HI6026 Audit, Assurance and Compliance – Assignment Assessment

HI6026 Audit, Assurance and Compliance
Trimester 3 2018
Individual Assignment
Assessment Value: 30%
General Instructions:
1. This assignment is to be submitted in accordance with the assessment policy stated
in the Unit Outline and Student Handbook.
2. It is the responsibility of the student who is submitting the work, to ensure that the
work is in fact her/his own work. Incorporating another’s work or ideas into one’s
own work without appropriate acknowledgement is an academic offence. Students
should submit all assignments for plagiarism checking on Blackboard before final
submission in the subject. For further details, please refer to the Unit Outline and
Student Handbook.
3. Assignments not submitted through Blackboard will not be assessed.
4. Maximum marks available: 30 marks. Refer to marking rubric for marking criteria.
5. Assignment should be 3,000 words. Please use “word count” and include this in
the report. Presented in Calibri font size 12.
6. Due date of submission: Week 9, Friday at 12.59 p.m.
Topic: Auditor’s Public Interest Responsibilities and Audit Quality
Background and Context:
In a recent interview with ABC news, the now former Chairman of the Australian
Securities and Investment Commission (ASIC) Greg Medcraft warned that:
“We don’t want to have another Enron. And the key to not having another Enron is
making sure auditors do their job and to get assurance that financials are free of
material misstatement” 1
Enron was an energy, commodities, and services company based in Texas, USA. It
was founded in 1985. Prior to its bankruptcy on 3
rd December, 2001, Enron employed
close to 30,000 staff and was a significant electricity, natural gas and communications
company, which had reported revenue of nearly US$101 billion during the year 2000.
By the end of 2001, it was revealed that Enron’s reported financial position was
manipulated by a systematic and preconceived accounting fraud, known since as
the “Enron Scandal”. Enron has since become known as an infamous case of
audacious corporate fraud and corruption.
The scandal also brought into question the accounting practices and activities of many
corporations in the USA and was a factor in the creation of the Sarbanes–Oxley Act of
2002. The scandal also led to the demise of the accounting firm, Arthur Andersen,
which was Enron’s auditor.
In more recent times, according to ASIC, based on samples of key audits performed
by Deloitte, KPMG, PWC and Ernst & Young, over an 18 month period up to December
2016, 23% had not provided reasonable assurance that accounts were accurate or
free of misstatements.
As stated in the Accounting Professional and Ethics Standards Board (APESB) APES
110 Code of Ethics for Professional Accountants, under Section 100 Introduction and
Fundamental Principles,
“A distinguishing mark of the accountancy profession is its acceptance of the
responsibility to act in the public interest.” 2
Pre –Assessment Task:
Download the latest APES 110 Code of Ethics for Professional Accountants
document. Review all the sections within this document which relate to the Auditor’s
role in providing reasonable assurance and performing auditing services. Refer to the
section in the textbook on “Whistleblowing” on pp 268 – 270, focussing on the
paragraphs which mention Enron.
Assignment Question
When sub-standard audits are performed and reasonable assurance cannot be
reliably ascertained, there are consequential risks for key stakeholders, including
auditors. In light of this, perform the following key assignment tasks:
1. Perform a key stakeholder analysis for an ASX listed company. Explain how the
key stakeholders would be affected if material misstatements are not properly
identified, disclosed or adjusted for in the finalised financial statements. What
are the key risks posed to each key stakeholder you have identified? (300 – 400
2. Consider the concepts of independence and “whistleblowing” in relation to
auditors. How do these concepts relate to the public interest requirements
mentioned in the APES 110 Code of Ethics for Professional Accountants
document? (300 – 400 words)
3. What lessons can auditors learn from the Enron scandal and in particular from
the behaviour of Arthur Andersen? (750 – 900 words)
4. With reference to the APES 110 Code of Ethics for Professional Accountants
document and the ASIC website, research “audit quality” and discuss what
auditors need to do to address the “warning” noted in the statement made by
Greg Medcraft above. (750 – 900 words)
Report Structure:
1. Executive Summary
• The Executive summary should be concise and not involve too much detail.
• It should make commentary on the main points only and follow the sequence
of the report.
• Write the Executive Summary after the report is completed, and once you
have an overview of the whole text.
• The Executive Summary appears on the first page of the report.
2. Contents Page – This needs to show a logical listing of all the sub-headings of the
report’s contents.
3. Introduction – A short paragraph which includes background, scope and the main
points raised in order of importance. There should be a brief conclusion statement
at the end of the Introduction. (100 – 200 words)
4. Main Body Paragraphs with numbered sub-headings – Detailed information
which elaborates on the main points raised in the Introduction. Each paragraph
should begin with a clear topic sentence, then supporting sentences with facts and
evidence obtained from research and finish with a concluding sentence at the end.
5. Conclusion – A logical and coherent evaluation based on a thorough and an
objective assessment of the research performed. (100 – 200 words)
6. Appendices – Include any additional explanatory information which is
supplementary and/ or graphical to help communicate the main ideas made in the
report. Refer to the appendices in the main body paragraphs, as and where
Resources Reference Links:
1. https://www.abc.net.au/news/2017-11-03/asic-boss-concerned-over-poorauditing/9114490
2. https://www.apesb.org.au/uploads/standards/apesb_standards/standard1.pdf
3. https://asic.gov.au/
4. Textbook: Gay & Simnett, Auditing & Assurance Services in Australia, 6th Edn,
McGraw Hill Education, 2017
Assignment Marks Allocation:
Executive Summary (6 marks)
Main Body of the Report (12 marks)
Conclusion (6 marks)
Spelling and Grammar (1.5 mark)
Presentation (1.5 mark)
Reference and Citation (3 marks)
Total 30 marks
Refer to the Individual Assignment Rubric below
HI6026 – Individual Assignment Marking Rubric
Criteria Weight Excellent Good Satisfactory Sub-standard
6 marks  Very effectively
written synopsis with
clear communication
of the main points.
(5 -6 marks)
 Competently
composed synopsis
with the main points
(4-5 marks)
 Synopsis is clearly
written, but it is brief
or has some errors.
(3-4 marks)
 Synopsis is deficient
and poorly written.
Too brief.
(1 -2 marks)
Main Body
12 marks  Excellent. Well
organised. Main
points are logically
ordered; sharp sense
of structuring and
arrangement of key
Supporting details
are specific to the
main points and
adequate facts and
other evidence is
provided and wellarticulated.
(10 – 12
 Organised; but
some main points are
incomplete or not
correctly prioritised.
Some details do not
support the subject.
(9 – 10 marks)
 Some organization;
main points are there
but they are
disjointed; Minor
structuring issues.
(7 – 8 marks)
 Poorly organized;
no logical
beginning and
ending are vague.
No structure. Lacks
substance. No
research noted. (1 –
6 marks)
Conclusion 6 marks  Very well composed
conclusion with a
clear and logical
evaluation with
conclusive and
statements based on
an intelligent
assessment of the
evidence acquired.
(5 -6 marks)
 Conclusion is logical
and an evaluation is
made, but there is
some lack of
evidence or depth of
analysis, which
would have improved
the overall
persuasiveness of
the report. (4 -5
 Conclusion is noted
and an evaluation is
presented, but it is
lacking in sufficient
detail or supporting
evidence. Requires
more analysis and
some proof-reading.
(3 -4 marks)
 Conclusion is poorly
written with no
evaluation and no
logical coherence. No
evidence of analysis.
Poor effort.
(1 -2 marks)
Spelling and
1.5 mark  No errors. Well
proofread. Clearly
edited and refined
prior to submission.
(1.5 mark)
 Only minor errors.
Needs some editing.
(0.75 – 1 mark)
 Numerous minor
errors. Not
proofread or
effectively. (0.5
 Numerous major
and minor errors
which distract from
understanding and
clarity. Not
proofread. Not
edited. Academic
English level is low.
(0 mark)
Presentation 1.5 mark  Very well formatted
with sub-headings,
page numbers,
appendices, and
effective use of
(1.5 mark)
 Formatting is well
set out and clear,
but there are minor
issues in
subheadings, page
appendices and/or
graphics. (0.75 -1
 Formatting is
coherent and clearly
structured, but page
numbers are missing
or subheadings or
contents page is
(0.5 mark)
 No formatting or lack
of structuring.
(0 mark)
and Citation
3 marks  References are
consistently correct
using Harvard style
or APA style. No
missing citations. A
strong reference list
with relevant and
credible sources.
(2 -3 marks)
 Generally correct
referencing using
Harvard style or APA
style. Lacks
(1.5 -2 marks)
 Some References
are used, but not
used consistently.
Not enough
research. (1
 References are
missing or do not
comply with correct
referencing style.
(0.5 mark)