Assessment 2: Group Assignment Case Study For the purpose of the assignment, you assume the role of an auditor and your firm has recently been appointed as external auditor of an entity. As required by Auditing Standard ASA300, you are assisting your Audit Manager in preparing an audit plan for the audit of the entity’s financial statements.
You are required to download the 2019 annual report of Vita Group
Edit Description for Assessment 2: Group
Using information in the Assignment Case Study • other relevant information, preparing a report
for your Audit Manager. The report should include the followings: 1. Introduction (4 marks) 2. A summary of the client’s operations (10 marks) 3. Five (5) accounts you consider most at risk of being materially misstated (10 marks) 4. Assess the audit risk for each of the five (5) accounts selected (10 marks) 5. Conclusion (4 marks) 6. Appendix/references (2 marks)
Useful information
The following additional information is useful for the purpose of the assignment:
- The summary of the client’s operations should include: brief information on their financial position and performance for the year, applicable financial reporting framework, industry in which the client operates and economy wide factors affecting the client.
- Use analytical procedure – simple comparison to identify accounts most at risk of being materially misstated. In general, accounts with significant movement in the balance between two financial years are most at risk.
- Use the audit risk model to assess the audit risk of the selected accounts. The audit risk model: AR = IR x CR x DR where AR = audit risk; IR = inherent risk; CR = control risk; and DR = detection risk. Generally, where IR and CR have been assessed as high, auditor must reduce DR to a low level in order to reduce AR to a low level.
Overview
Currently, auditors employ risk-based audit methodology in the conduct of audit assignments. Under this approach, auditors identify accounts most at risk of being materially misstated in order to better manage their audit assignments by allocate resources according to the assessed audit risk. Thus, the assignment’s objective is to provide students the opportunity to apply auditing and assurance standards, including audit theories and risk-based audit methodology into a real-life situation.
The purpose of this task is to: – assist students in learning key auditing concepts and to apply these concepts to a specified financial report of a real organisation Assessment 2 is group assignment to be completed in groups of four. Each member of the group will need to contribute an equal amount of work to the report as all members of the same group will receive the same mark for the assignment. You can request for variation of number of members in a group by contacting the lecturer and providing reasons. Typical reasons include odd number of students in the block and students’ employment conditions.
Learning Outcomes
L02. Investigate the audit process and the techniques used by auditors including business risk analysis, internal control assessment, evidence collection and evaluation, use of computer assisted audit techniques and audit reporting
L03. Investigate and develop an insight into the audit of specific transactions and account balances L04. Articulate the auditor’s responsibility in completing an audit L05. Clarify and advocate other assurance engagements that can be offered by accounting firms
Instructions
© Using the information on the organisation provided at the beginning of the block, download the annual report of the prescribed organisation; 111 Research the organisation at the economy, industry and entity levels; 13 Identify five accounts most at risk of being materially misstated by applying the analytical procedure – simple comparison to the income
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statement, balance sheet, statement of cash flows and statement of changes in equity.
Assess the audit risk of those accounts
nDiscuss your findings in a report
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