Acc3aud - SLG - Sem 1 2016

La Trobe Business School
AUDITING AND
ASSURANCE
[ACC3AUD]
Subject Learning Guide

Sem 1, 2016
Subject Coordinator: Dr. Seema
Miglani (Melbourne)
Table of Contents
SUBJECT DETAILS
GENERAL DETAILS
ENROLMENT REQUIREMENTS
SUBJECT DESCRIPTION
SUBJECT INTENDED LEARNING OUTCOMES (SILOS)
FACULTY GRADUATE CAPABILITIES
LEARNING ACTIVITY SUMMARY
ASSESSMENT AND FEEDBACK DETAILS
LEARNING RESOURCES
STUDENT FEEDBACK ON SUBJECT SURVEY
3
3
3
3
4
4
4
6
6
POLICIES, PROCEDURES AND GUIDELINES
ACADEMIC INTEGRITY
SPECIAL CONSIDERATION
EXTENSIONS, LATE SUBMISSIONS AND PENALTIES
RESULTS, REVIEWS AND RE-MARKS
STUDENT LEARNING UNIT (SL)
LEARNING MANAGEMENT SYSTEM (LMS)
LIBRARY
STUDENT SUPPORT SERVICES
PEER LEARNING ADVISERS
6
7
7
7
7
7
7
8
8
SCHEDULE OF LEARNING ACTIVITIES
DETAILED GRADING CRITERIA
11
WORKSHOP PROGRAMME
15
La Trobe University
Subject Details
GENERAL DETAILS
Subject Code:
ACC3AUD
Subject Title:
Auditing and Assurance

Bundoora
Blended
Teaching
Period:
Sem 1, 2016
Location(s):
Credit Points:
15
Mode:
ENROLMENT REQUIREMENTS
Prerequisites:
Level:
Three
Corporate Reporting (ACC2CRE)
Assumed Skills & Knowledge:
Students are expected to have a good understanding of financial

accounting techniques/principles and reporting requirements covered in
financial and corporate accounting subjects.
Special Study Requirements:
Students with special needs whose participation in this unit might be

limited by any study requirements are encouraged to consult Disability
Support Services at the Equality and Diversity Centre (EDC). Further
information and contact details for the EDC are available at
http://www.latrobe.edu.au/equality/index.html\
Staff Contacts
Role
Campus
Name
Email
Subject Coordinator
Bundoora
Seema Miglani
s.miglani@latrobe.edu.a
u
Instance
Coordinator
Bendigo
Kate Ashman
Lecturer
Bundoora
Biserka Siladi
k.ashman@latrobe.edu.
au
b.siladi@latrobe.edu.au
5444
7947
9479
1599
Instance
Coordinator
Dandenon
g
Chisholm
Rema Gurunathan
r.gurunathan@latrobe.e
du.au
9212
5031
Telephon
e
9479
2683
Room
112 (SS
Building
)
110 (SS
building
)
SUBJECT DESCRIPTION
This subject covers auditing theory and practice and is designed to meet the preliminary requirements of the
Chartered Accountants Australia and New Zealand (CAANZ) and CPA Australia (CPA). The subject aims to
familiarise students with the underlying concepts, objectives and reporting functions of the auditor and the auditing
process. Students will gain an understanding of the nature and purpose of auditing, the audit process, and the
responsibilities of the auditor in fulfilling his/her duties.
SUBJECT INTENDED LEARNING OUTCOMES (SILOS)
Upon successful completion of this subject, you should be able to:

1
Define and explain the auditors roles and responsibilities.
Explain and resolve ethical dilemmas.
Demonstrate an understanding of the audit planning and testing procedures.
Identify and explain the different types of auditors opinions.
Analyse real world auditing problems.
GRADUATE
CAPABILITIES
The following Graduate Capabilities (GCs) are evaluated in this subject:
GC
Assessments
Inquiry/research
Assignment
b Ethical awareness
Online quizzes, assignment and final examination
C Discipline-specific knowledge and skills
Online quizzes, assignment and final examination
d Team work
Assignment
Assignment and final examination
Critical thinking/analysis
LEARNING ACTIVITY SUMMARY

Learning Activity:
Workshop Schedule
Online lectures/activities- Before attending the weekly workshop students are

required to complete all the online learning activities available on LMS. These
include the online lectures and any associated online material.
Week 1-12
Further information is available at http://www.latrobe.edu.au/timetable/

ASSESSMENT AND FEEDBACK DETAILS
Assessment Tasks:
Due Date
Online quizzes
(5 individual quizzes)
Quiz 1Open -Friday March 18 5.00 pm
Closes- Saturday March 19 5.00
pm
(Material to be covered- Chapter 1
and 2)
March 19
(5.00 pm)
Quiz 2Open- Friday April 8 5.00 pm

Closes- Saturday April 9- 5.00 pm
and 4)
April 9
(5.00 pm)
Quiz 3Open- Friday April 22- 5.00 pm

Closes- Saturday- April 23- 5.00 pm
and 6)
Quiz 4Open- Friday May 6- 5.00 pm
Closes- Saturday- May 7- 5.00 pm
and 8)
COMMENTS
SILOs
Comments
1, 2, 3, 4
20%
Online quizzes are scheduled in

week 3, 5, 7, 9 and 11. Each quiz
contains 10 multiple choice and/or
true/false questions. Students can
have only ONE attempt at each
online quiz. Each quiz represents 5%
of the total assessment of this
subject. At the end of the semester,
the best four scores obtained from
the quizzes will be used to compute
20% of the total assessment of this
subject.
Students will receive 15 minutes to
complete each quiz.
Automatic feedback of marks
provided online after quiz closes.
April 23
(5.00 pm)
May 7
(5.00 pm)
Students who fail to complete the

online quiz before the due date will
automatically receive a zero.
Closes- Saturday May 21- 5.00

pm
and 10)
May 21
(5.00 pm)
Group assignment
(3 students per group)
Week 10
(Monday May
16- 5.00 pm)
1, 2, 3,
4, 5
20%
The purpose of the group assignment

is to give you an experience of
working in a team to analyse the
issues faced in the audit of a
company and write a professional
report on your findings.
The assignment will be provided
on LMS.
Students need to submit group
assignment via LMS through
Turnitin.
Students will be marked according to
detailed grading criteria located at p.
11 of the Subject Learning Guide.
Final Examination
TBA
1, 2, 3,
4, 5
60%
The examination will be held during

the exam period. Students should
consult the examination timetable for
date, time and room details.
The final examination will be based
on material covered during the whole
semester.
The final examination will consist of 2
hours writing time. Further details
regarding the format of the final
examination will be advised closer to
the date of the final examination.
Students will be marked according to
the detailed grading criteria located at
p. 13 of the Subject Learning Guide.
Students must obtain at least 40%
on the final examination and
achieve a minimum aggregate
mark of 50% for the subject in
order to gain a passing grade for
the subject.
The final grades in the subject will be
allocated according to the following:
A:
80 100%
B:
70 79%
C:
60 69%
D:
50 59%
N:
49% or less
LEARNING RESOURCES
Reading
Type
Title
Author and Year
Publisher
Prescribed
(essential)
Auditing: A Practical Approach(2nd

edition)
Robyn Moroney, Fiona Campbell

& Jane Hamilton
2014
John Wiley &

Sons Australia,
Ltd
Prescribed
(essential)
Auditing and Assurance: A Case

Studies Approach (6th edition)
Nonna Martinov-Bennie, Peter

Roebuck, Dominic Soh
Lexis Nexis
Butterworths
The Australian Auditing Standards can be downloaded from the AUASB website (http://www.auasb.gov.au/).
STUDENT FEEDBACK ON SUBJECT SURVEY

The Student Feedback on Subjects (SFS) Survey is part of the quality assurance process that occurs across the
university. In this survey you are invited to tell us about your learning experiences in this subject. Your views will
be taken seriously and will assist us to enhance this subject for the next group of students. The surveys are
anonymous, and you will be invited to participate via an email sent to your account during the survey period.
For information on Student Feedback on Subjects refer to:
http://www.latrobe.edu.au/students/get-involved/speak-up/subjects-teaching
Policies, Procedures and Guidelines

The University has a comprehensive policy framework to which both staff and students must adhere. You should
familiarise yourself with those policies, procedures and guidelines likely to affect you especially the following:
Academic Integrity
Academic Progress
Assessment and Feedback
Extension to Submission Dates
Late Submission of Assessment Tasks
Occupational, Health and Safety [OHS]
Privacy
Special Consideration
Student Charter
Use of Electronic Mail
The relevant policies, procedures and guidelines can be found on the website at: http://www.latrobe.edu.au/policy/
Academic Integrity
Academic integrity means being honest in academic work and taking responsibility for learning the conventions of
scholarship. La Trobe University views this seriously as evidenced by the following extract:
Academic honesty is a fundamental principle in teaching, learning, research and scholarship.
The University requires its academic staff and students to observe the highest ethical standards
in all aspects of academic work and it demonstrates its commitment to these values by
awarding due credit for honestly conducted scholarly work, and by penalising academic
misconduct and all forms of cheating.
Academic Integrity Procedures (2012, p. 1 of 6)
Academic misconduct includes improper referencing, plagiarism, copying and cheating. You should familiarise
yourself with your responsibilities in relation to Academic Integrity and if you have any questions, direct them to
your
Course
Coordinator.
Information
can
be
found
on
the
website
at:
http://www.latrobe.edu.au/students/learning/academic-integrity.
For assistance with referencing visit http://www.latrobe.edu.au/students/learning/academic-integrity/referencinghelp
Special Consideration
Special Consideration is the term used to describe a process that applies an equity measure to ensure that where
any temporary adverse circumstances beyond the control of a student, that impact negatively on that students
ability to demonstrate their learning achievement for an assessment task, is taken into account.
Eligibility to apply for Special Consideration does not automatically imply eligibility to receive it. Certain criteria
must be satisfied in order to receive Special Consideration.
Please refer to the relevant policies, procedures and guidelines website at: http://www.latrobe.edu.au/policy/
Submission of special consideration applications for assignments, mid-semester tests and final examinations
should be made online at: http://www.latrobe.edu.au/special-consideration
Extensions, Late Submissions and Penalties

There are policies and procedures to guarantee fair, consistent and transparent treatment of late submission of
assessment tasks provide equity around extensions to submission dates and penalties associated with not
submitting assessment by the due date and time.
The University requires fair, consistent and transparent treatment of late submission of assessment tasks. The
procedure for late submission is documented in the Late Submission of Assessment Tasks document (Ref. no.
112027D). It states:
The standard penalty for late submission of assessment tasks is 5% of the marks for that task for
each delay in submission of a day or partial day up to a maximum of five (5) working days after
the due date. Assessment tasks will not be accepted after the earlier of the following
occurrences:
The fifth (5th) working day after the due date; or

Feedback on the assessment task has been returned to any student by the Teaching
Team member.
These penalties apply only to individual assessment tasks worth 15% or more of the total
assessment for the subject. Late submission of take home examinations is not permitted.
Please refer to the relevant policies, procedures and guidelines website at: http://www.latrobe.edu.au/policy/
Student Complaint
La Trobe University is committed to an effective complaints handling mechanism for students in line with its policy
of creating a harmonious and productive study environment. Feedback stemming from student complaints is a
valuable source of information that helps the University improve the quality of its service.
You should lodge a complaint if:
you are unhappy about something specific in your academic life (eg not enough seating in a lecture, staff
not available during office hours, cancelled lectures...)
you don't think 'the rules' (university policy or procedure) are being followed
a university staff member has been rude or their behaviour to you was inappropriate
you have a dispute about a process used during an appeal
you have reported something to I&O, security or academic staff and you have not received a response
after a reasonable amount of time
you are a victim of bullying or harassment
For more information on student complaint

http://www.latrobe.edu.au/students/complaints
process
and
to
lodge
formal
complaint
Results, reviews and re-marks

If you believe your assessment task has been marked incorrectly you may request a review of your marks.
visit:
Please refer to the relevant policies, procedures and guidelines website at:
http://www.latrobe.edu.au/students/exams/results
Student Learning Unit (SL)

The Student Learning Unit (SL) works closely with teaching staff in the Schools and on the Melbourne and regional
campuses to ensure that all La Trobe students including those from non-English-speaking backgrounds develop
high-level academic speaking, writing, reading, and numeracy skills required for successful learning in their
courses. For further information, please see the website at: http://www.latrobe.edu.au/students/learning/
Learning Management System (LMS)

The Learning Management System (LMS) is an Internet based system which allows you access to learning materials
and to interact with other students and teaching staff in activities related to your studies from any location with
Internet access. Most subjects have a LMS site into which you are automatically added as part of your enrolment
into the subject.
The LMS can be accessed at: https://www.latrobe.edu.au/lms/login/ by using your Username and Password provided
to you on your Statement of Account. If you are having trouble accessing the LMS or want to find out more about
LMS, please see the website at: http://www.latrobe.edu.au/lms/
Library
The Library has many valuable physical and online learning resources that can help you with your study. On
campus students should get to know the physical Library environment by going on a Library Tour. All students
should get familiar with the Library website where online resources include:
LibGuides [http://latrobe.libguides.com/index.php] providing specific discipline and subject

guides;
LibSkills [http://latrobe.libguides.com/libskills] to teach you library research and information

literacy skills;
LibChat [http://www.lib.latrobe.edu.au/] - a library discussion forum allowing you to chat with a

Librarian;
Academic Referencing Modules [http://latrobe.libguides.com/referencingmodules] to assist

you to understand specific referencing styles;
Academic Referencing Tool [http://www.lib.latrobe.edu.au/referencingtool/non-flash/index.php]

providing detailed referencing examples; and,
Assignment Calculator [http://www.latrobe.edu.au/library/assignment-thesis-support] to assist

you in time managing your assignments and submitting on time.
Student Support Services

If you have special needs due to disability or other factors the Equality and Diversity Centre can provide advice and
support. This Centre can be contacted by telephone on (03) 9479 2900 (Melbourne); (03) 5444 7410 (Bendigo);
(02) 6024 9628 (Albury-Wodonga); National Relay Service Deaf and Hearing Impaired: T: 133677 (within
Australia only). Email: Equality@latrobe.edu.au or refer to the website at:
http://www.latrobe.edu.au/equality/.
Peer Learning Advisers

Peer Learning Advisers (PLAs) are successful and experienced students who are trained to assist fellow students.
PLAs are located in the library and can assist students with a range of inquiries. For more information refer to the
website at: http://www.ltrobe.edu.au/library/help-and-training/ask-a-pla?src=stu
Schedule of Learning Activities

Session Plan
Week
beginnin
g
Topic
1
Feb 29
Topic 1
Introduction and overview of audit and
assurance
Chapter 1
2
March 7
Topic 2
Ethics, legal liability and client acceptance
Chapter 2
3
March 14
4
March 21
March 28
5
April 4
6
April 11
7
April 18
Topic 3
Risk Assessment I
Quiz 1
Open -Friday March 18 5.00 pm
Closes- Saturday March 19 5.00 pm
(Material to be covered- Chapters 1 and
2)
Reading
Chapter 3
Chapter 4
Topic 4
Risk Assessment II
Semester Break
Topic 5
Audit evidence
Quiz 2
Open- Friday April 8 5.00 pm
Closes- Saturday April 9- 5.00 pm
4)
Topic 6
Gaining an understanding of the clients
system of internal control
Topic 7
Sampling and overview of the risk
response phase of the audit
8
April 25
9
May 2
Topic 8
Testing of controls
10
May 9
Topic 10
Substantive testing-balance sheet and
income statement accounts
11
May 16
Assessments
due dates
Topic 9
Execution of substantive procedures
Topic 11
Completion and reporting on the audit
Chapter 5
Chapter 6
Quiz 3Open- Friday April 22- 5.00 pm

Closes- Saturday- April 23- 5.00 pm
6)
Chapter 7
Chapter 8
Closes- Saturday- May 7- 5.00 pm
(Material to be covered- Chatpers 7 and
8)
Group assignment due
Monday May 16- 5.00 pm
Chapter 9

Closes- Saturday May 21- 5.00 pm
10)
Chapter 12
Chapters 10
and 11
Week
beginnin
g
Topic
12
May 23
Revision
Assessments
due dates
Reading
Detailed grading criteria

Assessment task 1: Online quizzes (20%)
Students will be awarded 0.5 mark for each correct answer.
Assessment task 2: Group assignment (20%)

The assessment criteria below outline the factors or qualities that are used to determine the levels of understanding
and performance being demonstrated to differentiate between the various grades.
ILO No
Criteria
(Total
marks=
20)
Excellent
Very good
Good
Could be
better
(50-59%)
Unsatisfactory
(80-100%)
(70-79%)
(60-69%)
1,2,3,5
Understa
nding of
issues
Excellent
analysis of
topic.
Demonstrated
excellent
understanding
of issues by
integrating
perspectives
to show
insights
Very good
analysis of topic
Most issues
demonstrated
well.
Identifies,
compares and
contrasts
different
perspectives
Good analysis
of topic
Main issued
demonstrated
satisfactorily
through a
logical
conclusion
Good attempt at
analysis of the
topic
Main issues
demonstrated
satisfactorily and
relationship
between most
main issues
explored
Poor analysis of
topic
Did not
understand the
issues
Unable to
demonstrate the
relationship
between
component
elements
1,2,3,5
Knowled
ge of
appropri
ate
standard
s, Acts
and
guideline
s
Applied
appropriate
standards and
guidelines
correctly to the
issues
Applied
appropriate
standards and
guidelines
correctly to most
of the issues
identified
Applied
appropriate
standards and
guidelines to
the main
issues
identified
Applied some
appropriate
standards and
guidelines to the
issues identified
Did not apply

any standards
and guidelines.
Or applied
inappropriately
due to lack of
understanding
1,2,3,5
Referenc
ing
Consistently
accurate
Employs an
accurate and
precise
academic
referencing
convention
that
accommodate
s depth and
Mostly accurate
Employs an
accurate
academic
referencing
convention citing
multiple sources
Mainly
accurate
Good attempt
Employs a basic
referencing
convention
Absent or poor
attempt
The task is
inadequately or
inappropriately
referenced
Basic
references are
provided with
minor errors.
Limited sources
of references
although
academic
convention of
referencing is
(0-49%)
ILO No
Criteria
(Total
marks=
20)
1,2,3,5
Structur
e
1,2,3,5
Teamwor
k
Excellent
Very good
Good
(80-100%)
(70-79%)
(60-69%)
breadth of
literature
Material
written clearly,
persuasively
and
imaginatively
matched to
task
Excellent
group
cooperation
Engages proactively with
team members
in team
decision
making and
facilitates the
achievement
of agreed
group
outcomes
Could be
better
(50-59%)
Unsatisfactory
(0-49%)
largely followed
Material written
clearly and
imaginatively
and well
sequenced
Material
written
informatively
and well
sequenced
Material written
somewhat
informatively
with some minor
sequencing or
clarity issues
Material written
difficult to
understand and
follow
Very good group

cooperation with
team decisions
making tasks
and contributes
to an equitable
distribution of the
workload
Satisfactory
group
cooperation to
meet task
deadlines and
work reflects
an agreed
contribution
Some limited
group
cooperation in
contributing to
the setting or
achievement of
all group goals
No cooperation
Fails to meet
task deadlines
and the work
does not reflect
an integrated
contribution to
the team project
outcomes
Assessment task 3: Final Examination (60%)-PAQ

The assessment criteria below outline the factors or qualities that are used to determine the levels of understanding
and performance being demonstrated and to differentiate between the various grades.
ILO Criteria
Excellent
Very Good
Good
Pass
Fail
no
(A 80-100%)
(C 60-69%)
(D 50-59%)
N (0-49%)
(B 70-79%)
Fulfilment of All the concepts
Concepts are
Mostly
Overall
Understanding of the
1-5
overall task
are clearly linked linked, logically
logical and
completion of
task is not apparent due
Intent
and organised in organised and
coherent
tasks with
to confused or
a given
answers are
linking of
some
underdeveloped
framework and
supported by
concepts.
inconsistencie
answers not supported
conclusions/ans
theory and data Problems
s in linking and by theory or data or
wers are well
have been
organising
answers have not been
supported by
addressed
concepts or
attempted
theory and all
satisfactorily
supporting
available data.
in a standard conclusions
format.
with data or
theory.
Use of
Evidence of
Evidence of
Most
General
Either no evidence or
1-5
information
critical
some critical
information is application of
irrelevant use of
(examples of application of
application of
supported by standards,
standards
evidence
evidence.
evidence.
use of
some
and
Comprehensive
Mostly accurate standards
inconsistent
accounting
and accurate
use of the
information
and auditing use of the
standards,
standards)
standards
some minor
omissions
Application
Critical and
Critical and
Relevant
Limited
Either no application of
1-5
of theories
evaluative
evaluative
concepts and applications of relevant theories and
&/or
thinking applied
thinking applied theories
relevant
concepts or major
concepts
i.e. able to
with little
generally
theories and
omissions/misunderstan
dealt with in
demonstrate
inaccuracy
applied
concepts,
dings
the topic or
understanding of
appropriately some
subject
how and why
, no major
misunderstand
theories and
omissions
ing
concepts are
applied.
1-5
Structure
and
organisation
Structure and
sequence are
used effectively
to integrate
ideas resulting in
a clear, logical
argument
Ideas are
logically
sequenced in a
satisfying way.
Integration of
themes/sections
is well made.
Use of
Fluent, confident
Mainly fluent
Ideas and
structure are
logical
presented.
Integrations
of
themes/secti
ons are
generally
satisfactory.
Academic/pr
Reasonably
structured and
organised,
requires more
focus on the
topic. Some
instances of
irrelevance.
Lack of structure, ideas

not organised or
irrelevant.
Academic/prof
Difficult to understand
1-5
language
and
adherence to
academic
conventions
and precise use

of
academic/profes
sional language,
mastery of style
and tone.
and precise use

of
academic/profe
ssional
language.
ofessional
Language is
generally/con
sistently
sound and
clear
throughout.
essional
language is
clear enough
to be
understood,
some unclear
expressions
the expression used

Unstructured or
unfocussed meaning, or
in a format inappropriate
to the task and/or the
grammar/spelling errors
detract from the
meaning
ILO
no
Criteria
Excellent
Very Good
Good
Pass
Fail
1-5
Ethical
awareness
(A 80-100%)
Critically
acknowledges a
range of value
perspectives
and adopts a
professional
code of conduct
to address
professional and
societal
concerns
(B 70-79%)
Acknowledgem
ent and
engagement of
a range of value
perspectives in
professional
and societal
concerns
(C 60-69%)
Acknowledge
ment of a
range of
value
perspectives
in
professional
and societal
concerns
(D 50-59%)
Some attempt
made to
acknowledge a
range of value
perspectives in
professional
and societal
concerns
N (0-49%)
No attempt made to
acknowledge a range of
value perspectives in
professional and
societal concerns
WORKSHOP PROGRAM (Week 1)

Auditing and Assurance (ACC3AUD)
Introduction and overview of audit and assurance
Online lectures/activities- It is recommended that student should complete the online learning activities before
attending the weekly workshop. These include the online lectures and any associated online material.
Reading guide
References: Moroney, Campbell and Hamilton - Chapter 1+ The Cloud 9 Case study
Martinov-Bennie, Roebuck and Soh, Chapter 6, Reading (pp. 142-147)
Standards:
ASA 200: Overall Objectives of the Independent Auditor and the conduct of an Audit in Accordance with the Australian
Auditing Standards.
ASRE 2410: Review of a Financial Report Performed by the Independent Auditor of the Entity.
ASAE 3000: Assurance Engagements Other than Audits or Reviews of Historical Financial Information.
Annual report: Download the 2015 Wesfarmers Limited annual report from either the Wesfarmers
(http://www.wesfarmers.com.au/) website or the La Trobe Universitys DatAnalysis Premium database
(http://www.lib.latrobe.edu.au/databases/title.php?l=D) and review the answers to the various questions below.
Discussion questions:
1.
2.
3.
What does assurance mean in the financial reporting context? Who are the three parties relevant to an
assurance engagement?
What qualities must an assurer have in order for you to feel that their statement has high credibility?
Explain the audit expectation gap.
With reference to the Wesfarmers Limited Financial report:

4.
5.
6.
7.
Describe the objective of an independent financial statement audit.

Explain the difference between the (1) auditors responsibility and (2) managements responsibility for the
financial report being audited.
Explain the meaning of true and fair presented in the audit report.
Refer to the auditors opinion in the audit report. Explain whether it is a positive or negative statement.
Moroney, Campbell and Hamilton

Cloud 9 (p. 45)
8. What are the main differences between a financial report audit, an environmental audit and efficiency audit?
9. What is the difference between reasonable assurance and limited assurance?
10. Who would Chip Masters ask that Ron have the financial report for McLellans Shoes audited rather than
reviewed?
11. What factors should Ron consider when selecting an accounting firm to complete the McLellans Shoes audit?

Ethics, legal liability and client acceptance
Reading guide
References: Moroney, Campbell and Hamilton, Chapter 2 +The Cloud 9 Case study
Standards:
APES 110: Code of Ethics for Professional Accountants (sec 290).
ASA 210: Agreeing the Terms of Audit Engagement.
ASQC1: Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial
Information, and Other Assurance Engagements.
1. What is more important, independence of mind or independence in appearance? Explain.
2. Explain how an auditor would use auditing standards to avoid legal liability.
3. Why is it so important that an audit committee not have any executive directors as members?
4. What is the purpose of an engagement letter? Are all engagement letters the same? Explain.
5. Discuss the procedures governing the client acceptance or continuance decision? Explain why auditors do not
accept every client.
Cloud 9 (p. 84)
6.
Prepare a document that explains the impact. If any, of each piece of relevant information on your client
acceptance decision for Cloud 9.
7.
List and explain any additional actions you would take before making client acceptance recommendation to
the partner, Jo Wadley, in this case.
PAQs
8.
Q. 2.23, p. 79
Martinov-Bennie, Roebuck and Soh,

9.
10.
Chapter 7, Case 7-1, p. 177


Risk assessment (I)
Reading guide
References: Moroney, Campbell and Hamilton, Chapters 3 +The Cloud 9 Case study
Standards:
ASA 300: Planning an Audit of a Financial Report.
ASA 240: The Auditors responsibilities relating to Fraud in an Audit of a Financial Report.
ASA 315: Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its
Environment.
1.
2.
3.
4.
5.
6.
Explain the importance of the risk assessment phase of a financial report audit.
List and explain the key factors that the auditor would consider during preliminary risk assessment.
In the context of fraud, explain the differences between (1) incentives and pressures, (2) Opportunity and (3)
attitudes and rationalisation. Why is it important for an auditor to consider the client systems relevant to all
three concepts?
Do only listed companies have good corporate governance? Explain.
Why does an auditor need to understand a clients IT system? Explain how IT affects the financial report.
What does it mean when we say that a business is a going concern or alternatively, has going concern
issues? Why must an auditor specifically consider evidence about the going concern assessment for each
client?

Cloud 9 (pp. 118-119)
7.
Discuss the questions given on p. 118-119 based on the information presented throughout chapters 1, 2, 3
and additional information about Cloud 9 presented in the appendix to the book.
Martinov-Bennie, Roebuck and Soh,

8.
Chapter 2, Case 2-8, Part A, Question 1 and 2, p. 47.

Risk assessment (II)
Reading guide
Standards:
ASA 240: The Auditors responsibilities relating to Fraud in an Audit of a Financial Report.
ASA 300: Planning an Audit of a Financial Report.
Environment.
ASA 320: Materiality in Planning and Performing an Audit.
1.
2.
3.
4.
5.
What is a time-series analysis? How could it be useful to an auditor?

Explain how setting a lower materiality level affects the number of items that are material and the assessment
of the sufficiency and appropriateness of audit evidence.
How does the auditors preliminary assessment of materiality affect audit planning? What does an auditor
consider when making the preliminary assessment of materiality?
If an auditor adopts a lower assessed level of control risk approach, do they have to perform any substantive
procedures? Explain.
Cheap-as-Chips stock thousands of items that range in value from $1 to $100. The inventory on hand
represents material portion of current assets. The merchandise items change according to the season and the
promotional theme adopted by the stores management for the year. Merchandise is ordered up to four
months in advance from Chinese and Korean suppliers. These special orders require Cheap-as-Chips to give
the suppliers substantial deposits upon placement of the orders.
Required: What are the inherent risks for Cheap-as-Chips inventory? Discuss the assertions being made by
management about the inventory.

Cloud 9 (p. 156)
6. Using the 30 Septemeber 2014 trial balance (in the appendix), calculate planning materiality and include the
justification for the basis that you have used for your calculation.
7. Based on your result from researching the client and its industry in chapter 1 and 2, discuss the inherent risks
in the audit of Cloud 9. Identify the associated financial accoutns that would be affected and provide an
assessment of high, medium or low in relation to the likelihood and materiality of th rrisk occurring.
Martinov-Bennie, Roebuck and Soh

8. Chapter 1, Case 1-1, pp. 7-8.

Audit evidence
Reading guide
Standards:
ASA 230: Audit Documentation
ASA 500: Audit Evidence
ASA 505: External Confirmation
ASA 620: Using the work of an Auditors Expert
1.
Why does an auditor have to consider the persuasiveness of corroborating evidence? Explain.
2.
Discuss the impact of electronic processing of transactions on the audit.
3.
What are the evidence gathering procedures an auditor might use? At which stages of the audit are these
procedures appropriate? How do the procedures relate to the types of evidence an auditor can rely upon?
4.
A client has a material balance in property, plant and equipment. The discussions with management indicate
that there is a risk the client will capitalise all repair costs to minimise the impact on expenses. Repairs are
likely to be material because of the extreme weather conditions affecting operations and machinery operating
conditions. Extensive repairs were due to be commenced in the month prior to year-end, with completion
around two months later.
Required: Based on the above information, what accounts and assertions are likely to be affected. Explain.

Cloud 9 (p.197)
5.
6.
Explain the procedures for engaging component auditors to perform the work on the inventory in China and
the US.
Advise Suzie on the engagement of the derivatives expert. Discuss the qualities the expert must possess. What steps
must Suzie perform? What should she tell the expert about the engagement? What must the expert provide to Suzie
so that she can be sure she has sufficient and appropriate evidence about the derivatives? Can the expert do all the
work on derivatives, or must Suzie perform any other procedures?
7.
Martinov-Bennie, Roebuck and Soh, Chapter 4, case 4-5, pp. 96-97.

Gaining an understanding of the clients system of internal controls
Reading guide
Martinov-Bennie, Roebuck and Soh, Chapter 1, Reading (pp. 34-35 and 84-90)
Standards:
ASA 260: Communication with Those Charged with Governance.
ASA 265: Communicating Deficiencies in Internal Control to Those Charged with Governance and Management
1. If an auditor does not intend to rely on internal controls in the audit, does the auditor need to obain an
understanding of internal control? Explain.
2. Why would an auditor be interested in a clients internal control monitoring processes?
3. Discuss the role of internal audit in an entitys system of internal controls. Is internal audit an essential element
of a control system? Explain.
Cloud 9 (p. 237)
4. Discuss the questions given on p. 237.
PAQs
5. Q. 6.23, p. 231
6. Q. 6.24 p. 232
7. Q. 6.30, p. 234

8. Chapter 4, Case 4-11, pp. 104-105.

Sampling and overview of the risk response phase of the audit
Reading guide
Standards:
ASA 330: The Auditors Responses to Assessed Risks
ASA 530: Audit Sampling
1. Explain the difference between tests of controls and substantive procedures.
2. Why does non-sampling risk exist for all types of tests in all audits? Explain.
3. Why are audit tests more likely to be conducted at or after year-end for high-risk clients than for low-risk
client? Explain.

Cloud 9
4. Discuss the questions on p. 282.
PAQs
5.
6.
Q. 7.32, p. 280
Q. 7.35, p. 281

Testing of control
Reading guide
Standards:
ASA 230: Audit Documentation
ASA 260: Communication with Those Charged with Governance.
Environment.
1. Within the clients IT system, supplier information is contained in a supplier master file (SMF). Each supplier has a
unique supplier code. If the purchasing clerk attempts to place an order from supplier not in the SMF, the order
cannot be processed.
Required: Explain what type of control the above information describes. Discuss its strengths and weaknesses.
2. What are four types of tests of controls? Explain them and comment on the reliability of the evidence obtained
from each.
3. Explain the purpose of (a) prevent controls and (b) detect controls. Why would it be important for an entity to have
both types of controls?
Cloud 9
4. Discuss the questions on pp. 315-318.
PAQs
5. Q. 8.33, p. 313
6. Q. 8.35, p. 314
7. Q. 8.36, p. 314
8. Chapter 4, Case 4-1, p. 91.

Execution of substantive procedures
Reading guide
Standards:
ASA 501: Audit Evidence-Specific Considerations for inventory and Segment Information
ASA 505: External Confirmations
ASA 520: Analytical procedures
1. Explain the difference between tracing and vouching.
2. Explain the two main types of CAATs. What are the advantages of using software to interrogate and examine
client data files? Does using CAATs remove the need to test client control systems?
3. Provide an example of (1) an error and (2) a judgemental misstatement that could affect the balance of property,
plant and equipment.
4. Carla Johnson has a suggestion for the audit program for the revenue account. She suggests:
Select a sample of sales from the sales journal and agree the details in the journal to the sales invoices,
delivery dockets and customer orders.
Required: Explain which assertion for the revenue account would be addressed by this test.
Cloud 9 (p. 351)
5. Prepare common size statements for Cloud 9. Use total assets as the basis for the balance sheet and revenue
as the basis for the income statement. Comment on any audit implications revealed by your statements.
PAQs
6.
Q. 9.34, p. 350

7.
8.

Substantive testing-Balance sheet and income statement accounts
Reading guide
References: Moroney, Campbell and Hamilton, Chapter 10 and 11 +The Cloud 9 Case study
Standards:
AASB 7: Financial Instruments: Disclosures
AASB 102: Inventories
AASB 116: Property, Plant and Equipment
AASB 138: Intangible Assets
ASA 330: The Auditors Responses to Assessed Risks
AGS 1002: Bank Confirmation Requests
1. What are the most important assertions for sales revenue? Compare these with the most important assertions
for other revenue. Are they different? Explain.
2. Explain the techniques clients might deliberately use to violate the cut-off assertion because of pressure to meet
sales targets. How might an auditor detect these actions?
3. Explain the purpose of searching for unrecorded liabilities. Why is it important?
4. Explain why gathering evidence about the occurrence assertion for a set of transactions could also provide
evidence for the completeness assertion for a balance sheet account. Provide an example.
5. What are subsequent receipts tests? Why do they provide useful evidence about debtors valuation?
Moroney, Campbell and Hamilton textbook
Cloud 9 (p. 403)
6. Discuss the questions on page 403.
PAQs
7. Q. 11.29, p. 430
8. Q. 10.33, p. 400
9. Chapter 3, Case 3-13 Part A, B and C, pp. 71-73

Completing and reporting on the audit
Reading guide
Standards:
ASA 560: Subsequent Events
ASA 570: Going Concern

ASA 580: Written Representations
ASA 700: Forming an Opinion and Reporting on a Financial Report
ASA 705: Modifications to the Opinion in the Independent Auditors Report
ASA 706: Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditors Report
Discussion Questions:
1.
What matters does an auditor communicate at the end of the audit to those charged with governance? Why
are these matters important?
2.
Explain the difference between limitation of scope and disagreement with those charged with governance.
3.
What is the accounting assumption of going concern. Why is it of interest to auditors?
4.
Why do audit reports contain paragraphs outlining (1) managements responsibility for the financial report and
(2) the auditors responsibility for the financial report? What is contained in these paragraphs?
5.
6.
Is materiality the only consideration for an auditor deciding whether to qualify the audit opinion?
Explain the auditors reporting responsibilities with respect to the clients ability to continue as a going
concern.

PAQs
7.
8.
Q. 12.29, pp. 462-463

Q. 12.33, pp. 464-465
9.
Chapter 5, Case 5-1, pp. 121-122

Revision
1. Chapter 10, Practice Examination 1, Q. 4, Part B and C, p. 273.

2. Chapter 10, Practice Examination 2, Qs. 1 and 2, pp. 281-282.
3. Chapter 10, Practice Examination 4, Q. 1, p. 290.
4. Chapter 5, Case 5-3, pp. 127-128

5. Chapter 5, Case 5-5, pp. 125-127

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Subject Learning Guide

POLICIES, PROCEDURES AND GUIDELINES

SCHEDULE OF LEARNING ACTIVITIES

DETAILED GRADING CRITERIA

Auditing and Assurance

Corporate Reporting (ACC2CRE)

Assumed Skills & Knowledge:

Students are expected to have a good understanding of financial

Special Study Requirements:

Students with special needs whose participation in this unit might be

Upon successful completion of this subject, you should be able to:

Define and explain the auditors roles and responsibilities.

Explain and resolve ethical dilemmas.

Demonstrate an understanding of the audit planning and testing procedures.

Identify and explain the different types of auditors opinions.

Analyse real world auditing problems.

Online quizzes, assignment and final examination

C Discipline-specific knowledge and skills

Online quizzes, assignment and final examination

Assignment and final examination

LEARNING ACTIVITY SUMMARY

Online lectures/activities- Before attending the weekly workshop students are

Further information is available at http://www.latrobe.edu.au/timetable/

Quiz 2Open- Friday April 8 5.00 pm

Quiz 3Open- Friday April 22- 5.00 pm

Online quizzes are scheduled in

Students who fail to complete the

Closes- Saturday May 21- 5.00

The purpose of the group assignment

The examination will be held during

Author and Year

Auditing: A Practical Approach(2nd

Robyn Moroney, Fiona Campbell

John Wiley &

Auditing and Assurance: A Case

Nonna Martinov-Bennie, Peter

STUDENT FEEDBACK ON SUBJECT SURVEY

Policies, Procedures and Guidelines

Extensions, Late Submissions and Penalties

The fifth (5th) working day after the due date; or

you have a dispute about a process used during an appeal

you are a victim of bullying or harassment

For more information on student complaint

Results, reviews and re-marks

Student Learning Unit (SL)

Learning Management System (LMS)

LibGuides [http://latrobe.libguides.com/index.php] providing specific discipline and subject

LibSkills [http://latrobe.libguides.com/libskills] to teach you library research and information

LibChat [http://www.lib.latrobe.edu.au/] - a library discussion forum allowing you to chat with a

Academic Referencing Modules [http://latrobe.libguides.com/referencingmodules] to assist

Academic Referencing Tool [http://www.lib.latrobe.edu.au/referencingtool/non-flash/index.php]

Assignment Calculator [http://www.latrobe.edu.au/library/assignment-thesis-support] to assist

Student Support Services

Peer Learning Advisers

Schedule of Learning Activities

Quiz 3Open- Friday April 22- 5.00 pm

Quiz 5Open- Friday May 20- 5.00 pm

Detailed grading criteria

Assessment task 2: Group assignment (20%)

Did not apply

Very good group