .
· The assignment must conform to the requirements set out in this assignment
· The assignment must be lodged online via the ACT303 Learnline Assignment Lodgement link on the ACT303 Learnline site.
· Ensure your file is named using a file naming convention that allows the lecturer to identify to whom it belongs. Failure to use an acceptable file naming convention may result in your assignment lodgement being rejected.
· DO NOT LODGE VIA EMAIL or FAX - assignments lodged by email or fax will not be accepted. KEEP A COPY - Ensure you have a copy of the assignment lodged.
Coversheet
Coversheets are no longer required.
Students will now be required to affirm at the point of submission that the work they are submitting is their original work.
This is built into the submission point.
The submission text reads as follows:
By clicking the SUBMIT button I certify that this assignment is my own work, based on my own personal study and research, and that I have acknowledged all material and sources in the preparation of this assignment, whether they be books, articles reports, lecture notes, images, videos, any other kind of document or personal communication.
I also certify that this assignment has not previously been submitted for assessment in any other course or at any other time in the same course (except as a DRAFT submission) and that I have not copied in part or whole or otherwise plagiarised the work of other students and/or persons.
I have read Charles Darwin University's Academic and Scientific Misconduct Policy (pol-001) and Student Breach of Academic Integrity Procedures http:
www.cdu.edu.au/governance/procedures/pro-092.pdf and understand its implications.
1 Instructions for creating PDF documents and/or combining documents of different formats are provided on the Learnline site.
College of Business and Law
Semester 1 2018
Page 1 of 9
Format
The assignment may be completed manually, or with the use of an electronic spreadsheet, word processing software or with the use of accounting software. Marks may be deducted for illegible or partially illegible papers. If completed using multiple file formats or manually, the document must be combined into one document, in PDF format2.
Resubmission
As a general rule resubmission of assessment items is NOT possible, however the Lecturer may ask for resubmission if it is deemed appropriate. Details for such resubmission will be made available by the Lecturer if and when the situation occurs.
Oral Test or Viva Voce
Lecturers may, at their discretion, ask students to ve
ally present their assignment submissions or rewrite some selected part/s of their answer in a controlled setting. Lecturers may exercise this discretion where they feel that the assignment was not the student’s own work.
University Plagiarism policy
Plagiarism is the unacknowledged use of material written or produced by others or a rework of your own material. All sources of information and ideas used in assignments must be referenced. This applies whether the information is from a book, journal article, the internet, or a previous essay you wrote or the assignment of a friend. Plagiarism policy is available at:
http:
www.cdu.edu.au/governance/policies/pol-001.pdf and Student Breach of Academic Integrity Procedures
http:
www.cdu.edu.au/governance/procedures/pro-092.pdf
Extensions and Late Lodgements
LATE ASSIGNMENTS WILL GENERALLY NOT BE ACCEPTED UNLESS AN EXTENSION TO THE DUE DATE HAS BEEN GRANTED BY THE HEAD OF SCHOOL.
Exceptions will only be made where assignments are late due to special circumstances that are supported by documentary evidence, and may be subject to a penalty of 5% of assignment marks per day. Partially completed assignments will be accepted with appropriate loss of marks for the incomplete portion.
Should students foresee potential difficulties with submission of assessment items, they should contact the lecturer immediately the difficulties come to notice, to discuss suitable a
angements etc for the submission of those assessment times. An Application for Assignment Extension or Special Consideration should be completed and provided to the Head of School, School of Law and Business.
This application form, explanation and instructions is available on the ACT303 CDU Learnline course site or direct from http:
learnline.cdu.edu.au/units/lb_school_templates/deployed/assignment_extension.docx
Please note that it is now Faculty policy that all extension requests must be approved by the Head of School. The lecturer is no longer able to personally approve extension requests.
Leaving a request for an extension, special assessment or special consideration until the last moment, based on grounds that students could have reasonably been able to foresee, may result in the application being rejected.
Ensure that you maintain suitable backup copies of your assignment during preparation, before completion and after lodgement. Loss of data/assignment due to failure to maintain a suitable backup will not constitute grounds for an extension.
2 Instructions for creating PDF documents and/or combining documents of different formats are provided on the Learnline site.
College of Business and Law
Semester 1 2018
Page 2 of 9
Assignment Details
Part A (20 marks)
Part A-1
You are an audit partner with Billings & Associates, a large and experienced audit firm.
You have been approached to accept the audit of Pharmaceuticals Ltd (Pharmaceuticals), a medium-sized chemical manufacturer. The manufacture of the chemicals results in highly toxic waste and Pharmaceuticals is cu
ently under investigation by the Environmental Protection Agency for a significant spill of toxic chemicals into a nea
y river. The media have reported that senior employees were allegedly involved in trying to cover up the spill.
Required:
Identify and explain the key ethical matter regarding Pharmaceuticals and its management that you should consider before making the decision to accept the engagement. (2 Marks)
Part A-2
Pharmaceuticals Ltd (Pharmaceuticals) imports a number of pharmaceutical products. In order to hedge its foreign cu
ency transactions, Pharmaceuticals entered into a number of forward rate agreements this year. Prior to this time Pharmaceuticals had had little exposure to derivative instruments, but a series of bad experiences resulting from fluctuating exchange rates convinced the company that a hedging strategy was necessary. During planning for the audit of Pharmaceuticals, the company’s hedging a
angements were identified as inherently risky and increased testing was ca
ied out in this area. A number of small e
ors were noted in accounting for hedge transactions, but there did not appear to be any material e
ors and as such no adjustments were made. A review of the audit file suggests that the e
ors noted were a result of inexperience and poor controls in the area. While all of the e
ors were
ought to the attention of the treasurer, who is responsible for the company’s hedging strategy, no further action has been taken to date.
Required:
Outline what further action the auditor should take in response to the e
ors and control weaknesses identified. Justify your response. (2 Marks)
College of Business and Law
Semester 1 2018
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Part A-3
Billings & Associates has agreed to take on a new audit client, Reaction Pty Ltd, a small garage door manufacturer that has never previously been audited. Billings & Associates has issued an engagement letter prior to commencing work for the cu
ent year. While conducting the audit, the audit team is unable to gain sufficient appropriate audit evidence around accounts receivable due to a lack of documentation. You have informed client management that you need to issue a modified auditor’s report due to the scope limitation. In response, management has requested that the engagement become a review engagement with the associated lower level of assurance, as they are not required to have an audit.
Required:
Outline the appropriate response to this situation. Provide reasons to support your response. (4 Marks)
Part A-4
Consider the following independent situations:
1. You are the auditor of Hail Pty Ltd a medium sized furniture manufacturer. Your audit firm has finalised the financial statements after the client has substantially prepared the accounting records. However, the client admits to having limited knowledge of identifying and calculating impairment and has asked for your assistance. You have proposed a number of adjustments to account for the impairment of assets.
2. You are the auditor of Travel Time Ltd, a large travel agent that also handles all your audit firms travel a
angements on normal commercial rates and provides excellent service. The managing director of Travel Time has indicated that the company is having a tough time of it due to the lack of consumer confidence in the economy at the moment and has asked if you could help by recommending their services to your other audit clients. He has said that he will understand if you are not able to do so. You happily agree to provide the recommendation, as you have always been satisfied with their service.
3. Your audit firm has been approached by a new client, Civil Constructions Ltd, to conduct the audit for the coming year. As part of your client acceptance procedures, you identify that the wife of one of the audit firm’s partners has a substantial shareholding in Civil Constructions Ltd.
4. Your audit client, Pleasure Cruises Ltd, is having cash flow problems and has not paid any of the cu
ent year’s fee by the time the auditor’s report is due to be issued. They expect business to pick up in the coming year and have requested an additional time to pay the bill.
Required:
For each of the independent situations above:
a) Identify the type of potential threat to independence. Justify your answer. (8 marks)
) Describe a safeguard, if any, which could be implemented to reduce each of the independence threats. (4 marks)
College of Business and Law
Semester 1 2018
Page 4 of 9
Part B (10 marks)
Background
Toy Universe Pty Ltd (TUPL) is a toy manufacturer. TUPL has factories across the country and its customer base includes retailers, as well as individuals, to whom direct sales are made through their website. You are an audit senior at Harley Quinn & Associates and you are cu
ently reviewing documentation of TUPL’s internal controls in preparation for the interim audit.
TUPL’s website allows individuals to order goods directly and full payment is taken in advance. Cu
ently the website is not integrated into the inventory system and inventory levels are not checked at the time when orders are placed.
Goods are delivered via local couriers; however, the couriers do not always record customer signatures as proof that the customer has received the goods. Over the past year, there have been customer complaints about the delay between sales orders and receipt of goods. TUPL has investigated these complaints and found that, in each case, the sales order had been entered into the sales system co
ectly,