School of Business & Law

CQUniversity Australia

School of Business & Law

ACCT20075 Auditing and Ethics

Assessment Task 2 - Term 2, 2024

The object of this assignment is to assist students to develop critical analysis skills in relation to materiality used for the audit, analytical review, audit procedures and forming an opinion. This is a written assessment with a weighting of 30%. A marking rubric has been provided to assist you with the marking scheme for this assessment task. The written assessment is to be presented in report format, the report is due on Friday 27 September 2024 at 23.00 AEST (Week 11).

You must submit your MS Word document via Turnitin on Moodle. The report is to have a maximum length of 2,000 words. This is an individual assignment. Name your report ACCT20075 Ass 2 <surname student number>.

Assume you are part of the audit engagement team for your allocated listed company. The most recent annual report is the draft annual report for your company. Please check the list on Moodle and look up your Student ID to determine your company code. You are required to answer the following questions in this context. This must be your own work and if questioned you should be able to explain your answers without your assignment in front of you. Please read the plagiarism and academic misconduct section at the top of the Moodle page. You should also click on the link for Plagiarism Awareness and watch the video. If I consider any assignment is not the students own work I will refer you for academic misconduct, therefore it is important that you read and listen to the plagiarism information provided to understand what is and is not acceptable behaviour. Please ensure you include citations and a reference list as appropriate.

You have been allocated an individual company for your assignment. You MUST only use the annual report of the company that you have been allocated. You can find the annual report online on either the companys website or the ASX website at:

https://www.asx.com.au/asx/research/listedCompanies.do

Click on the company code you have been allocated. You should use the group annual report.

Assignment questions on next page

Assignment Questions

There are three sections to this assignment. Each section is worth 10 marks. Each section includes a component for communication skills. Communication with clients is an imperative necessity for auditors and excellent writing skills are expected from professional accountants, therefore please write your answers carefully and clearly. You will lose marks for poor presentation, spelling mistakes or grammatical errors.

SECTION 1

Section 1 - Part A

Determine the level of materiality to be used for the audit of the group accounts for the year ending in 2023. Your answer should include a discussion of the nature of materiality, and a description of what materiality represents in terms of the audit of a set of financial statements and should discuss the different bases and considerations employed in arriving at materiality. Explain the rationale behind your choice of a certain level of materiality. You must also provide a quantitative estimate of materiality for your company.

Some Guidance to help answer Section 1 - Part A

This part asks you to define and discuss the use of materiality in auditing. Please refer to Chapter 7 of the text and Lecture 5 (and 9). You are pretending to be the auditor of your designated company. The materiality figure has to be set by you as a dollar amount. It is not in the Auditor's Report. You have to justify why you set this amount.

Section 1 - Part B

Review the various draft notes and disclosures accompanying the draft annual report. Highlight at least 3 disclosures that may have significance to the audit, e.g., Contingencies, and outline the audit procedures that you will need to perform.

Some Guidance to help answer Section 1 - Part B

Review the notes of the company, looking for interesting issues that may require the auditor to examine carefully. Contingencies (Chapter 17, Lecture 10), related parties, subsequent events, provisions, valuation issues, are good examples of what might be interesting issues. Explain the auditor's responsibilities in relation to these issues, and how can these responsibilities be addressed.

SECTION 2

Section 2 Part A

The partner has requested you to prepare a preliminary analytical review on the information provided by your company. The partner suggests that, as a minimum, you address key balance sheet and profit and loss horizontal analysis, vertical analysis and ratios for the past 3 years. Based on these results and the nature of your companys business and its markets, outline the apparent trends and changes in these ratios, the key risk areas for the audit and the matters that will have to be addressed in the audit plan. Give examples of relevant assertions and at least one audit procedure for each assertion.

Some Guidance to help answer Section 2

Do your own calculations and show all workings, do not just use ratios that may be provided in the financial reports.

This question is not just about calculations of comparative horizontal and vertical analyses, and ratios. Interpretation is required. What are the trends? Are these positive or negative from a financial management perspective? Are any movements consistent with the over-statement of profit and assets, or the under-statement of expense and liabilities? Summarise the main risks. What audit objectives (e.g. occurrence/existence) are relevant? What audit procedures are useful? Refer to Lecture 7.

SECTION 3

Section 3 Part A

Review the statement of cash flows. Which category of cash flows provided the majority of cash inflows? Which category had the greatest outflows? Identify the primary cash receipts and cash payments during the year. What were the main non-cash financial and investing activities? Using the results of your review of the cash flows, analytical review and other public information, evaluate the going concern risk of this company. What audit procedures would you recommend to address any such risk?

Some Guidance to help answer Section 3 - Part A

The first part of Section 3- Part A can be obtained from the cash flow statement.

The second part of Section 3 Part A wants you to consider if the company is trending towards problems with short-term or long-term solvency? Is operating cash flows positive? Is the company investing in its non-current assets? What does your analytic review tell you about the company's prospects? Is anything else impacting on the company (COVID?)? See Chapter 18 of the text on the auditor's responsibilities (e.g. mitigating factors, management plans).

Section 3 Part B

Now review the audit report of the 2023 financial report. State what type of opinion was expressed? Are there any additional sections or paragraphs indicating any audit issues? What key audit matters have been addressed and how? Describe the nature of these issues in detail.

Some Guidance to help answer Section 3 - Part B

Section 3 Part B can be answered by referring to the Auditor's Report.

Marking Guide Rubric

Grade 7 6 5 4 3 Mark

Section 1 Comprehensive and well- judged application of the auditors responsibilities with reference to relevant Standards on materiality and disclosures. Excellent presentation, correct spelling, punctuation and grammar.

(8.5 10 marks) Effective and well-judged application of the auditors responsibilities with reference to relevant Standards on materiality and disclosures. Excellent presentation, correct spelling, punctuation and grammar.

(7.5 - 8.5 marks) A reasonably well-judged application of the auditors responsibilities with reference to relevant Standards on materiality and disclosures. Very good presentation, and mostly correct spelling, punctuation and grammar. (6.5 7.5 marks) Some application of the auditors responsibilities with reference to relevant Standards on materiality and disclosures. Good presentation, some errors with spelling, punctuation and grammar. (5 6.5 marks) Little application of the auditors responsibilities with little reference to relevant Standards on materiality and disclosures. Fair presentation, errors with spelling, punctuation and grammar. (<5 marks) 10

Section 2 Comprehensive and well-judged analytical review of the information provided in relation to balance sheet and profit & loss information. Correct ratio analyses and descriptions with identification of key risk areas. Correctly identified relevant assertions and appropriate audit procedures. Excellent presentation, correct spelling, punctuation and grammar.

(8.5 10 marks) Effective analytical review of the information provided in relation to balance sheet and profit & loss information. Correct ratio analyses and descriptions with identification of key risk areas. Identified most relevant assertions and appropriate audit procedures. Excellent presentation, mostly correct spelling, punctuation and grammar.

(7.5 8.5 marks) A reasonable review of the information provided in relation to balance sheet and profit & loss information. Some correct ratio analyses and descriptions with identification of key risk areas. Identified most relevant assertions and appropriate audit procedures. Very good presentation, mostly correct spelling, punctuation and grammar.

(6.5 7.5 marks) Adequate review of the information provided in relation to balance sheet and profit & loss information. Some correct ratio analyses and descriptions with identification of key risk areas. Identified most relevant assertions and appropriate audit procedures. Good presentation, some errors with spelling, punctuation and grammar.

(5 6.5 marks) Response did not adequately analyse the information provided in relation to the balance sheet and profit & loss information. Some correct ratio analyses and descriptions with identification of key risk areas. Identified few relevant assertions or appropriate audit procedures. Fair presentation, errors with spelling, punctuation or grammar.

(<5 marks) 10

Section 3 Comprehensive understanding of cash flows and evaluation of going concern risk. Well-judged application of audit procedures to mitigate this risk. Comprehensive review of the audit report. Excellent presentation, correct spelling, punctuation and grammar.

(8.5 10 marks) Effective understanding of cash flows and evaluation of going concern risk. Well-judged application of audit procedures to mitigate this risk. Comprehensive review of the audit report. Excellent presentation, mostly correct spelling, punctuation and grammar.

(7.5 8.5 marks) A reasonable well-judged understanding of cash flows and evaluation of going concern risk. Thoughtful application of audit procedures to mitigate this risk. Rational review of the audit report. Very good presentation, mostly correct spelling, punctuation and grammar.

(7.5 8.5 marks) An adequate understanding of cash flows and evaluation of going concern risk. Thoughtful application of audit procedures to mitigate this risk. Rational review of the audit report. Good presentation, some errors with spelling, punctuation and grammar.

(5 6.5 marks) Lacking understanding of cash flows and incomplete evaluation of going concern risk. Inadequate review of the audit report. Fair presentation, errors with spelling, punctuation and grammar.

(< 5 marks) 10

Total 30

Term 2-2024 ACCT20074 Contemporary Accounting Theory

Assessment 2 on Sustainability Reporting

Nature of task Individual

Total marks 40 (40% of the unit)

Due date Week 10 Monday (16 Sept 2024) 11:45 pm AEST (Queensland Time)

Word limit 2,500 words for executive summary, introduction, main contents, conclusion & references.

Format Submit in Report format as per the template, marking criteria, and guidelines below.

Prepare MS Word document (not pdf).

File name Use first name and student id, for example, Kazi_s012345

Requirements:

Undertaking a review of literature, explain the concept and importance of sustainability reporting.

Based on your understanding of contemporary accounting theory, explain which theories are useful in understanding the necessity and contents of sustainability reporting.

Explain the role of different international bodies for developing a framework (guidelines) for sustainability reporting before 2023.

Explain the process (various steps) followed by the International Sustainability Standards Board (ISSB) to develop the IFRS sustainability reporting standards.

Discuss the effects of the Conceptual Framework for Financial Reporting on ISSBs IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.

Prepare a Disclosure Index showing the key information to be disclosed in a sustainability report as per IFRS S1.

Download the 2023 sustainability report/ESG (Environment, Social, Governance) report of selected ASX company allocated to you. Then explain the key contents of this report. Also provide your opinion as to whether your company early applied ISSBs IFRS S1 in preparing its sustainability/ESG report.

(Note: Visit allocated company website. Sustainability /ESG report will be available in the annual report area under investor/shareholder information of selected ASX company).

Template, Marking criteria and Guidelines

Student name: .. Student ID: .

Template Marks Guidelines

1 Executive summary 2 Summarise overall findings

2 Introduction 1 State the purpose and research methods

3 Concept and importance of S/reporting (req a). 2 Refer to 4 journal articles

4 Useful theories about S/reporting (req b). 2 Refer to 4 journal articles

5 Role of international bodies for developing a framework (guidelines) for s/reporting (req C). 4 Refer to international bodies

6 Process/steps followed by the ISSB to develop IFRS S/reporting standards (req d). 3 Refer to ISSB initiatives

7 Effects of the Conceptual Framework on IFRS S1 (req e). 2 Refer to CF and IFRS S1

8 Disclosure Index showing key information to be disclosed in a sustainability report as per IFRS S1 (req f). 7 Refer to IFRS S1

9 Sustainability/ESG reporting practices in 2023 annual report of ASX company: key contents and opinion about early application of IFRS S1 (req g). 10 Refer to the sustainability/ESG reporting in company annual report

10 Conclusion 1 Gist of findings and lessens you learned

11 References in text and in list 4 Use APA referencing guide

English grammar & presentation skill 2 English quality assessed throughout the paper

Total 40