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Page 1 of 5 BUACC 5935 AUDITING AND ASSURANCE SERVICES SEMESTER 2, 2020 GROUP ASSIGNMENT DUE DATE AND TIME: Week 10 Sunday 4 October at 11:59pm (Online group submission through Moodle) PERCENTAGE OF FINAL GRADE: 25% (25 marks) of your total marks for this unit. 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. Page 2 of 5 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-Writing- and-Study-Skills.pdf https://federation.edu.au/__data/assets/pdf_file/0018/190044/General-Guide-to-Writing-and-Study-Skills.pdf https://federation.edu.au/__data/assets/pdf_file/0018/190044/General-Guide-to-Writing-and-Study-Skills.pdf Page 3 of 5 https://federation.edu.au/__data/assets/pdf_file/0020/313328/FedUni-General-Guide-to- Referencing-2016ed.pdf https://federation.edu.au/__data/assets/pdf_file/0017/190043/General-Guide-to-Layout- and-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/special- consideration • 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/student- support-services/student-advisory-service/misconduct/accused-of-plagiarism-or- misconduct • 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-help- with/plagiarism https://moodle.federation.edu.au/course/view.php?id=64539 https://federation.edu.au/__data/assets/pdf_file/0020/313328/FedUni-General-Guide-to-Referencing-2016ed.pdf https://federation.edu.au/__data/assets/pdf_file/0020/313328/FedUni-General-Guide-to-Referencing-2016ed.pdf https://federation.edu.au/__data/assets/pdf_file/0017/190043/General-Guide-to-Layout-and-Appearance.pdf https://federation.edu.au/__data/assets/pdf_file/0017/190043/General-Guide-to-Layout-and-Appearance.pdf http://federation.edu.au/current-students/essential-info/administration/special-consideration http://federation.edu.au/current-students/essential-info/administration/special-consideration https://federation.edu.au/current-students/assistance-support-and-services/student-support-services/student-advisory-service/misconduct/accused-of-plagiarism-or-misconduct https://federation.edu.au/current-students/assistance-support-and-services/student-support-services/student-advisory-service/misconduct/accused-of-plagiarism-or-misconduct https://federation.edu.au/current-students/assistance-support-and-services/student-support-services/student-advisory-service/misconduct/accused-of-plagiarism-or-misconduct https://fedflix.federation.edu.au/media/Uploading+to+Turnitin/0_irjuaw8p/74540772 https://federation.edu.au/current-students/learning-and-study/online-help-with/plagiarism https://federation.edu.au/current-students/learning-and-study/online-help-with/plagiarism https://moodle.federation.edu.au/course/view.php?id=64539 Page 4 of 5 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? https://www.gov.uk/government/publications/report-into-the-collapse-of-barings-bank Page 5 of 5 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%. -End of Document– 1 | AN OVERVIEW OF APES 110 CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS