Students are required to explain the analytical procedure, audit risk and application of audit committee effectiveness from your selected company. Students are required to analyse the causes of audit risk by understanding company’s analytical procedure and
the relevant issues from their selected company’s and then specify whether their selected company’s follows audit committee guideline suggested by ASX CGC guideline to ensure professional integrity, good governance and reputation.
Purpose of the assessment (with ULO Mapping)
• Evaluate the economic and legal basis for auditing and the applicable auditing standards and reporting requirements
• Analyse and communicate knowledge of the auditor’s professional judgement, legal and ethical responsibilities to their clients and third parties
• Assess audit strategies including the evaluation of business risk and internal controls
• Apply audit concepts and processes to gather evidence and formulate judgments with respect to the underlying information
Students will have to research relevant academic literature, including related organisation websites andwrite in-text citations in this assignment. Additionally, they will demonstrate understanding and critical evaluation of the Australian financial governance reporting environment and its current regulatory framework, and recommend future directions to the Australian governance principles reporting regulators.
Part A: Analytical Procedure (15 marks)
Obtain a copy of a recent annual report (2019) from ASX Top 300 listed companies list (most companies make their annual reports available on their website). Perform analytical procedures of the Statement of Financial Position and of Financial Performance over the two years (2018 and 2019) using appropriate ratios and/or metrics.
Measure and discuss income statement, balance sheet and cash flow ratios from your selected company and How does this affect your assessment of materiality, detection risk and overall audit Risk? Provide a brief explanation in the report. This should be presented in a table format. (15 marks)
Part B: Audit Committee Effectiveness (20 marks)
1. “Audit committees do not prepare financial reports, nor do they conduct audits. But they have an essential role to play in ensuring the integrity and transparency of corporate reporting”. Explain this statement? Who should be members of the Audit Committee? Is there an association between Audit committee effectiveness and audit quality after IFRS adoption? (10 marks)
2. Explain your selected company’s (same selected company from part A) and prepare the following responses about the application of audit committee effectiveness recommended by ASX Corporate Governance Council (CGC) principles using Corporate Governance Principles and Recommendations (4th Edition) was released on 27 February 2019?(10 marks)
i. Members of the audit committee meet all applicable independence requirements.
ii. The audit committee demonstrates appropriate industry knowledge and includes a diversity of experiences and backgrounds.
iii. Audit committee members have the appropriate qualifications to meet the objectives of the audit committee ‘s charter, including appropriate financial literacy.
iv. Discuss about audit committee size and members profile.
v. Discuss about meeting arranged by audit committee chairman and whether member participate actively?
vi. The audit committee monitors compliance with corporate governance regulations and guidelines.
The assignment structure must be as follows:
1. Holmes Institute Assignment Cover Sheet – Full Name, Student No., Contribution.
• 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.
3. Contents Page – This needs to show a logical listing of all the sub-headings of the report’s contents. Note this is excluded from the total word count.
4. 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.
5. Main Body Paragraphs with numbered sub-headings – Detailed information which elaborates on the main pointsraised 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.
6. Conclusion – A logical and coherent evaluation based on a thorough and an objective assessment of the research performed.
7. Appendices – Include any additional explanatory information which is supplementary and/ or graphicalto help communicate themain ideasmade in the report. Referto the appendicesin the main body paragraphs, as and where appropriate. (Note this is excluded from the total word count.