As you can see there are 2.1 and 2.2. They do not count words and we've almost done themAP2 needs to identify the findings only from AP2.1 and AP2.2AP1 is key findings for everything including client meeting notes and information in the instruction
Meeting Notes: Mighty Mining Ltd Attendees: Bruce Mackenzie (Audit Engagement Manager), Isabella Woods, Thomas Moore (Audit partner from BMS) and Mighty Mining Ltd Senior Management Date: 30th July, 2018 Staffing: · Operational staff in mines are fly-in, fly-out living on site with a small centralised full-time staff in Head Office in Brisbane · Entrepreneurial Board of Directors– no changes in last 12 months – Paul Barclay is Deputy Chair · High turnover of accounting staff which has meant that purchasing processing and Accounts Payable transactions completed by the same staff including ordering, input, matching and approvals. Mine managers are responsible for the initial request and CFO’s staff have key responsibilities for each of the mines including visiting on a regular basis. Plant & Equipment: · Property, Plant &Equipment (PP&E) is serviced at the site and a very limited amount of supplies are held on hand these are usually purchased as required · No stores inventory is in the Trial Balance as the PPE supplies are expensed as they are purchased. · Annual PP&E stocktakes are part of the role of the accounting staff when they visit each site. Usually two staff visit all 5 locations for one week each quarter. · Audit staff have never observed stocktakes for machinery (PP&E). General: · Directors believe the PP&E assets are undervalued and have suggested that BMS could complete the revaluation because of Paul’s knowledge of the company and the sector. · Bank reconciliations are being completed each quarter – to align with board meetings (and because of staffing issues) · Purchases of goods and services are ordered and delivered to each mine. Mine managers raise all purchase orders independently of Head Office although when accounting staff visit, they usually make sure that all delivery dockets (ready for collection) have approved purchase orders (by the mine manager) and take them back to the Accounts Payable section at Head Office. · The ATO visited for a desk audit for monthly BAS and income tax returns. A number of issues were raised in relation to exploration and related claims but to date, no assessment has been issued. The company’s tax advisors are presently following up the matters. The BMS Tax partner (Mark Stafford) is the tax advisor. · With changes in operation and view to have an IPO, tax fees have increased. CFO commented that now both audit and tax using same firm, can a deal on fees be struck? · The Accounts Receivable Supervisor has requested that debtor’s confirmations are not sent out by the auditors this year, as last year there were some adverse comments from some of the overseas debtors. The response rate of debtors last year was 60% return. · MML is exploring a new site in PNG. The new site in PNG has found some significant deposits requiring extra costs and possible increase in loans in future years. The local council in PNG is seeking possible royalties from the new mine as a local government tax for use of a cultural site. MML has been discussing this with their lawyers. QUEENSLAND UNIVERSITY OF TECHNOLOGY QUT Business School - School of Accountancy AYB301 Audit and Assurance SEMESTER TWO 2018 Group Project (Weighting Total – 30%) Due Thursday 20 September at 11.59pm Group Formation Form a group of 3 with other students in the unit and register your group in Blackboard under Assessment>Assessment Item 2: Group Project. Working in a group You will now work with that group for the assessment task. You can use the email in this group area to communicate with group members and also save and share files between the group. Group Task · Complete the Audit Current File for Mighty Mining Ltd (excel file provided) · Submit the completed file online at the Group Project Submission link at Assessment>Assessment Item 2: Group Project in AYB301 Blackboard site. •Only one group member needs to submit on behalf of the group. •Blackboard will automatically link all group members to this submission •All marks and feedback will be provided electronically via Blackboard back to all group members. Individual Task · Each Student in the unit must also undertake a group project peer evaluation survey at Assessment>Assessment Item 2: Group Project by the due date and time. This will provide feedback on the group processes and comments must be included in the survey. Weighting Submission of completed Audit Working Papers for Mighty Mining Ltd (25%) Individual Group Assessment Survey (5%) Grading will be based upon the text that is within the word limit (or 10% above) Length Excel Audit Current File Mighty Mining - Word Limit (2000 words +10% maximum) Note: The analytical review worksheet and the Trial Balance worksheet are not counted as part of the submission word count. Electronic survey process via Blackboard (word limit does not apply) This assessment item assesses the following learning outcomes and AoL goals: PC3.1 Professionally communicate accounting and legal knowledge, advice and recommendations in written forms to both accountants and non-accountants. HO2.1Investigate real world business issues and situations through the effective analysis, evaluation and synthesis of theory and practice TS4.2Apply teamwork knowledge and skills to work effectively with others across diverse accounting purposes and contexts. SE5.1Demonstrate and apply knowledge of ethical and regulatory perspectives relating to professional accounting. Late Assessment and Extensions As the group project is an assessment that involves a group of three students and the group has a number of weeks to complete the assessment task, students will be unable to apply for an extension via the QUT Late Assessment Policy. Further information on late assignments and extensions can be found at https://www.student.qut.edu.au/studying/assessment/extension. The MOPP Policy relating to Late Assessment and Extensions can be found here: http://www.mopp.qut.edu.au/E/E_06_08.jsp BARCLAY, MOORE & STAFFORD – CHARTERED ACCOUNTANTS Bruce Mackenzie is a Chartered Accountant (CA) and Senior Audit Manager of Barclay, Moore & Stafford (BMS) - a well-known accounting and assurance firm with its head office in Brisbane’s central business district (CBD). BMS provides a cross-section of services to its clients including auditing, taxation, business valuations and management consultancy services. The firm has six partners – two in audit (Barclay and Moore), two in tax (Stafford and O’Hoare) and two in business and consulting services. The two audit partners are registered company auditors under the Corporations Law and ASX requirements. Bruce Mackenzie commenced his career in a smaller suburban audit firm when he graduated in 2010, transferring to BMS on promotion (as Audit Manager) in 2017 with a goal to become a partner of the firm within the next 5 years. He is hard working, focussed and prides himself on maintaining up to date technical auditing and accounting skills which is beneficial to his role/s at BMS. Bruce has recently been asked to be the Audit Engagement Manager for a potential new audit for the year ended 30 June 2018 - Mighty Mining Ltd (MML), a mining company with five Queensland mine sites. Thomas Moore is the planned audit engagement partner for MML if the engagement is accepted by BMS. Thomas will not be directly involved in the audit as he will be away from the office for next two months but will back to sign the audit report for MML based on the work undertaken by Bruce. Working with Bruce on the audit will be Isabella Woods (senior auditor) and Hudson Fielding who has recently been promoted to graduate auditor now he has finished his undergraduate degree in accounting. Hudson has been working with BMS as an undergraduate for the last 3 years and has been assigned to the same audit team during that time. He has been and will continue to be supervised by Isabella (who has been working with mining clients for the last 4 years starting as a graduate). AUDIT PERMANENT FILE INFORMATION Potential Client – Mighty Mining Ltd (MML) MML are a mining company with origins in Queensland and recent exploration in Papua New Guinea (PNG). There are 5 mine sites throughout Queensland, but all business activity is centralised in the Head Office in Brisbane. The CFO (Mike Barclay) and his team regularly visit mine locations. The company believes that the exploration in PNG will be the catalyst for them to prepare an Initial Public Offering (IPO) to list on the ASX. Currently the MML Board of Directors (Board) includes Paul Barclay (one of the Audit Partners of BMS and Mike’s brother) as Deputy Chair. With the possible move to the ASX, the audit firm who has undertaken the MML audits for the last 8 years has given notice of resignation as MML auditors due to their Audit Manager being offered a senior operational position (Corporate Secretary) at MML and the Audit Engagement Partner retiring. The firm was a small firm and their client list is being sold to another small audit firm. The CFO for MML has suggested that the audit should be finished by the end of August so that the company can get organised to prepare for the IPO. A few firms who offer audit services in Brisbane have been reviewed by MML as potential new auditors but BMS has been recommended by the MML Board to be appointed as auditors for the firm for the next 3 years. Staff from BMS and MML meet to discuss the audit (see the attached client meeting notes as a record of the initial meeting). Bruce knows that from the meeting requests and his initial planning preparation, this audit will not be able to be completed before the end of September. The CFO of MML (Mike Barclay) has also commented that he has doubts about the ability of his staff to complete the general-purpose financial statements (in full compliance with accounting standards) required for the IPO process and requests that BMS assist with the preparation of these statements AUDIT CURRENT FILE -MIGHTY MINING LTD AUDIT TASKS: 1. ACCEPTANCE DECISION - AUDIT OF MIGHTY MINING LTD 2018 (10%) · Assess whether it is ethical for BMS to accept the audit engagement of MML for 2018. Refer to APES110 (2017 version) and determine the implications and make appropriate recommendations in relation to the audit acceptance decision for BMS in the Audit Current File - MML provided on Blackboard under assessment>Group Project. The two workpapers to complete for this task are: AE1 - Engagement Issues (Review) Workpaper to report your findings to the BMS partners AE1.1- Engagement Ethical Issues Worksheet critically analysing the key ethical issues and making recommendations for resolution 2. PLANNING THE AUDIT OF MIGHTY MINING LTD 2018 (15%) Based on the implementation of your group’s analysis and ethical recommendations, BMS agree to accept the audit of the financial statements as at 30 June 2018. Bruce (Audit Engagement Manager) starts planning the audit by completing a detailed analysis of the final MML trial balance, performing an initial analytical review, and preparing for the team planning meeting. Your project group has been assigned to work with Bruce’s audit team. Bruce, together with Isabella, Hudson and your group (3 new graduates) are about to start work on the audit of