UNIVERSITY OF SOUTH AUSTRALIA
Study Period 3, 2018
ACG31 Auditing Theory and Practice
Subject Co‐ordinator: Chris Kandunias
© University of South Australia 2018
Due 11:00pm* Tuesday 30th of October 2018
Word Limit – 2,000 words**
*All references to submission times refer to Adelaide time (CST)
**Penalties will be applied if your assignment exceeds 2,200 words
(Word count excludes reference list and appendices – it includes in-text referencing,
headings, text contained in tables and footnotes)
AMP is a large Multi-National company. For more company information and annual
You will be required to assess and analyse AMP from an auditing perspective, in
the period leading up to the period ending on 28 October 2018 (although the
reporting date for AMP is not the 28th of October, for the purposes of this
assignment, we will be assuming that the reporting period for AMP encompasses
29/10/20XX-28/10/20XY and is based around the due date of the assignment). This
will allow you to collect articles up to and including the 28th of October.
The Internet is a valuable source of information for obtaining background
information on a client, as well as the UniSA Library databases (e.g.
EBSCO/ProQuest) available on the UniSA library link on the Subject Homepage.
The link to the UniSA library HomePage is here: http://www.library.unisa.edu.au/.
You are encouraged strongly to use the Internet and other media to assist you in
collecting further information relating to AMP. To do well in the assignment, it is
required that you will undertake research on the entity beyond merely the AMP
homepage and their annual reports.
Important Note to Students
The focus of this assignment is to illustrate the importance of planning the audit of
a reporting entity and to gain an understanding of the role of the auditor in an
accounting environment. AMP, as a live case provides students with the opportunity
to experience more ‘real’ issues in the planning of an audit.
You will focus on collecting information relating to AMP in the period leading up to
October 28 2018 (as a general guide, you should focus your identification of
appropriate information in the period 1 July 2017 onward for issues that will affect
the planning of the audit for the period ended 28 October 2018). I do not want you
to be beyond this period so any articles focusing on the period prior to the 30th of
June 2017 should not be used in this assignment.
The objective of this assignment is to illustrate the nature of auditing and how it is
integrated into the financial reporting framework – as all topics are connected in
some way. The identification of relevant events, for example, will be important in
identifying relevant risks of misstatement, as events often give rise to the
identification of risks of material misstatement. It is this integration of the topics that
makes auditing unique.
This ‘live’ case is only being used to illustrate the importance of planning an
external audit. As such, please do not assume that this is a first time audit of the
entity – you are to use the AMP case like an auditing training tool rather than
undertaking the audit of AMP yourself. This means that you have to be very specific
with your identification and discussion of relevant risks associated with the audit of
the entity. The textbook for example, on pages 239–241 outlines some “generic”
inherent risks which may be relevant in assessing inherent risk. One of these
general inherent risks identified in the text is “initial versus repeat engagement”.
Students cannot for example, use this as a discussion of a potential misstatement
as this is a broad generic risk and we are also assuming that you are not the auditor
of the entity. It also makes it almost impossible to identify a specific potential
misstatement in the financial reports associated with this risk or specific impact on
the audit of the entity – one of the key requirements of the assignment is to identify
specific potential misstatements so you need to stay away from identifying and
discussing broad general issues. Students who identify this as an initial engagement
as one of the risks associated with the entity, will receive no marks for discussion of
Academic Integrity: Please be aware of the dangers of plagiarism – we use
Turn-it-in software and it is VERY reliable. Please refer to the discussion on
academic integrity on the Subject website – if you are caught and found responsible
you will, as a minimum, score zero for a piece of assessment. Use the software
available to you to ensure that your work, once submitted, meets the requirements
of the University and is representative of YOUR OWN WORK. Try your best in this
assignment. Part of the learning process is to apply the theory you have been
learning in your degree to a practical situation. Such skills are vital when you are
working in a professional environment and will hold you in good stead for your
ASSIGNMENT (2,000 words): Due Date Tuesday 30th October
2018 11:00pm Adelaide (Central Standard) time.
1. Identify what you consider to be four ‘key’ events that could have an impact on the
audit of the AMP Group for the year ended 28 October 2018 and/or future audits.
(For the purposes of this assessment we are assuming the reporting date is the
28th of October, not a traditional balance date).
For each of the events identified above, describe the event clearly and state how
and why you consider the event may create the risk of potential material
misstatement in the financial statements of AMP for the year ended 28 October
2018. You are expected to identify four (4) critical events that have occurred within
the relevant reporting period. You are required to identify appropriate and relevant
references to specific Accounting Standard(s) (mandatory disclosure requirements
or requirement for specific procedures related to the amounts to be shown in the
financial reports) as part of your discussion of the potential misstatement. You
must also identify an appropriate audit objective which you think is relevant to
each of the risks you have identified and explain how you arrived at the
identification of the audit objective (i.e. you must justify the identification of the
(4 x15 = 60 Marks)
2. Using your understanding of the audit evidence mix, discuss briefly how each of
the risks you identified will impact on the evidence mix for the planning of the audit
of AMP. When referring to the evidence mix to use, reference should be made to
the tests of balances, transactions and analytical procedures and the like (refer to
the lectures for a complete list of types of evidence used by the auditor), indicate
which specific areas in the accounting system would be critical and comment on
the nature and extent of the testing required (see guidance notes in appendix).
HINT: You are only required to assess the evidence mix for each individual event
identified and determine an appropriate evidence mix for that specific event. You
are not required to identify an overall inherent risk and audit risk assessment for
the entity. You are not required to determine an overall evidence mix for the entity.
Focus only on the impact of each individual risk on the evidence mix required to
assess the impact on each risk you have identified.
(4 x 5 = 20 Marks)
PRESENTATION, USE OF APPROPRIATE REFERENCING CONVENTIONS, GRAMMAR
AND SPELLING – 10 MARKS
Refer to Appendix four and guidance notes in Appendix two.
TOTAL MARKS FOR THE ASSIGNMENT (90 Marks)
The above should be read in conjunction with the guidance notes, in the appendices at
the back of this assignment booklet.
Index to Appendices
Appendix 1 Submission of Assignment
Appendix 2 Assignment guidance notes
– Word limits
– Late lodgement penalties
– Objectives of the assignments
– Assignment Broad Guidance Notes
Appendix 3 Frequently Asked Questions and hints
Appendix 4 Assignment feedback sheet/marking schedules
Appendix 5 Note on Academic Integrity and use of Facebook Groups
Appendix 6 Submission of a draft for question 1
APPENDIX ONE: SUBMISSION OF ASSIGNMENT
Students will NOT be permitted to submit an assignment in a team. This assignment must be done
Students are reminded to maintain backups of their assignments. Please get into the habit of backing
up your assignment on a regular basis (every time you work on your assignment you should create a
backup). If something goes wrong, minimise the risk of losing work! Students are responsible for
ensuring they maintain a backup of their work. A corrupted assignment with no backup available
cannot be used as a reason to request an extension for the assignment. I know how hard it is
to manage time when studying numerous Subjects and working at the same time. This places
pressure on your time and being able to start the assignment with ample time to complete.
Don’t leave it to the last minute to start the assignment as this is when you increase the risk of
making mistakes such as corrupting your file, deleting the wrong version of your assignment
Please make sure that the file you upload onto Learnonline is the final version of your
assignment. The file which is uploaded onto the website is the file that will be marked and the
file used to finalise your grade for the assignment.
APPENDIX TWO: ASSIGNMENT GUIDANCE NOTES
Guidance notes for Assignments
Please include the number of words in your assignment on your title page.
Assignments should be presented in a succinct business-like writing style and you
should avoid repetition and irrelevant information. As a broad guide, your
assignment should absorb no more than 2,000 words, though the assignment can
be completed in fewer words (there is no minimum to the words you use to answer
the assignment). Quality of the information presented will, however, be the important
factor rather than quantity. Penalties will be applied if you exceed the upper word
limits (in this case, 2,200 words); the application of penalties is at the discretion of
the co-ordinator and will reflect the amount of the word limit exceeded – e.g. if you
exceed the upper word limit by 10% you will receive a penalty of 10% of your mark.
Please note, to be fair to all students, if, for example, the assignment is
submitted with a word count of 2,250 the penalty for going over the word limit
will be based on exceeding 2,000 words. In other words, the penalty applicable
in this case will be 250/2000 = 12.5% rather than 50/2200 = 2.3%. It will not be
based on using 2,200 as the basis for calculating the percentage penalty. The
additional 200 words are given in case some students are “just over” the 2,000
word limit and to allow me some discretion in the marking process.
The following are EXCLUDED from the word limit calculation:
– Title Page
– Reference list
The following are INCLUDED in the word count
– In-text Referencing
– Heading and Sub-headings
– Words contained in tables (e.g. headings for tables)
I appreciate this may differ from the rules used for the calculation of word limits in
other subjects. However, these are the rules applicable to this subject. If you
include text in an appendix, it is not part of the word limit. However, the content
of the appendix will not be used in determining whether you have answered the
question. In-text referencing is included in the word limit. Again, I appreciate
these rules may appear to be somewhat harsh but you should find no trouble in
keeping within the required word limit for this assignment. If you are struggling
to stay inside the word limit, you are writing too much and need to consider
where you can be more succinct in your discussion.
Late lodgement Penalties
Late lodgement penalties of 10% of the maximum mark apply for each calendar day
(including weekends), or ANY PART thereof if an assignment is lodged at any time
after the due date and time. This is applied rigidly to ensure that ALL students are
treated equally and equitably and that no-one receives an unfair advantage. As such
please do not leave it to the last minute and think you can lodge ‘a few minutes’ late
and avoid a penalty.
Objectives of the assignments
Having completed the assignment, students should be able to:
Identify risk factors facing the auditor and understand the impact on audit
procedures and the collection of audit evidence;
Apply accounting knowledge (lifelong learning skills) in identifying the risk of
errors in financial reports;
Use the skills they have learned in previous Subjects to think critically about the
quality of information.
Exercise judgment and learn about the investigative nature of audit tasks.
Apply theory to a simulated real world case.
Further—the assignments are designed to contribute to your development of
following graduate qualities, though the emphasis is on GQ’s 1, 3, 4, and 6.
#1 – Operating effectively with and upon a body of knowledge….
This is a simulated real world case that requires the application of your prior learning
to test your ability to apply principles to the case at an appropriate depth of
#2 – Is prepared for life-long learning…..
Once again, the solution to this case will not appear in the texts for this Subject. It is
expected that you will be able to think creatively and practically, realising that each
audit client will be unique, requiring different approaches to solving business issues
or planning an audit. In other words, a lifelong learning skill is that there is no ‘cookbook’ that gives the right answer, and the real skill is examining the information,
applying general principles, undertaking research and developing practical solutions.
#3 – Is an effective problem solver, capable of applying logical, critical, and
Once again, the answers to the case will not be found in a textbook. You need to
take on the role of business analyst so that you can identify, from an audit point of
view, the critical areas for focus in the gathering of evidence. This takes creative
thought, and logical but critical thinking.
#4 Can work both autonomously and collaboratively…
Working as an individual requires good time management as you are responsible for
the assignment input, and will reap the benefit of having covered all areas. You will
be required to work strategically in terms of managing your time to ensure you can
address the assignment requirements within the submission timeframes.
#5 Is committed to ethical action and social responsibility…
This is a real world case so that you may gain an appreciation of the work
undertaken by an auditor in planning an audit. As the next generation of professional
accountants, it is the aim that you will have a better appreciation of what is required
in planning an audit and gain an understanding of the theory in a practical
#6 Communicates effectively….
Your report will be assessed for structure, professional presentation, language and
content. Case analysis assists in developing logical thought processes which should
translate to written and oral communication skills.
#7 Demonstrates an international perspective
Specifically addressed in this assignment; the entity under consideration has
Students are provided with the opportunity to research information relating to a real
world entity. The issues raised are from real-world situations and require application
of accounting knowledge and auditing theory. Many students find assignments based
on the real world difficult because many of the issues confronting them are practical
and, therefore, unfamiliar. The following notes are intended to help you structure your
responses and also indicate how marks will be awarded.
Although the “reporting date” for the entity is assumed to be the 28th of October,
students may still use the annual reports to assist with their assignment i.e. students
can refer to data from the annual reports when trying to argue the potential for a
specific material misstatement.
You are assuming the audience for this assignment is a managing partner of an
auditing firm and you are preparing a set of notes for the partner to use to prepare for
the audit. Therefore, the assignment is pitched in a professional environment. Being
able to present a succinct piece of work to your “manager” is a critical skill as a
graduate. Do not embellish and write too much in the way this assignment
booklet does! The assignment booklet goes to great lengths to explain as much as
possible and to pre-empt as many questions from students as possible – it needs to
be this long. Your assignment is being pitched to someone who already has a strong
understanding of the material hence you can write it with this assumption in mind. If
you are in doubt, do not hesitate to contact me (the coordinator) if you think you are
writing too much. Remember YOU ARE NOT CONDUCTING THE AUDIT OF AMP.
This means you can assume the target audience for this assignment has a thorough
understanding of the theory so you do not need to explain the theory.
ASSIGNMENT BROAD GUIDANCE NOTES
AN APOLOGY IN ADVANCE FOR THE AMOUNT OF READING YOU NEED TO
DO TO ANSWER THE ASSIGNMENT. I HAVE TRIED TO BE AS SPECIFIC AS
POSSIBLE IN MY GUIDANCE TO YOU. YOU CAN VIEW THIS SUBSEQUENT
DISCUSSION AS NOISE AND IGNORE IT AND JUMP STRAIGHT INTO
ANSWERING THE ASSIGNMENT. OR YOU CAN SET ASIDE AN EVENING TO
CAREFULLY READ THROUGH THESE GUIDANCE NOTES AND THEN YOU
WILL SEE EXACTLY WHAT I AM ASKING YOU TO DO FOR THIS
ASSIGNMENT. ALL I ASK OF YOU IS TO SET ASIDE AN EVENING OF YOUR
TIME TO PREPARE FOR THIS ASSIGNMENT PRIOR TO STARTING IT.
Identify what you consider are four (4) key events which would impact on the audit of
AMP. You are encouraged to use financial information relating to AMP and the
industry in which it operates for the period in question. Discussing the
announcement of profits, budgets or dividends or revised financial forecasts, of
themselves, is not considered a major event, and this will not accrue any marks if
identified and discussed in your assignment. Non-financial information can be a
goldmine which can assist you in identifying potential misstatements by giving you
clues as to what to research.
Be careful to answer the question – that is, it asks what are the “key events”. You
should be clear about what “key events” mean. Another way of looking at it is to ask
yourself what are the “areas of concern” associated with these events? Overall
these terms mean what areas of the financial statements are there likely to be risks
of material misstatements (which might ultimately impact on the auditor’s opinion
and report). Specifically, the information may lead you to think that some areas may
have an error (mistake) in them as a direct result of certain events or issues that the
company has experienced during the period. Your task for this assignment is to
identify that information and how and why it may present a possible risk of material
misstatement in the financial reports. The misstatement(s) are identified by referring
to the relevant Accounting Standard(s) and paragraphs within those Standard(s).
Further, you will need to clearly explain why and how you have arrived at each event
and the potential misstatement from each of these events. Simply stating information
relating to the event without applying it to something specific from the Accounting
Standards will not attract any marks.
How you set out the answer to question 1 is up to you, but you must clearly address
all aspects of the question:
1. What is the event? (A simple explanation will suffice for this part of the
question). This is usually a brief explanation of the event that has occurred
during the reporting period which has the potential to impact on the financial
reports. This is critical. You must identify an event that has occurred during
the period. You can assume that at the start of the period (1/7/17), the
financial reports were free of material misstatement. So you are starting with
a set of reports which are correct.
This means you need to find something that has happened this year which
may create the potential for misstatement. As an example, you may be
thinking that the entity deals with foreign exchange which is complex in
nature and therefore can create the potential for misstatement. This is, on the
face of it correct. In general foreign currency will create the potential for
material misstatement due to its complexity and the nature of events related
to foreign currency.
However, if the reports are free of material misstatement at the start of the
period, any events involving foreign currency from prior periods can be
assumed to have been tested by the auditor(s) and verified to ensure there
are no misstatements at the end of last period (start of the current reporting
Hence, if the entity did not undertake any events involving foreign currency in
the current period, the risk of misstatement due to foreign currency would be
irrelevant to the entity this year and the risk of misstatement associated with
foreign currency would be minimal. Hence you could not discuss foreign
currency in these circumstances. You need to identify a specific event which
has occurred which would require the use of appropriate disclosure
requirements associated with foreign currency to make it relevant to the
If however, you found an event occurring during the period involving the
need for foreign currency, you could now identify foreign currency as an
inherent risk and a potential source of misstatement in the financial reports.
The event itself would be the reason for potential misstatement. In other
words, focus on things that have occurred during this period which tell you
that you now need to investigate for potential misstatement. If nothing has
occurred this period to change the accounts associated with (for example)
foreign currency, then you cannot argue that foreign currency would create a
risk of potential missatement for this reporting period. Remember you are
trying to help the auditor save time when doing the audit so what you are
saying is if there are no major events associated with a particular area
(foreign currency, leasing, etc), then there is less need to allocate resources
in the audit to assess the potential for misstatement in those areas of the
2. What is the specific risk of material misstatement? (To do this, you need to
explain and give an example of a specific potential misstatement that could
occur as a result of the event). Do not simply state “this will cause potential
misstatement” or ‘this may result in fraud’ or ‘the directors will misstate the
financial statements’. When looking at the term “misstatement” you can
approach this one of two ways – you can discuss a potential misstatement in
the form of the dollar amount being misstated or you can identify and discuss
a potential disclosure requirement outlined in the Accounting Standard(s).
Whichever one you choose to use you must still provide a specific example
of a potential misstatement that could occur (i.e. a potential account balance
or a specific aspect of disclosure as per the Accounting Standards – you
must refer to the Australian Accounting Standards or the International
Accounting Standards) when answering question 1. This is not as easy as it
sounds. The potential misstatement must be specifically related to AMP and
be both reasonable and plausible.
You need to link your discussion to the financial reporting framework – in
other words, you need to find something in the Accounting Standards
which you can link directly to the discussion of the risk identified. This is
critical in getting a good grade for the assignment. A discussion of specific
procedures outlined in the relevant Accounting Standard(s) is expected.
For example, if you identified an event in question 1, which was associated
with a contingent liability, it is expected you would discuss AASB137 and a
specific provision from this Standard. Note you are identifying relevant
Accounting Standards and paragraphs from the Accounting Standards. You
might need to refer to, for example, paragraphs 36-41 relating to the
measurement of the liability and the need to use judgement. You would also
highlight the need to disclose the uncertainties associated with expenditure
as per paragraph 44 of AASB137.
You are not required to identify a relevant Auditing Standard in question 1.
The focus is on identifying the reporting aspect (i.e. compliance to a
mandatory recording or disclosure requirement). You may identify Auditing
Standards if you wish (for example, you might discuss ASA501 if you were
talking about inventory in the misstatement discussion) but it is not a
requirement for this assignment. The assignment is highlighting the
importance of understanding accounting to be able to undertake a successful
external audit. If you don’t know your accounting, you will not know what to
audit and hence you cannot do an audit.
Make sure you have a look at the example on the Subject website for further
guidance relating to the expectations placed on students in answering
There are two aspects in identifying the relevant Accounting Standard(s) to
discuss. You must first establish that something needs to be recorded (so
find something in the Standards that says that an asset, liability etc needs to
be recognised). Then you need to explain what the specific disclosure would
be using something specific from the Accounting Standards. It is therefore
likely you will need to look at two different areas of the Accounting Standard
to address this question.
3. What are the appropriate audit objective(s) applicable to the potential
misstatement identified in your discussion in “1” above? You may discuss
either transaction related and/or balance related audit objectives. A hint – it is
much easier to identify balance related objectives in this assignment due to
the nature of auditing and the limitation in gaining access to the processing
systems for the entity – this is not to say you cannot identify transaction
related objectives, it is just that it is harder to identify and then justify a
transaction related objective.
An example has been provided on the subject website for students to use as the
basis of preparing the answer to question 1 of the assignment.
There has been ample discussion of AMP and the entities it owns (and the events
impacting on them) in the financial press in the last 18 months. This should provide
you with a wealth of information to use to answer the questions in the assignment.
Identify what you consider to be relevant (and specific) events that will impact on the
planning of the audit for the reporting periods ending on or after 28 October 2018.
You may find that some of the information could be relevant for more than one
reporting period. The UniSA library has an excellent serials database within EBSCO
Students are not expected to explain the theory applicable for this assignment. For
example, the definition of inherent risk or acceptable audit risk does not need to be
explained or defined in your assignment. Likewise, a discussion of why it is
important to identify major events in the planning of an audit is not required.
Students should focus on applying the theory to a practical environment. Be efficient
in the use of your word allocation – focus on answering the questions rather than
embellishing on the information used for the assignment. Remember you are writing
this report for your audit partner – your audit partner will know the theory so don’t
explain it in your report.
You may use ‘bullet points’ in answering this question, but correct and adequate
sentence structure must be adhered to, in addition to referencing protocol. The
target audience is your “manager” in an accounting firm. Therefore, you need to be
succinct, professional and clear in your communication to ensure your message is
made clear to the person reading your work. Do not do what I have done in this
assignment booklet! The reason this booklet is so detailed and lengthy is because I
want to make sure you know exactly what to do. To pre-empt your questions. When
you create your report (assignment) keep focused on the word limit. If you find that
you do not need 2,000 words to complete the assignment, that’s fine. You will not be
penalised for not writing enough. Please do not use a table to answer this
assignment. You will be penalised significantly in the presentation mark if you
use a table to answer this assignment i.e. if it takes the form:
|What is the
|What are the potential
|What is the|
|Event (Risk) 1|
As a general example, you might find an article which says that 380 staff will have
their jobs terminated due to a restructure of the entity1. This may be a risk because
terminations normally involve the calculation of employee entitlements which are
complex in nature as per AASB119 and the need to create provisions for employee
redundancy. Hence, there is a greater chance that there will be calculation errors
due to things such as eligible termination payments (paragraph 68), and leave
entitlements (paragraph 153). You must provide specific examples of potential
misstatements that could occur in the financial reports. Students will not be
allowed to use staff redundancies and the associated calculations of
employee entitlements as a major event. No marks will be given to the
identification and discussion of staff redundancies (potential or otherwise) as
it relates to AMP.
Please note that this question will take you a bit of time to complete. It is therefore
advisable that you do not leave this to the last minute to begin. As always, you are
welcome to post questions on the discussion forum before submitting. If you leave it
to the last minute, it is unlikely you will receive the assistance that you require to
complete the assignment. It is reasonably expected that students will have good
research skills so we will not be providing research hints for you.
IMPORTANT: The announcement or use of financial results (or subsequent
payment) of profits/losses and forecasts or dividends and information about profit
forecasts by AMP (irrespective of magnitude) does not constitute an event or
inherent risk of significance relevant to the assignment and will not accrue
any marks. You are required to research the company and identify specific AMP
events which will assist in the planning of the audit. I expect you to research the
entity by going beyond the annual report and the entity’s homepage. Students
cannot use the annual report financial figures to drive the identification/discussion of
a risk of misstatement. For example, students cannot identify a risk as “the
allowance for doubtful debts increased by 45% in the current financial period. As the
allowance is an estimate, there is potential that a misstatement has occurred due to
the significant change in the balance in the last 12 months”. Impairments are a good
example of what to look for in your research especially in the mining industry.
This does not mean you shouldn’t use the financial report figures at all. Far from it. If
you found that a balance such as the balance in the commodities account changed
1 http://www.abc.net.au/news/2015‐08‐09/bhp‐announces‐380‐job‐losses‐at‐olympic‐dam/6684060 (The event is from 2015 and
although about BHP, is used for illustrative purposes only.
by 45% in the last 12 months, you should look at doing an Internet search to find the
reason why such a significant change in the balance occurred. This might then
uncover an event or issue that occurred during the current period which then
becomes your risk factor. For example, there may have been a significant downturn
in the overseas market during the period. The potential outcome of that risk is then
the potential for the commodities on hand balance to be misstated. It is these subtle
changes in your thought process which can elevate you from a solid mark to an
outstanding mark both for the assignment and the final examination.
Therefore, a good approach is to try to reverse engineer your answers. A common
mistake made by students is identifying the outcome of the risk as the risk factor.
This makes it almost impossible to be specific as to the nature of the potential
misstatement. As an example, many students look to identify going concern as a
potential risk of misstatement when an entity is struggling financially. Although
technically correct, the identification of “going concern” as the risk makes it
impossible to be specific and hence a low mark ensues (usually a P1) for
subsequent discussion. Further to this, AMP does not have any issues with going
concern so any discussion suggesting as such will be penalised accordingly. What
you should do is ask yourself “what is causing the going concern issue?” It may be
that there has been an event involving the write-down of a major asset(s) which has
meant the carrying amount of major assets in the balance sheet have changed
significantly also resulting in a large loss being reported for the period attributable to
the impairment. You would now need to look at the relevant Accounting Standard
provisions and explain how this event would be specifically recorded and disclosed
in the financial reports. You may need to think back to your previous accounting
studies (eg FA2) to be able to answer this part of the question.
A common mistake made by students (especially if they are running out of time) is to
simply use the annual reports and the entity’s website to identify key risks. It is easy
to see that you have not made the effort to undertake independent research to
support your work and your marks for the assignment will reflect this. Likewise,
using the general inherent risks discussed on pages 239–241 of the textbook in the
assignment is too broad. You should still read these pages to gain a better
understanding of how to identify a risk of misstatement but once you have done this,
go to Appendix 2 of ASA315, look at the examples in the appendix and then start
looking for the possibility of these examples being relevant to AMP in the current
“reporting period”. Be careful though – not all of the examples in Appendix 2 relate to
inherent risks. Some relate to the internal control environment. Focus on those that
give rise to the potential for misstatement as a result of the existence of (an)
inherent risk. Identifying the correct ones to use from the list in Appendix 2 forms
part of the assignment process. Look at the list as a set of potential areas to
investigate to see if an event has occurred during the period which may give rise to
misstatement in the financial reports.
Do not use fraud or examples of potential fraud in your discussion of potential
misstatements. It is dangerous to start questioning the integrity of management for
the entity and trying to identify a specific potential misstatement when looking at
fraud, is very hard to do. The easier approach is to look at potential errors that can
occur which are based on the Accounting Standards and your assumed knowledge
from your prior accounting studies. Using fraud as an example is also very difficult
because it is hard to think of something that is both plausible and specific enough to
meet the requirements of the assignment.
An auditor is required to collect sufficient appropriate evidence to form an opinion.
This is the case for the whole audit and applies to your analysis of the risk identified
in question 1. Having identified specific events that may give rise to a risk of
potential misstatement you are now required to determine how you would assess
these risks. In other words, what would be considered sufficient evidence to collect
to assess the events identified in question 1?
Make sure you understand what I mean by evidence. In this case, I am talking about
the 5 key types: tests of control, tests of transactions, gaining an understanding of
internal control, tests of balances and analytical procedures. The accumulation of
evidence based on these 5 types of evidence forms the “evidence mix” needed to
assess the event identified in question 1. Therefore, you need to discuss the 5 types
of evidence and how they relate to the assessment of each event identified in
question 1. For example, if you identified staff redundancies as a major event, the
potential for misstatement would relate to the calculation of entitlements and
redundancies and potentially, taxation implications. The evidence mix would
therefore focus on increased tests of controls and increased tests in gaining an
understanding of the internal control environment because a reduced workforce will
impact on the controls of the entity. The calculation of the redundancies would
represent tests of balances (they are not transactions) hence there would be an
increase in the tests of balances. Analytical review would be extensive (it is always
extensive because of the costs associated with implementing this type of testing)
and tests of transactions would be low.
You can use “low”, “medium” or “extensive” in determining the amount of testing to
be undertaken by the auditor for each type of evidence. Make sure you address all 5
of the types of evidence in your discussion in question 2.
Have a look at the material covering evidence and then the audit risk model and the
steps involved in determining the evidence mix and apply this to the areas of AMP
which you identified in question 1. As always, be as specific as you can.
IMPORTANT: While independent research is required you will still need to reference
any information you have used from the entity’s annual reports. Specifically, you will
need to reference the information back to the relevant pages in those annual reports.
Failure to do so could result in problems with plagiarism and charges of academic
Do not discount the importance of non-financial information in determining the
evidence mix. You may find information identified in question 1 relevant to this
question. As a very simple example, you may have identified in question 1 that AMP
has just been sued for breach of contract in relation to the failure to deliver a
shipment overseas to a major customer (clearly this has been made up and is used
for illustrative purposes only) and the case is proceeding through the Courts but will
not be settled for some time. You may use this to supplement your discussion and
indicate that the auditor will need to discuss the issue with the entity’s solicitors to
gain further understanding of the impact on the financial reports. You should still
discuss the 5 types of evidence in your answer.
This example is very general and is used only as a broad indicator of strategy in
answering the question.
Ultimately, you are being assessed on your ability to link the information you have
obtained to the assessment and discussion of the major event. Refer to the textbook
for further information regarding evidence mix – you will need to discuss all aspects
of the evidence mix relevant to each main area of risk. You are not required to
provide an overall assessment of inherent, control, detection and acceptable audit
risk for the entity. Your focus in question 2 is to identify the levels of risk associated
with the individual events only.
Focus only on the impact of the individual event(s) identified on the approach of the
auditor to collecting sufficient and appropriate evidence to assess the recording and
disclosure of the event on the financial reports identified in question 1.
10% of the overall mark for the assignment has been allocated to assessing your
presentation skills. This will be based on the following:
Effective compliance with research conventions—Correct In-text
referencing/properly formatted reference list/appropriate citations etc.
Expression and grammar
Organisation and layout
Ability to identify and present KEY issues.
A significant aspect of the presentation mark is allocated to the referencing of your
work where you have used other sources. I cannot understate the importance of
correct referencing. Any ideas which are those of someone else, or any direct
quotes from another source must be adequately referenced to avoid potential
problems with academic misconduct.
You are also being assessed on your ability to identify and apply appropriate
research (beyond the textbook and the homepage of the entity) to your answer. You
are also being assessed on your ability to identify and integrate a discussion of
appropriate Accounting Standards in question 1 of the assignment. Minimal
reference to the Accounting Standards in question 1 will be reflected with a lower
mark for presentation.
I refer you to the Subject Outline in relation to the submission guidelines for the
assignment. Students who do not follow the submission guidelines will be required
to re-submit their assignment to the Subject Coordinator. Your assignment may not
be marked if you do not follow the guidelines.
APPENDIX THREE: FREQUENTLY ASKED QUESTIONS & HINTS
Q: Am I allowed to combine the two questions as one answer?
A: NO. There are distinct questions being asked in the assignment. You are
therefore required to answer each question SEPARATELY. You should not combine
questions (1) and (2) and answer them together as this will also incur a penalty in
the presentation mark given for the assignment. For presentation purposes it would
be advisable to include the discussion of the event from question (1) and then
discuss the evidence mix in part (b) immediately after rather than answer all
question (1) and then all question (2). You will not lose any marks if you answer all
of question (1) first and then all of question (2).
Q: Can I use a table in answering question 1?
A: NO. Your target audience does not like the use of Tables and has specifically
asked you not to use them to answer this assignment. Penalties will apply for the
use of a Table in answering question 1. A table CAN be used to summaries the
evidence mix in question 2 of the assignment.
Q: Do I have to have an introduction and an executive summary?
A: NO. You are NOT required to have an executive summary, an introduction or
conclusion. You won’t lose any marks but it will absorb words. Although presentation
is important, I am more concerned with ensuring that students have addressed the
requirements of each question. This means you do not need to present the
assignment as a report or in an essay format. An introduction simply takes up your
word limit. A common mistake made by students is to provide a brief introductory
paragraph restating the question – for example, “this assignment is focusing on
identifying 4 key events in the assessment of the AMP Group and the potential for
material misstatement. The assessment of material misstatement in the financial
reports is important because….”. Please do not do this. The person marking your
assignment (i.e. me) is familiar with the question (because I wrote the assignment!)
Therefore, there is no need to restate the question. A better way to show that you
understand the question is to answer it correctly. If you do this, the marker will be in
no doubt that you have understood what the question was asking you.
Q: Do I have to reference the financial statements?
A: YES. Once again, you are reminded of the importance of referencing. Any
information gained from a source must be referenced in the body of the assignment
and the source needs to be included in your reference list. If you are not sure about
your referencing, it pays to ask the Subject Co-ordinator before submitting. When
referencing financial statements the page number is critical.
Q: Can I use Wikipedia?
A: NO. This is a level 3 subject so hopefully this would be asked with decreasing
frequency, and I am sure you have already heard this but it is still important to
remind you that the Wikipedia website contains information which has not been
verified by an independent third party. Contributions to the website can be made by
anyone without the need to verify this information. To this end, information contained
on the Wikipedia website may not necessarily be accurate. Therefore, we
discourage the use of Wikipedia as a reliable reference resource. At most, it can be
used as a starting point for researching an entity, however you must then seek a
secondary credible website to verify the information obtained through Wikipedia.
If you still have any grievances regarding the use of Wikipedia and why we do not
allow its use, please look at the example below which has been taken from an actual
webpage from Wikipedia. The extract needs no explanation!
Source: http://en.wikipedia.org/wiki/Commerce (Accessed 2/3/15)
Q: Can I identify one event (or one article) from the research and then cover
two or three risks using that one event (article)?
A: NO. Risks relevant to one event (and one article) can only be used for one of the
four risks. You are only asked for 4 events – it will not be difficult to identify 4 unique
events and as such, it is expected that the risks will be unique. If you can identify
more than one risk from the same event pick the one you think is the easiest to
discuss and apply to the requirements of the assignment.
Q: Are footnotes, appendices and in-text referencing included in the word
count of both assignments?
A: YES. If you do not want the words in appendices to count, the content of the
appendices will not be marked. Appendices and footnotes cannot be used to get
around the word limit.
Q: If I find three different articles discussing three separate events of a similar
nature (for example, three different articles indicating staff redundancies in
three separate areas of the group of entities) can I use these separately and
therefore I have 3 events?
A: NO. This would only count as one significant event – you can combine all three
events together to illustrate that this event has occurred numerous times during the
period which helps to illustrate its significance but it does not count as three
separate events (risks).
Q: Can I use an event which comes from any entity that is within the AMP
A: YES. For example, if you find an event involving AMP Capital, you may use this
event in your assignment as AMP Capital is considered part of the AMP Group.
APPENDIX FOUR: ASSIGNMENT FEEDBACK SHEET/MARKING
To assist students in answering the assignments, a marking schedule has been
included in this assignment booklet. Please take some time to read through the
marksheet as this will give you a good idea of what I am looking for when marking
the assignment. Please take note of the focus on requiring you to provide specific
answers in the assignment. The more explanation you can provide which is
specific to the entity, the more likely you will score well in the assignment. We
are looking for an application of the theory to a simulated real world case study –
broad discussion does not indicate that the theory has been applied in a practical
situation. The effect (by way of potential misstatement) MUST be specific to the
entity – examples of potential misstatements should be identified when answering
questions. Broad, generic answers will not be rewarded with any marks.
IMPORTANT NOTE RELATING TO SUBMISSION
If you do not follow the submission requirements you will be required to amend and
resubmit your assignment to have it eligible for assessment. Plagiarism issues will
be immediately directed to the Academic Integrity Officer.
ASSIGNMENT Marking Schedule
ACG31 Auditing Theory and Practice
University of South Australia
|1. Identifying of key events
Use of an auditing perspective:
– Major events are specific to reporting entity and
occur in the relevant period?
– Detailed explanation of the potential misstatement
(a SPECIFIC account balance or AASB disclosure
requirement associated with the financial reports
has been identified)? (broad issues will not
accrue any marks)
– Identification of applicable Accounting Standards or
other mandatory requirements – specific
– Specific guidance provided as to what needs to be
recorded and what needs to be disclosed
according to the Accounting Standards
– Answer has focused on potential errors and does
not discuss potential fraud
2. Assessment of the events and impact on the
– Identifying sufficient and appropriate evidence
based around the types of evidence the auditor
– Evidence mix explained using all 5 types of
3. Presentation (10 Marks)*
– Compliance with Harvard referencing guidelines
– Reference, in-text referencing list complies?
– Grammar and English satisfactory?
– Good presentation – headings used?
– Did not combine questions 1 and 2 together.
– Adheres to submission guidelines as outlined in the
Subject Outline and Assignment Booklet.
– Sufficient research undertaken and applied (going
beyond the textbook and entity homepage)
– Table was NOT used to answer question 1 (a table
can be used to provide a summary of risks in
4. Word Limit Penalty?
Assignment words>2,200? If yes – penalty applied
= % Excess words x mark achieved
5. Late Penalty? Assignment penalty applies? Yes/No
|Words > 2,200…….
Excess Words %.
……..Days late @10%
|TOTAL MARKS Failure to adhere to the University referencing
guidelines may result in action being taken by the academic integrity
officer for plagiarism.
APPENDIX FIVE: NOTE ON ACADEMIC INTEGRITY AND USE OF
Whilst I understand that pressures from fellow students are sometimes difficult to
resist, and it is acceptable (and indeed generous) to assist other students by
discussing issues relating to assignments, including discussion on Facebook sites, it
is not acceptable to provide access to, or copies of, your own assignment (or part of
your assignment) to other students; nor is it acceptable to use another student’s
work (or from a group) as the basis for submission of an individual (or part of)
assignment, whether quoting, paraphrasing or simply using their ideas.
FACEBOOK GROUPS: Whilst I encourage students to discuss assignments I would
like to warn students that there are real dangers in participating in online study
groups and sharing information through social media. These mediums are NOT
supervised by an academic and information shared may be wrong or taken from
somewhere without appropriate acknowledgement. If you share information about
your assignments and someone else uses it in their own assignment then ALL
members of the group who have provided, misused or had access to the information
may be deemed to have committed an academic integrity offence. Please be careful.
If you are working in a study group and have a disagreement in terms of how to
approach your answer, email me. I wrote the questions and I will be marking them so
the best person to ask for clarification is me.
Note that assignments in this Subject will be checked using text comparison software
for instances of plagiarism or collusion.
APPENDIX SIX: SUBMISSION OF A DRAFT FOR QUESTION 1
(NOT QUESTION 2)
Students are encouraged to start the assignment as early as possible in the study
period. To assist students in ensuring they are addressing the question
appropriately, you can submit a draft of one (1) major event via the Learnonline
website and I will review this draft and provide feedback to you. Students who submit
a draft will receive 5 marks which contributes towards the final mark out of 90. If you
do not wish to submit, you are not penalised, you can still score 90/90 for your final
submission. If you submit the draft, and meet the requirements for the draft, you will
be awarded 5 marks (i.e. the mark awarded is not based on the quality of the work
submitted but on meeting the requirements of the submission) so if you scored 85/90
for the assignment, you would now score 90/90.
The draft will require you to address the following:
1. Identify one major event – do not submit more than one event – with a
discussion of the potential specific misstatement.
2. Reference an article which you have used to identify and develop the
discussion for the event identified. There is no need to attach the article to the
draft – just the URL will suffice.
3. Identify the relevant Accounting Standard (specific paragraphs needed).
4. Identify the appropriate audit objective(s). A minimum of 1 must be identified
but you can discuss more than 1 if you think more are relevant.
You will also receive feedback on the discussion you provide for the major event.
Therefore you get feedback to use before you submit your assignment. It is up to you
if you want to take advantage of this offer – there is no requirement for you to submit
a draft if you do not wish to. The draft you submit should be at the same level as that
of your final submission – i.e. when you submit the discussion of the one event it is
as if you are submitting your final assignment. Do not put together a set of short
broad bullet points. The more you put into the draft the more you will get back in
terms of feedback. The draft should be the equivalent in detail to what I have
provided in the example that I have uploaded onto the subject website. If you provide
this detail it also means I can give you very specific feedback on whether you are on
the right track with your approach to the assignment. If you use bullet points and are
too broad I will likely be identifying that your discussion is not specific enough. The
event and potential misstatement associated with the event that you submit as a
draft can still be used when submitting your final assignment.
You can only submit a draft once and receive feedback once and only one event can
be submitted. If you submit more than one event only the first event listed will be
assessed. The due date for submitting your draft is Sunday the 14th of October
11:00pm Adelaide time. No extensions will be given beyond this date. This gives me
enough time to work through your drafts to provide you with feedback. You may
submit as early in the study period as you wish to give yourself more time to evaluate
the feedback I give you in relation to the content of your submission.
Please do not submit a rushed submission which you put together an hour before the
deadline hoping to get the 5 marks. A submission of one paragraph which is very
broad and shows a lack of research or use of the hints in the assignment booklet will
not receive any marks. The 5 marks are not given because you are submitting, they
are given because you are taking the time to start the assignment early and to get
some guidance how to answer the question. You will not receive marks for a
substandard submission. Given the nature of the feedback provided this is
considered a fair approach.
I will not be providing feedback on drafts via email – you must submit using this
process (through the website). Please don’t miss the deadline to submit the draft.
1. Arens A. A., Best, P. J., Shailer, G. E. P., Fiedler, B. A., Elder, R. and Beasley, M.,
2017. Auditing, Assurance Services & Ethics in Australia – An Integrated Approach,
10th edition, Pearson Australia, Frenchs Forest, N.S.W.
2. Institute of Chartered Accountants in Australia, Accounting Handbook 2018, John
Wiley and Sons, Milton.
3. Corporations Act. Butterworths or Australian Government Printer. Available online at:
University of South Australia © 2018