Developing an Audit Program for a selected publically listed Company

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HA3032 AUDITING

Assessment Details and Submission
Guidelines

Trimester T2 2020

Unit Code

HA3032

Unit Title

Auditing

Assessment Type Group Assignment

Assessment Title “Developing an Audit Program for a selected publically listed Company”

Purpose of the
assessment (with
ULO Mapping)

Students are required to:

1.1- Identify and distinguish between tests of controls, substantive tests of

transactions and substantive tests of balances.

1.2- Identify and understand when the auditor will undertake substantive

audit procedures in response to specific assessed risks of material

misstatement.

1.3- Understand how assertions relate to account balances

1.4- Understand how to select the most efficient and effective combination of

audit procedures that allows them to achieve the audit objective

1.5– Active participation in an “audit team context” with professional

group discussions

The following Unit Learning Outcomes are applicable:

1. Demonstrate a thorough understanding of the reporting requirements of

auditing standards relating to auditors’ reports.

2. Explain how the audit planning process directs the auditor to obtain

adequate evidence to support audit findings and address the importance of

materiality in an audit;

3. Explain the process of audit planning to determine risk assessments and

an overall audit strategy;

4. Explain the auditors’ obligations with regards to understanding the

client’s business and internal controls, and assessing business

risks.

5. Achieve a high level of competence in applying prescribed auditing

techniques in gathering evidence to satisfy audit assertions

Weight 40% of the total assessment

Total Marks 40 Marks

Word limit Maximum 3,000 – 3,500 words

Due Date Week 10

HOLMES INSTITUTE

FACULTY OF
HIGHER

EDUCATION

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HA3032 AUDITING

Guidelines
on
Submission

 All work must be submitted on Blackboard by the due date along with a
completed Holmes Institute Assignment Cover Page.

 The assignment must be in MS Word format, single spacing, 12-pt Arial
font and 2 cm 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.

HA3032 Auditing – Group Assignment Specifications

Purpose:

The aim 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.

Assignment Requirements and Structure

1. Students are required to form groups of 4 students group members by
completing the “HA3032 Group Form details”.

2. Each group of students group have been provided by unit coordinator, a unique
ASX listed company to use for progressive analysis in this group assignment.

3. Prepare a detailed audit program Report [3,000-3500 words] for the client/company in a
group of 4 students. Students must use a Report Format with an Executive Summary

and Table of Contents.

4. Use publicly available online resources for research purposes.

Detail Assignment Tasks: Developing an Audit Program for a selected listed
Company

1. 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, CR, 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?

2. Perform analytical procedures of the Statement of Financial Position and of Financial
Performance over the last three years using appropriate ratios and/or metrics. Select four

key ratios and provide a brief explanation in the report. This should be presented in a table

format.

3. 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, 7 & 8)

4. Select up to ten different material account balances, at least five assets and five liabilities.

5. For each material account balance selected, list the relevant financial report assertions and

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HA3032 AUDITING

explain why the selected assertions are applicable to each account.

6. 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)

7. 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?

8. Refer to some or all of the following websites for further information and

research processes: http://www.auasb.gov.au/Home, http://www.asic.gov.au/,

www.cpaaustralia.com.au, http://www.ifrs.org,

Group Assignment Report – Marking Criteria Weighting %

Key Business Risk Identification 4 10%

Audit Risk Model – Assessment of Inherent Risk, Control Risk, Detection Risk 4 10%

Analytical Review of the selected company, including ratio analysis in a table 4 10%

Material Account Balance Identification (Minimum 5 x Assets and 5 x Liabilities) 10 25%

Assertions identified – Correct Assertions are stated and explanations are noted 4 10%

Audit Program – Audit work steps / procedures are clearly stated and listed. 10 25%

Sampling Plan for each material account balance with samples sizes. 4 10%

Weight 40 Marks 100%

HA3032 Auditing Group Assignment – Marking

Rubric

HA3032
Auditing

Group

Assignmen t

– Marking

Rubric

Part

Excellent

Good

Satisfactory

Unsatisfactory

Key

Business
Risk

Identificatio
n

(4 marks)

Relevant
Business Risks
have been clearly
stated and are
appropriate after
considered
analysis.

(80% – 99%)

Business Risks
are well stated
and
appropriate to
the company

selected.

(65% – 80%)

Business
Risks are
noted and
stated, but
they are only
generic in
nature.

(50% – 65%)

Business Risks
have not been
adequately
addressed. There is
insufficient or
irrelevant
information noted.

(0 – 49%)

http://www.auasb.gov.au/Home

http://www.auasb.gov.au/Home

http://www.asic.gov.au/

http://www.asic.gov.au/

http://www.asic.gov.au/

http://www.asic.gov.au/

http://www.cpaaustralia.com.au/

http://www.cpaaustralia.com.au/

http://www.cpaaustralia.com.au/

http://www.cpaaustralia.com.au/

http://www.ifrs.org/

http://www.ifrs.org/

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HA3032 AUDITING

Audit Risk
Model

(4 marks)

The Audit Risk
Model has been
very well
understood and
applied.
All risk
components
are correctly
stated and the
Audit Risk
Model has
been applied
correctly
to the
company

selected.
(80% – 99%)

The Audit Risk
Model has been
correctly
understood and
all the risk
components are
noted. The
analysis is
sound, but detail
is lacking.

(65% – 80%)

The

Audit

Risk Model
has been
satisfactorily
applied, but
either some
minor
mistakes are
noted or
there is a
lack of detail
in some
areas. (50%
– 65%)

The Audit Risk
Model has not been
understood,
considered or
analysed in the
report. There is
minimal or no real
grasp of the
concept or it is
missing from the
report.

(0 – 49%)

Analytic
al
Review

(4 marks)

The Analytical
review has been
very well
performed and
includes three
years of ratios.
All four key ratios
are appropriate
and presented in
a table with
sound
commentary.

(80% – 99%)

The Analytical
review has been
well performed
and includes four
key ratios. They
are relevant and
presented in a
table with some
good
commentary.

(65% – 80%)

The
Analytical
review has
been
satisfactorily
performed.
Ratios are
noted and
there is some
commentary
, but there
are some
minor
errors.

(50% – 65%)

The Analytical
review is sub-

standard. There are
ratios missing. There
is no commentary or
it
is poorly written. The
requirements have
not been
understood. The
analytical review is
missing from the
report.

(0 – 49%)

Material
Account
Balance

Identificatio
n

(10 marks)

Materiality has
been correctly
calculated
using an
appropriate
base with
explanation.
Five Asset
accounts and
five Liability
accounts have
been selected
and they are
appropriate to
the company.
This section is
presented in a
table. (80% –
99%)

Materiality has
been correctly
calculated with
some
explanation.
Five Asset
accounts and
five Liability
accounts have
been selected.
This section is
presented in a
table. (65% –
80%)

Materiality
has been
stated with
some
explanation.
Asset
accounts and
liability
accounts have
been
provided, but
some are not
material.
Some
Formatting is
noted. (50% –
65%)

Materiality has not
been calculated and
it is missing.
Account balances
are either only
partially stated or
missing. Accounts
selected are not
asset or liability
accounts or they
are not material
account balances.
There is a
lack of
understandin
g.

(0 – 49%)

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HA3032 AUDITING

Assertions
Identificatio

n

(4 marks)

Each of the
material accounts
selected has the
correct financial
report assertions
associated with
it. A clearly
written and
correct
explanation has
been provided. It
is well presented
in the table.
(80% – 99%)

Each of the
material
accounts
selected has
financial
report
assertions
associated
with it. A
correct
explanation
has Been
provided

(65% – 80%)

The accounts
selected have
financial
report
assertions
associated
with them. A
minimal
explanation
has been
provided.
(50% – 65%)

No financial report
assertions have
been provided or
they are clearly
incorrect.
There is a lack of
understanding of
the
requirements.

(0 – 49%)
Audit

Program

(10 marks)

A
comprehensive
set of
appropriate audit
procedures have
been provided
and they are very
well stated for
each of the
material account
balances. There
is a logical
linkage with the
financial report
assertions. This
section is clearly
and well
formatted in a
table.

(80% – 99%)

A set of
appropriate audit
procedures have
been provided
and they are
effectively stated
for each of the
material account
balances. There
is a linkage with
the financial
report assertions.
This section is
well formatted in
a table structure.

(65% – 80%)

Audit
procedures
have been
provided and
they are
stated for
each of the
material
account
balances.
There is an
association
with the
financial
report
assertions.
This section is
appropriately
presented in a
table
structure.
(50% – 65%)

Audit procedures
have not been
provided or they are
mis-stated or
incorrect for the
account balances.
There is no
association with the
financial report
assertions or the
assertions are
missing. This
section has not
been presented in a
table structure. It is
not presented well.
There is a lack
of
understanding.
(0 – 49%)

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HA3032 AUDITING

Sampling

Plan

(4 marks)

For the material
account balances,
a well
-constructed
sampling plan
has been
included which
states the
sampling method
selected, the
appropriate
sample sizes of
items to be
tested, as well
as other
important
sampling
information for
evaluating the
results of the
sample. This is
included in a
table.
(80% – 99%)

For the material
account
balances, a good
sampling plan
has been
included which
states the
sampling method
selected and the
sample sizes of
items to be
tested.

(65% – 80%)

For the
material
account
balances, a
satisfactory
sampling plan
has been
included which
includes the
sample sizes
for each
account.

(50% – 65%)

A sampling plan has
either not been
included or is only
partially provided.
There is a lack of
understanding of
basic sampling
concepts and there is
some incorrect
included.
(0 – 49%)

Academic Integrity
Holmes Institute is committed to ensuring and upholding Academic Integrity, as Academic Integrity is integral to

maintaining academic quality and the reputation of Holmes’ graduates. Accordingly, all assessment tasks need

to comply with academic integrity guidelines. Table 1 identifies the six categories of Academic Integrity

breaches. If you have any questions about Academic Integrity issues related to your assessment tasks, please

consult your lecturer or tutor for relevant referencing guidelines and support resources. Many of these

resources can also be found through the Study Sills link on Blackboard.

Academic Integrity breaches are a serious offence punishable by penalties that may range from deduction of

marks, failure of the assessment task or unit involved, suspension of course enrolment, or cancellation of

course enrolment.

Table 1: Six categories of Academic Integrity breaches

Plagiarism Reproducing the work of someone else without attribution.

When a student submits their own work on multiple

occasions this is known as self-plagiarism.

Collusion Working with one or more other individuals to complete an

assignment, in a way that is not authorised.

Copying Reproducing and submitting the work of another student, with

or without their knowledge. If a student fails to take

reasonable precautions to prevent their own original work

from being copied, this may also be considered an offence.

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HA3032 AUDITING

Impersonation Falsely presenting oneself, or engaging someone else to

present as oneself, in an in-person examination.

Contract cheating Contracting a third party to complete an assessment task,

generally in exchange for money or other manner of

payment.

Data fabrication and

falsification

Manipulating or inventing data with the intent of supporting

false conclusions, including manipulating images.