Purpose of assignment
The purpose of the assignment is to build you skill to research and explore specific aspect(s) of auditing and assurance as a group, and prepare and submit written work in academically acceptable format linking your auditing and assurance knowledge and skill to the corporate world
This is a two parts assignment. In Part A of the assignment, you are required to produce and submit plan for audit of a new engagement, Elmo Software Limited, a company listed on Australian Securities Exchange covering three key segments of the audit plan (a) preliminary riskassessment, (b) analytical review of company’s performance and financialposition, and (c) audit planning materiality. In Part B you are required to submit a discussion on a current issue of auditing and assurance – quality and effectiveness of independent audit
TASK PART A: AUDITING AND ASSURANCE [15 Marks]
You are the manager of CWC Chartered Accountants. Your firm has been engaged as external auditor of Elmo Software Limited on 28 September 2018 to audit the company’s financial report of the year ending 30 June 2019. The engagement partner called you in his office on 1 October 2018 and gave you complete audited financial report of Elmo Software Limited for the year ended 30 June 2018, and asked you to complete the following preliminary planning tasks and report to him on 1 November 2018:
You are therefore required to prepare and present
- (i) preliminary risk assessment of Elmo Software Limited giving an
understanding of the company and its environment;
- (ii) analytical review of Elmo Software Limited showing the company’sfinancial performance, financial position and business risks. Discuss the specific areas of the audit that you believe should receive special emphasis during your audit; and
- (iii) computation on planning materiality for Elmo Software Limited with justification for the basis that you have used for your calculation.
TASK PART B: QUALITY AND EFFECTIVENESS OF INDEPENDENT AUDIT [10 Marks]
Recently serious questions have been raised again on the quality and effectiveness of independent audit around the world.
You are required to
- (i) Identify and discuss the main concerns on the quality and
effectiveness of independent audit in Australia and in other countries of the world; and
- (ii) explain how these concerns are now being addressed by the regulators, the auditing profession and the individual audit firms.