Audit and Assurance Service Assignment

Assignment Description / Requirements
• This is a group assignment. Each group must be completed in a group of 2 to 3
members. It is students’ responsibility to form/join a group and to ensure that the group
dynamics work.
• This assessment task presents a number of complex questions which will help you to
consolidate your understanding of some of the key concepts covered in this unit.
• The assignment has three parts. All parts have to be submitted to the assignment folder.
• Word Limit: 3,500 word limit (excluding references).
• Students must fully reference the relevant sources of all materials (i.e., textbooks,
journals, newspapers, or internet, etc), even if you have re-expressed the idea, facts or
descriptions; and not submit their work that has been researched and written by another
person. Academic integrity is heavily penalised.
• Please monitor Moodle regulatory for any further instructions or announcements.
Format of the Assignment:
• Assignment cover sheet
• Assignment title page- including group number, student names, and student IDs, and
individual member’s contribution on this assessment task.
• Part A Answer
• Part B Answer
• References-including the relevant sources that you cited. (Students must correctly use
the Harvard Style of Referencing).
• Appendix.
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Submission Instruction:
This assignment is to be submitted online only. (You are not required to submit a hard copy).
The completed assignment must be submitted into Turnitin Assignment Dropbox on Moodle
on or before the due date. Only one submission per group is required. i.e. only one student
submits on behalf of all other group members.
When you are required to submit an assignment through your Moodle Unit site, you will
receive an email from your Federation email address confirming that it has been submitted.
Once submitted you cannot take your assignment back but you can submit another version.
The most recent version submitted will be marked.
You must keep a backup copy of every assignment you submit, until the marked assignment
has been returned to you. In the unlikely event that one of your assignments is misplaced, you
will need to submit your backup copy.
Any work you submit may be checked by electronic or other means for the purposes of
detecting collusion and/or plagiarism.
Marking, Dispute Resolution, and Free Riders:
The marking will be done for the group as a whole not on an individual basis. Each group
member is awarded the same mark.
Working in groups has its pros and cons. It is beneficial that you can learn a lot by discussing
the issues with your fellow students. Invariably different group members bring different skills
to a project, and it is up to you to make the best of it. if you find your group members are not
“pulling their weight” or there are problems with any members’ commitment, please try to
resolve these issues amongst yourselves. Open and honest communication always helps.
If you are unable to resolve these issues, you are most welcome to see your lecturer and tutor.
We will try to sort out the problems together. Do this as soon as possible and certainly before
the due date. In case of any dispute among the group members or if there are any free riders
identified in the group, members should report to your lecturer in writing.
Assessment Feedback:
Students who submit their work by the due date will receive their marks and feedback on
BUACC 5935 Moodle site within 15 working days of the assignment submission due date.
Notes:
• There is a discussion area on Moodle titled ‘Group Assignment discussion Forum’. This
area is for you to discuss the assignment. It is an area for students to help each other.
• The assignment is to comply with the Federation University’s General Guide to Writing
and Study Skills, General Guide to Referencing, and Assignment Layout and Appearance
Guidelines, via the links below:
https://federation.edu.au/__data/assets/pdf_file/0018/190044/General-Guide-to-Writingand-Study-Skills.pdf
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https://federation.edu.au/__data/assets/pdf_file/0020/313328/FedUni-General-Guide-toReferencing-2016ed.pdf
https://federation.edu.au/__data/assets/pdf_file/0017/190043/General-Guide-to-Layoutand-Appearance.pdf
• Penalties for late submission: the marking penalties will apply if you submit an
assessment task after the due date without an approved extension: 10% will be deuced
from available marks for each calendar day up to ten days, and work that is submitted
more than ten days after the due date will not be marked. Requests for extension of time
must be made with the lecturer concerned and based on Special Consideration guidelines.
For further information on Discretionary Assessment Extensions and Special
Consideration, including access to the policy, procedures or associated forms, see
http://federation.edu.au/current-students/essential-info/administration/specialconsideration
• Plagiarism and collusion are forms of cheating and are considered a serious academic
misconduct, and severe penalties are associated with them. Please refer to the university
policy for more information.
https://federation.edu.au/current-students/assistance-support-and-services/studentsupport-services/student-advisory-service/misconduct/accused-of-plagiarism-ormisconduct
• Turnitin: Students are strongly recommended to check originality through Turnitin, prior
to submitting the final assessment. For more information about Turnitin and how to check
for originality, refer to the following useful links:
https://fedflix.federation.edu.au/media/Uploading+to+Turnitin/0_irjuaw8p/74540772
https://federation.edu.au/current-students/learning-and-study/online-helpwith/plagiarism
https://moodle.federation.edu.au/course/view.php?id=64539
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Assignment
This assignment has two parts.
Part A:
Background
You are currently studying a number of corporate failures happened in the World that caused
a major creditability crisis in the accounting and auditing profession. The collapse of Bearings
Bank has drawn your attention.
Barings Bank was one the world’s oldest merchant bank. Barings decided to open a Future
and Options office in Singapore. The bank appointed Nick Leeson as a general manager, who
was sent over to head both front office and back office operations. Leeson was able to settle
his own trades, bypassing the bank’s own internal controls.
After moving to Singapore to execute and clear transactions on the Singapore Exchange,
Leeson began making unauthorised trades, which initially made large profits: £10 million in
one week for Barings. This humongous profit accounted for 10% of Barings’ annual profit,
which caught the attention of other staff members in the bank. In particular, Mike Killian, the
head of Global Equity Futures and Options Sales, knew that Barings was making about £200
million for the whole year. Killian was cynical that if Leeson carried on making such profit
throughout the year, it would be a £1billion a year profit. According to some sources, Killian
claimed that if Leeson is doing the amount of business for the amount of profit, then they
should shut down the rest of the bank because they were just overheads.
Due to Leeson’s rogue trading, Barings declared bankruptcy in February 1995. The report of
the collapse of Barings Bank is available on Moodle. For further information, please refer to
the below source link:
https://www.gov.uk/government/publications/report-into-the-collapse-of-barings-bank
Required:
1. Mike Killian was cynical that one person alone was making more money than all the rest
of Bearings Bank staff. Questioning the reliability of information and being alert to
conditions that may indicate possible fraud is an attitude expected from auditors. In
your view, what is the name of the professional attitude for auditors and explain the
concept of this professional attitude.
2. Using your knowledge of APES 110 Code of Ethics for Professional Accountants to
identify and explain the potential type(s) of threats to Nick Leeson’s independence.
Suggest what safeguard(s) should be instituted to reduce the threats to independence.
3. Before going insolvency in 1995, Barings Bank had received an unmodified audit report.
In your view, what does this mean regarding the audit expectation gap? How does an
unmodified audit report relate to the collapse of Barings?
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4. Explain the concept of reasonable assurance, and how reasonable assurance is
determined? Discuss the three reasons why an auditor cannot offer absolute assurance.
(1,200-1,500 words) (6 + 12 + 12 + 10 = 40 marks)
Part B:
Based on the 31 December 2019 Annual Report for Woolworths Group Limited (available
on Moodle), prepare a planning memorandum for the audit partner which includes the
following:
Required:
1. Identify four major business risks of Woolworths and provide a detailed explanation of
why each factor is identified as a risk to the business.
2. Results of analytical procedures. It is recommended that you prepare a trend analysis and
prepare key ratios (Examples of a trend analysis and ratio analysis are available on
Moodle). Identify and explain which changes in the trend analysis and ratio analysis
would trigger further investigation in the audit for Woolworths. (Please include your
workings in the Appendix).
3. Identify four inherent risks that you identify from business risks and analytical procedures
in parts 1 and 2. (Note: business risks are not the same as inherent risks).
4. Identify a key account and a key related assertion at risk of material misstatement based
on the inherent risks you identify in part 3. (Note: Identify a key account and a key
assertion for each of the four inherent risks identified in part 3).
5. Calculate planning materiality in a $ amount. You must include a breakdown of your
calculation and a justification of your choice of base, the percentage used and your
assessment of detection risk. Assume control risk is high.
(1,800-2,000 words) (12 + 20 + 12 + 8 + 8 = 60 marks)
Total of 100 marks will be scaled to a mark of 25%.
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