Objectives: Analysing role of auditing in company’s annual report / public disclosure.(Applicable textbook chapters 1 and 2)
disclosures available from company’s website and answer the following:
1) Number of independent directors and executive directors in the audit committee or equivalent. (if any)
2) Who is the chairman of the audit committee (if any)?
3) How many number of meetings (if available) held by the audit committee during the year?
4) Name of the external auditor?
5) How much is the audit fee paid to the external auditor for the current year?
6) What is the nature and amount of non-audit services provided by the external auditor?
7) When was the audit report issued?
8) Briefly describe the structure / contents of the audit report.
9) To whom (full name) the audit report is addressed to?
10) What is the type of modification (if any) in the audit report?
11) What are the standards or legislations that management and auditor complied with as according to directors’ responsibility paragraph and auditor’s responsibility paragraph in the audit report?
12) Which financial statements do the auditor making explicit reference to in the audit report?
13) What are the business and geographical segments (as according to AASB 8) of the company? (only if applicable)
14) Are there any inter-segment sales and what is the largest component of these inter-segment sales?
15) How many subsidiaries or controlled entities does the company have?
16) Briefly describe how would the information from question 13) to question 15) changes the extent of your audit works?
Objectives: understanding planning stage of the audit process: review of client business and perform audit risk analysis
Assume that you are audit senior in an accounting firm. Your firm has recently won an audit for a company that you selected in assignment 1. The whole assignment 2 should be prepared based on your selected company from assignment 1 in the form of report.The assumptions are that your firm does not have any other clients that operate in this industry and your audit partner is concerned about his lack of knowledge of the industry the company is operating in. He is aware of the requirements of ASA 315 (par 25 and 26).
Your audit partner asks you to prepare a memo/ report on the ‘state of the company’s industry’ and associated risk factors. Your report must cover the requirements below and exhibit effective communication (attributes such as coherent writing style, proofreading and proper referencing)
Required:
a) Prepare a list of three useful sources (the relevant information from the particular source must also be listed) that you can use to obtain the required industry knowledge. An example of a valid source of research material would be Australian Bureau of Statistics (www.abs.gov.au)
b) Prepare a memo to the audit partner on the ‘state of the company’s industry’ and associated risk factors.
c) Identify a relevant general balance-related and a transaction-related audit objective based on the finding from the risk factors in part b). The required audit objectives here must be specific to the company that you are working on and causal relationship with part b) must be established.
d) Perform overall analytical procedures to identify significant changes in the financial positions or results of the business which require detailed investigation and explanation. The overall analytical procedures / risk analysis should at least cover the areas in liquidity, (can the business meet present obligations?) solvency (can the business continue to operate for the foreseeable future?) and profitability (is the business profitable?)
General requirement:
The length of the writing / reportmust not exceed 1000 words. Words in Bibliography or Reference Lists section are not included in the word count.
The information required to work on this assignment includes company’s annual report (directors’ report and financial report) and any media releases related to the company. There are Excel files on financial statement line data (historical) for all ASX listed companies provided for your needs (optional) in performing the analytical procedures.
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