Asia pacific data centre is the topicneeded to be done with powerpoint slides1 | P a g e H A 3 0...

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Asia pacific data centre is the topicneeded to be done with powerpoint slides1 | P a g e     H A 3 0 3 2  G r o u p A s s i g n m e n t  T 2  2 0 1 8 HOLMES   INSTITUTE      FACULTY OF  HIGHER   EDUCATION HOLMES INSTITUTE      FACULTY OF HIGHER EDUCATION                             Group Assignment         HA3032 Auditing   TRIMESTER 2 / 2018      Instructions:    1. This assignment is to be submitted in accordance with the assessment policy, as stated in the Subject  Outline and in the Student Handbook.    2. It is the responsibility of the student, who is submitting the work, to ensure that the work is in fact  her/his own work. Incorporating another person’s work or ideas into one’s own work without  appropriate acknowledgement is an academic offence.   3. Students can submit all assignments for plagiarism checking (self-check) on Blackboard before final  submission in the subject. For further details, please refer to the Subject Outline and Student  Handbook.    4. Maximum marks available: 30 marks.  (Weighting = 30%)  5. Due date of submission: Week 9   6. Assignment word length = 3,000 words  7. Please use the “Spelling & Grammar” and “Word Count” functions and include the actual no. of  words on the front page of the report.    8. Important Note: Please submit the Assignment through SafeAssign. 2 | P a g e     H A 3 0 3 2  G r o u p A s s i g n m e n t  T 2  2 0 1 8 Format of the Report   1. You should at least have the following details:   a. An Assignment Cover Page clearly stating all of your members names and student numbers  b. Brief Introduction or Overview of what the report is about.   c. Main Body of the report with sections to answer the above sections and with appropriate section  headings. Provide your responses in a table format.   d.  Conclusion   e.  List of References.   2. Ensure all diagrams and tables are clearly labelled and explained.   3. Ensure all materials used are correctly referenced.   4. Use page numbers at the bottom of each page of the assignment.  5. Use the correct in-text referencing, appropriate expression, correct grammar, spelling and  punctuation, 10-12pt font, appropriate word length and normal margins.   Plagiarism will be severely penalised.      Learning Outcomes  9.1 - Identify and distinguish between tests of controls, substantive tests of transactions and  substantive tests of balances.  9.2 - Identify and understand when the auditor will undertake substantive audit procedures in  response to specific assessed risks of material misstatement.  9.3 -  Understand how assertions relate to account balances  9.4 -  Understand how to select the most efficient and effective combination of audit procedures that  allows them to achieve the audit objective  9.5 – Active participation in an “audit team context” with professional group discussions  9.6 - Co-operation with fellow students to produce a joint deliverable on time and to a high standard. 3 | P a g e     H A 3 0 3 2  G r o u p A s s i g n m e n t  T 2  2 0 1 8 Group Assignment Theme:   “Developing an Audit Program for a selected ASX listed Company” The objective of this group assignment is to provide you with an opportunity to design a “risk-based”  audit program for a real world company and focus on the “Substantive tests of balances”, which involves  substantiating the ending balance of an account(s), which is comprised of multiple transactions, as at a  certain year-end date.  Introduction and Assignment Requirements 1. Students are required to form groups of three students and inform their session lecturer of their group  members by completing the “HA3032 T2 2018 Group Form details”. 2. If you have difficulties forming such groups, please contact your lecturer ASAP. 3. Each group of students will select, or have selected for them, a unique ASX listed company to use for  progressive analysis in this group assignment. 4. Final approval of the company/client – i.e. any company listed on the ASX and which has not already  been selected by another group - is required by your lecturer. 5. Prepare a detailed audit program Report [3,000 words] for the client/company in a group of 4 or 5  members. 6. Use publicly available online resources for research purposes. 7. Prepare an 8 – 10 mins oral presentation using power-point slides (10 marks).  4 | P a g e     H A 3 0 3 2  G r o u p A s s i g n m e n t  T 2  2 0 1 8 Detail Assignment Tasks: Developing an Audit Program for a selected listed Company 1. Select a listed company from the current ASX List or this will be allocated to your group. 2. Gain an understanding of the nature of the entity and its industry and then identify key business  risks. After this is completed, assess where the risks of material mis-statements could be in the  financial report. Consider the factors affecting both Inherent Risk and Control Risk. Finally, apply  the Audit Risk Model [AR = f (IR x CR X DR)] to the selected company. Which risk rating would you  apply (Low, Medium or High) to the company’s inherent risk assessment and control risk  assessment? How does this affect your assessment of Detection Risk and Audit Risk? 3. Perform analytical procedures of the Statement of Financial Position and of Financial Performance  over the last three years using appropriate ratios and metrics. Select four key ratios and provide a  brief explanation in the report. This can be presented in a table format. 4. Discuss with your group members which account balances are considered “material”. Explain how  you calculated materiality for planning purposes and provide appropriate justification for your  decision-making.  (Note - Use a table format to structure your answers to questions 5, 6 and 7.) 5. Select up to ten different material account balances, at least five assets and five liabilities. 6. For each material account balance selected, list the relevant financial report assertions and explain  why the selected assertions are applicable to each account. 7. Design a comprehensive set of audit work steps for each material account balance, which  addresses the selected assertions and which will result in sufficient and appropriate audit evidence  being collected for your selected client company. (Assume that a predominantly substantive  approach is being adopted) 8. Include a sampling plan, which details how you will use sampling for each material account balance  to be tested. How many items will be tested for each test? 9. Refer to some or all of the following websites for further information and research processes:  http://www.auasb.gov.au/Home, http://www.asic.gov.au/, www.cpaaustralia.com.au, http://www.ifrs.org, http://www.auasb.gov.au/Home http://www.asic.gov.au/ http://www.cpaaustralia.com.au/ http://www.ifrs.org/ 5 | P a g e     H A 3 0 3 2  G r o u p A s s i g n m e n t  T 2  2 0 1 8 HA3032 – AUDITING -  T2 2018 Group Assignment Form Details Please complete this form as soon as possible and provide one copy only to your lecturer. You will  select or be assigned a unique ASX listed company to review for this group assignment. It cannot be a  company which has already been selected by another group.  Group No._____ (Note - this will be assigned to you by the Unit Convenor)    Lecturer Name___________________________ (T2 2018)  Session No.________  Campus Location_________________________   Date______________ Note – All students in the group, as listed below, are required to be active participants and all  members agree to co-operate in the interests of each other’s learning and educational development.  Each student has a responsibility to contribute equally to the completion of the group assignment and  submit one assignment only by the due date. If your group encounters major problems and issues,  which may prevent or delay completion of this assignment by the due date, student(s) need to inform  their lecturer immediately. Students are reminded that purchasing an assignment or the solutions  from an online source, third party or using a “ghost writer” constitutes academic misconduct with the  result that zero marks will be awarded. Student Name    Student No.    Signature  1. __________________________ ______________________________ ______________________ Student Name    Student No.    Signature  2. __________________________ ______________________________ ______________________ Student Name    Student No.    Signature  3. __________________________ ______________________________ ______________________ Student Name    Student No.    Signature  4. __________________________ ______________________________ ______________________ Student Name    Student No.    Signature  5. __________________________ ______________________________ ______________________ Company Selected___________________________________________________________________ Approved by Unit Coordinator / Lecturer____________________            Date______________ 6 | P a g e     H A 3 0 3 2  G r o u p A s s i g n m e n t  T 2  2 0 1 8 Group Assignment Marking Guidelines (Total = 20 marks) 1. Students will select or have selected for them a unique company from the ASX to review and  analyse. No group is allowed to have the same company. This must be controlled by strict  allocation from the Unit Convenor / lecturer, who will maintain a master list of approved  companies for use in the assignment. 2. Students need to demonstrate their understanding of the entity and its industry and also, their  ability to utilise the risk-based audit approach, as illustrated in Figure 4.8 in Chapter 4 of the  textbook. Having gained an understanding of the nature of the entity and its industry, assess  business risk, the risk of material mis-statement, and the factors affecting inherent risk and control  risk. After this is completed, apply the Audit Risk Model [AR = f (IR x CR X DR)] to

Pulkit · Accepted Answer

Introduction:
The report is about the preparation of audit program of Asia Pacific Data Centre Holdings Limited which is aimed to provide its investors an amount of income earned by way of rents from its data centres and also increase in the capital potential of the company. It operates in the three Australian capital cities. The report details down the audit areas which are crucial and are needed to be detailed analyzed by the auditor.
Task 2-8
1. The following are the details of Asia Pacific Data Centre Holdings Limited:
The Group’s principal activity is to generate income by way of investment in data centre investment property mainly comprising of land and building in Australia. The Group’s main objective is to provide its investors with regular and fixed income from rental income from its data centres and also the income by way of growth in the capital of the company. With the aim to achieve its objective the company operates its business operation in three Australian capital cities. Asia Pacific Data Centre Group (APDC Group) comprises Asia Pacific Data Centre Holdings Limited (APDC Holdings) and its wholly owned subsidiary Asia Pacific Data Centre Limited (APDC Limited), and Asia Pacific Data Centre Trust (APDC Trust).
The activities undertaken by the Group is exposed to a variety of financial risks including market risk comprising of currency risk, interest risk and price risk, credit risk and liquidity risk. The risk management program undertaken by the Group seeks to minimize the adverse effect of the financial markets un-predictableness on the financial performance. In view of this the Board has established the Audit, Risk and Compliance Committee (the Committee) for the purpose of developing and monitoring the Group’s risk management policies. The Committee reports regularly to the Board on its activities. 
In assessing the risk involved the auditor considers internal control system present in the entity for the preparation of the Financial Report. The Group has got many risk involved in the preparation of the financial statements of the company for depicting the true and fair view. Market risk including the foreign exchange risk, currency risk and interest rate risk considers that the fair value or the future cash flows of a financial instrument will fluctuate because of changes in market prices. Credit risk is the risk that one party to a contract of financial instrument will fail to meet the obligation to pay to the other party. Liquidity risk is considered as the risk that the Group will not be able to meet its financial obligations on time. The Group is continuously engaged in maintaining sufficient cash balances and also maintains a relationship with its bankers and investors to meet its obligations. The Group uses derivative financial instruments such as interest rate swaps to manage its financial risk.
Inherent Risk (IR) is defined as the risk of a material misstatement in the financial statements because of omission or error involved in the judgement of a transaction due to absence of controls. In case where a high degree of judgement and estimation is involved or the transaction undertaken by the company are complex the existence of inherent risk is higher.  In the case of the Asia Pacific Data Centre Group there exists a high degree of inherent risk as the company is involved in such activities and operations which requires high degree of estimations as to the values of the transactions involved and as discussed above.  Control Risk (CR) is defined as material misstatements arising because of the absence of relevant control system in the organization. Control risk is considered to be high where the company does not have adequate internal control system to detect events of fraud and error. This type of risk in the case of Asia Pacific Data Centre is low as there exists an internal control system which is revised and checked by the respective authority time to time. Audit risk model is used to manage the overall risk faced by the company in preparation of the financial statements also Audit Risk Model [AR = f (IR x CR X DR)]. In the case of Asia Pacific Data Centre the audit risk model is high. Detection Risk (DR) is the risk that the auditors may not be able to detect a material misstatement in the financial statements. This risk is also very low as the Groups accounts are audited time to time. Where the inherent and control risk assessment is high then to the audit risk model to an acceptable level the detection risk is required to be set at a lower level. Conversely, in case the inherent and control risks is low then the detection risk is allowed to be set at   higher level. (Joyce, E.J., 1976.)
2. 
	Sr. no.
	Particular
	Explanations 
	1.
	Current ratio
	The current ratio is basically the method of measuring of the ability of the entity to pay its obligation in the near future. It measures the short term liquidity of the entity. It is the ratio of the current assets to current liabilities. On seeing the trend in the current ratio it can be seen that the ratio has declined during the years in comparison to previous years.
	
	2017
	2016
	2015
	
	
	1.49
	1.67
	1.66
	
	2.
	Debt equity ratio
	The debt to equity ratio measures the amount of risk involved in the business operations of the company. It is calculated as the proportion of the total debt to the total equity of the company. When a business has a high debt to equity ratio it means it has got money intact in fixed cost bearing debts in the form of interest expense.  It means that in order to earn profit more sales are required. The leverage effect is known from this ratio. Here the ratio has first declined in 2017.
	
	2017
	2016
	2015
	
	
	0.13
	0.15
	0.17
	
	3.
	Net Profit ratio
	The net profit ratio is a percentage of after-tax profits to net sales and depicts the financial position of the company by stating the profitability of the company. The net profit is calculated after deducting the amount of all the direct and indirect expenses and also the amount of income tax. It is a short term and not cash flow measurement of the company. Here the same has increased over the years.
	
	2017
	2016
	2015
	
	
	2.75
	2.40
	2.02
	
	4.

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