Subject Overview – Hire Academic Expert

Charles Sturt University Subject Outline
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ACC331 – Auditing and Assurance Services
Session 1 2013
Faculty of Business
School of Accounting and Finance
CSU Study Centre Sydney
Internal Mode
Subject Coordinator Shibly Abdullah
Subject Overview
Welcome to a new session of study at Charles Sturt University.
This subject adopts a risk-based approach to auditing and assurance services, exploring the practice
and theory of auditing as it applies to Australia within a global environment. Emphasis is placed on the
application of auditing concepts to financial statement audits.
Your subject coordinator
Shibly Abdullah
Teaching staff
Lecturer: Robert Houston
Email:
[email protected] (mailto:[email protected]p.com)
Academic biography
Robert Houston
Robert has had extensive industrial experience as well as owning, managing and running a number of
businesses. He had 20 years experience in the insurance industry specialising in systems analysis and
design, internal audit and accounting. He has been involved in importing associated with the plastics
industry, the engineering and valve industry, owned and operated a motel and currently owns a fitness
centre and runs several importing companies associated with the fitness industry. He has also worked
as a consultant on a number of major accounting packages. He has nearly 20 years experience in
lecturing and tutoring in a variety of accounting and systems subjects at a number of universities.
Subject author(s)
This subject was written and compiled by Warwick Baines.
Learning objectives
Be able to comprehend and describe the role of assurance services and providers;
Be able to explain the influences on the audit processes, including the Corporations Act,
Common Law, Australian and International professional standards, professional bodies and
public expectations within a global market;
Be able to appraise the client’s business environment and apply the risk model;
Be able to explain, select and apply procedures involved in the audit process;
Be able to relate the expanding scope of auditing to today’s international business
environment.

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Assumed knowledge
ACC222 or ACC321 or ACC220
Attendance
Attendance is required at all scheduled lectures and tutorials.
Contact Procedures
Academic enquiries
Any questions concerning the teaching of this subject can be made by contacting your subject
coordinator.
Subject Coordinator Shibly Abdullah
Email [email protected]
Phone 0292919300
Fax To be advised.
Campus To be advised.
Building/Room number To be advised.
Consultation procedures
The Subject Coordinator will be available for student consultation. The most effective way to contact
the Subject Coordinator is via email or through subject forums. The Subject Coordinator also will be
available at certain times for phone or face to face consultation and will inform you of their times at
the start of session.
When sending emails, please state the subject code and your name and ID number in the email
title/subject. This will avoid your email being treated as SPAM.
The Faculty of Business is committed to staff engaging with their students and students receiving
adequate support so that they have the best possible chance of succeeding in their studies. Therefore,
students who are not completing assignments or sitting for tests or who are not engaging with the
subject may be contacted by the subject coordinator to discuss their circumstances.
Minimum standards of consultation
According to the Minimum Standards for Communication with Students Policy (
http://www.csu.edu.au/acad_sec/academic-manual/docs/p8.pdf), students can expect that the subject
coordinator or nominee of the distance education forums will respond to their postings at least once a
week during the teaching weeks of the session.
Contact procedures
Any questions concerning the teaching of this subject can be made by contacting your subject lecturer.
Email:
[email protected] (mailto:[email protected])
Subject Delivery
Class/tutorial times and location
Lecture and Tutorial: Tuesdays 1:00pm – 5:00pm
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Room 3 / 9
The weekly instruction in this subject will consist of a combined lecture /tutorial lasting up to 4 hours
which will occur every week. This will cover the main points from each topic.
Learning, teaching and support strategies
The study guide for this subject has been written specifically to guide you through the sections (and
questions) of the prescribed textbook relevant to each topic.
You should check the Interact Site at least weekly for postings, announcements, lecture information
and other resources that will assist your studies or additional information and resources vital to your
success in the subject.
Studying at university does not mean studying alone. Take advantage of collective wisdom and post
your questions to the subject forum.
Use the subject schedule to plan your studies over the session.
Information on effective time management is available on the CSU Learning Skills website via the
following link: student.csu.edu.au
Visit the Learning Skills website for advice about assignment preparation, academic reading and note
taking, referencing, effective time management and preparing for exams at: student.csu.edu.au
You can also contact an adviser through Student Central on the following number:
1800 275 278 (or +61 2 6933 7507 from outside Australia).
Queries regarding the content of this subject should be directed to your Subject Coordinator.
Library services
You can find on the Library Services web site full details of how we can help you find books, articles,
Australian and international databases, full-text newspapers and journals, electronic reference
collections as well as links to other libraries and their catalogues:
The Library website provides access to print and online material, such as books, reports, journals,
articles, dissertations, newspapers, and other reference tools. You will also find guides and assistance
to help you use the Library’s resources.
http://www.csu.edu.au/division/library/
You can find Library Services on both the CSU website and the SGA library catalogue website
including access to a wide range of electronic books, electronic journals, as well as textbooks available
for loan in the Darlinghurst campus library. You can also access reports, journals, articles,
dissertations, full text newspapers, and online reference resources (eg. ABS statistics, Australian
standards, encyclopaedias, dictionaries), as well as links to other libraries and their catalogues:
http://bonza.unilinc.edu.au/sga – SGA Darlinghurst library catalogue including electronic books and
electronic journals online.
http://www.csu.edu.au/division/library/ – CSU Library Services catalogue including online tutorials
and video tutorials in research skills, finding articles for assignments, APA referencing and other
styles, topic analysis, Endnote referencing program and many other online library services to help you
successfully complete your assignments for all CSU courses.
http://trove.nla.gov.au/ – Powerful search engine from National Library of Australia to access many
different online resources on any subject from one search.
Interlibrary Loans are also available to all students from the network of CSU libraries as well as

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renewing and extending loans. All CSU students by showing their CSU student card can access
University of Technology, Sydney (UTS) library for free 10 times per year or paying $50 per year to
join CAUL scheme to borrow books and use the UTS library as often as students like. The UTS Blake
library is located near Chinatown, corner Quay Street & Ultimo Road, Haymarket. Ph: 02 9514 3666.
Contact Details for renewing loans, locating books and other information:
SGA Darlinghurst library:
David Hart – Manager, Library Services
Ph: (02) 9291 9302
Email: [email protected]
Zora Janeva – Library Technician
Ph: (02) 9291 9315
Email: [email protected]
Library Help
Answers to your frequently asked questions about Library services and resources are available at:
http://www.csu.edu.au/division/library/how-to/faq/
Library skills tutorials
SmartSkills is a self-paced, interactive, online tutorial which teaches core research skills such as using
library databases and the library catalogue. It incorporates a number of exercises and quizzes to test
your understanding. It is modular and can be done in any order at any time. SmartSkills is located on
the Library website (go to ‘How to use the library’ and ‘Library skills tutorial’) or can be accessed
directly at:
http://www.web-ezy.com/csuweb-ezy/
Academic learning skills assistance
Visit the learning skills website for advice about assignment preparation, academic reading and
note-taking, referencing, and preparing for exams at: http://student.csu.edu.au/study
You may also contact:
Dr Susan Lee
Study Support Officer
Phone: 02 9291 9337
E-mail: [email protected]
For appointments, please see Reception.
Queries regarding the content of this subject should be directed to your subject lecturer.
Student Workload
CSU Academic Senate policy states that a standard 8 point subject should require students to spend a
total of between 140-160 hours engaged in learning and assessment activities. This means an average
of 10 to 12 hours each week. This subject complies with this policy.The study guide for this subject,
which is available on Interact, has been written specifically to guide you through the sections (and
questions) of the prescribed textbook relevant to each topic.
Subject Content
This subject contains the following topic areas:
Topic 1 The role of auditing and ethical decision making
Topic 2 Legal liability of auditors
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Topic 3 Overview of assurance concepts and the audit process
Topic 4 Audit planning
Topic 5 Internal controls and risk assessment
Topic 6 Tests of controls
Topic 7 Tests of transactions and balances
Topic 8 Audit sampling
Topic 9 Completing the audit
Topic 10 Reporting obligations
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Week Commencing Topic Name Essential Readings
(4th OR 5th edition)
4th edition 5th
edition
1 4 March 1
The role of auditing
and ethical decision
making
pp. 1-18, 25-32, pp.
53-61, pp. 90-97 &
111-120
pp. 1-20,
30-33,
pp.49-55,
pp. 84-90
& 103-112
2 11 March 2 Legal liability of
auditors
pp. 150-181 pp. 140-168
3 18 March 3 Overview of
assurance concepts
and the audit process
pp. 199-213 &
217-229
pp.
187-200 &
204-216
Assignment 1 due 20
March 2013
4 25 March 4 Audit planning pp.
245-287; 308-314 &
327-331
pp.
233-272;
288-294 &
305-310
5 1 April 5 Internal Control and
Risk Assessment
pp. 353-391 pp. 329-370
8 – 19 April Mid Session Break
6 22 April 6 Test of controls pp. 419-441 &
454-458
pp.
389-409 &
422-429
7 29 April 7 Tests of transactions
and balances part 1
pp. 477-529 pp. 445-493
8 6 May 7
(cont)
Tests of transactions
and balances part 2
Continued Continued
9 13 May 8 Audit Sampling pp. 547-562 &
569-577
pp.
511-526 &
532-540
Assignment 2 due
15 May 2013
10 20 May 9 Completing the audit pp.603-628 pp.
563-587
11 27 May 10 Reporting obligations pp.647-675 pp.
603-634
12 3 June Revision
Examination period 10 June – 21 June 2013.

Schedule
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Residential school
There is no residential school for this subject.
Text and Learning Materials
Prescribed text(s)
Students must have access to a copy of the prescribed textbook(s) and handbook.
Text book:
Gay, G. E., & Simnett, R. (2012). Auditing and assurance services in Australia (5th ed.). Roseville:
McGraw Hill.
OR
Gay, G. E., & Simnett, R. (2010). Auditing and assurance services in Australia (4th ed.). Roseville:
McGraw Hill.
Handbook:
ICAA. (2013 or 2012). Auditing and assurance handbook. Brisbane: Wiley.
Note: The CPA version of the auditing handbook, available from Pearson, is a permitted substitute for
the above.
The handbook can be taken into your final examination but the only marking allowed on the text is
highlighting and underlining. Please take care not to mark your text carelessly or you will be unable to
use it in the final examination.
Assessment Information
Pass Requirements
In order to achieve a passing grade in this subject, a student must attain a minimum passing standard
in both the overall total mark and the examination.
Grades
Final grades for this subject are awarded by the Business Faculty Assessment Committee in
accordance with the University’s Assessment Regulations. (See current Academic Regulations via
http://www.csu.edu.au/acad_sec/academic-manual/docs/g1.pdf ).
Grading Scale
Your final grade for the subject as a whole will be based on the grading scale outlined in the CSU
Assessment Regulations.
HD High Distinction 85% – 100%
An outstanding level of achievement in relation to the assessment process.
DI Distinction 75% – 84%
A high level of achievement in relation to the assessment process.
CR Credit 65% – 74%
A better than satisfactory level of achievement in relation to the assessment process.
PS Pass 50% – 64%
A satisfactory level of achievement in relation to the assessment process.

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FL Fail 0 – 49%
An unsatisfactory level of achievement.
The percentages specified above should be viewed only as guidelines for the award of final grades.
The Faculty has an obligation to ensure that grades are equitable across different cohorts of the same
subject offering and will undertake appropriate moderation processes to ensure that grades are
awarded consistently in accordance with the University’s Moderation Policy.
Assessment Requirements
Students will be assessed in subjects on the basis of a combination of norm and criterion referencing
with marks and grades being awarded by a combination of predetermined standards and the
performance of other students in the subject. The subjects that have a satisfactory/unsatisfactory
grading scale will have this clearly identified within the Subject Outline.
For further information please consult the Academic Regulations of the Academic Manual
http://www.csu.edu.au/acad_sec/academic-manual/gcontm.htm
Presentation
Please adhere to the following instructions regarding assignment submission:
Style
You must use a computer for the completion and presentation of all the assignments. Please double
space your work (this allows markers to insert comments/feedback). Use Times New Roman 12pt. or
Arial 10pt. fonts and, if submitting by mail, print in black ink. It is advisable to insert a footnote with
your name and student ID on each page. Please clearly number each question being attempted and
present your work in order (i.e. Q1, Q2 etc.).
Ban on use of folders
Please do not put your assignments in any type of folder. Just attach the coversheet to the front of your
assignment. We appreciate the fact that many students consider using folders to protect their
assignments and improve presentation. They can make marking more difficult and time
consuming. The CSU Learning Skills website also contains further useful information including the
difference between a bibliography and a reference list.
http://www.csu.edu.au/division/studserv/my-studies/learning/faqs/referencing-faq#bib
Original copy
The assignment copy submitted must be the original. Photocopies will not be accepted. However, you
should keep a copy of all assignments submitted as there have been situations in the past where
assignments have been mislaid.
Bibliographies/ Reference list
A bibliography or reference list is required for all assignments. You should acknowledge all references
you used to assist you in completing the assignment. This includes your textbooks and your study
notes. Bibliographies are required for practical as well as discussion questions because you
would have referred to texts, etc for assistance in answering both types of questions.
Bibliographies/ reference lists should appear at the end of the assignments or at the end of long essay
questions. A 5% penalty may be applied for omission of bibliographies/ reference lists. Furthermore,
marks will be deducted if bibliographies/ reference lists do not adhere to the APA referencing style. If

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you are not familiar with bibliography/ reference list presentation, you must consult an appropriate
source. A copy of the APA guide to referencing can be found at:
http://www.csu.edu.au/division/studserv/my-studies/learning/pdfs/apa.pdf
For further information on the presentation of your assessment items you should refer to the marking
criteria for each assessment item.
The following link provides information about planning and presenting written report or essays:
http://student.csu.edu.au/study/learning-support/academic-writing
Note: You are to submit either a bibliography or a reference list, depending on your subject
coordinators requirements, but not both.
Plagiarism
Charles Sturt University expects that the work of its students and staff will uphold the values of
academic honesty and integrity. The Guide to Avoiding Plagiarism is located at:
http://student.csu.edu.au/study/plagiarism. This is an important resource that will help you understand
these values and apply them in practice. You should familiarise yourself with these requirements and
ensure that all assessments submitted by you are your own work, have not been submitted elsewhere
and comply with the University’s requirements for academic integrity.
The University has purchased Turnitin software. This software has two functions, a pre-emptive
education function which students may use to check their own work prior to submission, and a
plagiarism detection function which academics may use to check the student’s work for improper
citation or potential plagiarism. Use by students is optional and is not a prerequisite for submission.
You are encouraged to check your work for originality prior to submission. You can register with
Turnitin to create a Student Account under the CSU Turnitin Licence at
http://www.turnitin.com/login_page.asp. Further information on how to use Turnitin is provided
within the Guide to Avoiding Plagiarism:
http://student.csu.edu.au/study/plagiarism/checking.
Extensions
Assessments should reach the University no later than the due date.
In order to ensure that students who hand their assignments in on time are not disadvantaged, and to
enable the lecturer to comply with the requirement to return assignments to the class within 21 days,
the following rules about extensions will be strictly enforced:
1. Extensions cannot be granted for on-line tests, as these have to be done within a specific time frame,
after which the answers are released to the class automatically.
2. Computer problems (such as the speed of your computer) and normal work-related pressures and
family commitments do not constitute sufficient reasons for the granting of extensions.
3. If it becomes obvious that you are not going to be able to submit an assignment on time because of
an unavoidable problem, you must submit your request for an extension to the Subject Coordinator in
writing (email or post) prior to the due date.
Requests for extensions will not be granted on or after the due date so you must make sure that any
extension is requested prior to the day on which the assignment is due.
You are expected to do all you can to meet assignment deadlines. Work and family-related pressures
do not normally constitute sufficient reasons for the granting of extensions or incomplete grades.
4. If you apply for an extension, you may be asked to email your lecturer on what you have done so far
on the assignment.

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5. You must be able to provide documentary evidence (such as a certificate from a doctor or
counsellor) justifying the need for an extension as soon as practicable – but please note that if the
circumstances giving rise to the request for an extension arise on a day when you cannot get
documentary evidence, you must still apply for the extension before the due date and submit the
documentary evidence afterwards.
6. Given the tight deadlines involved in returning assignments to students and putting feedback on
Interact, the maximum extension granted generally will be seven (7) days from the due date.
7. Assignments received more than 10 days after the due date or extension date will not be marked
unless the staff member decides otherwise. Items received late will be penalised at 10% of the mark
available for the assessment item per day it is late (see below).
8. Note that for purposes of measuring lateness, the ‘day’ begins just after 00.00 hrs AEST – so an
assignment received after midnight of the due date will be penalised 10% for lateness. This rule will
be applied to all students uniformly.
Online Submission
Assignments should be submitted through Turnitin as well as hard copy. Turnitin password details for
this subject will be given by your lecturer.
Postal Submission
Under normal circumstances postal submissions will not be accepted for any of the assessments
required.
Hand Delivered Submission
Assessments should reach the University no later than the due date. It is recommended that your name
and your student number be included in the header or footer of every page of any assignment.
Charles Sturt University has a centralised assignment receipt centre located at reception. All
assignments should be accompanied by a completed assignment cover sheet. Reception accepts
assignments up to 8pm each week day, however, after 5pm if reception is not attended, please wait
until a staff member is present at reception to stamp and date your assignment submission and provide
you with a receipt.
You will have the assignment receipt handed to you stamped and signed; this must be kept as proof of
submission.
Faxed / Emailed Assignments
Faxed or emailed assessment tasks will not be accepted under normal circumstances.
Penalties for Late Submission
The Faculty of Business has determined that the penalty for the late submission of an assessment task
(without obtaining the Subject Coordinator’s approval for an extension) will be:
10% deduction per day, including weekends, of the maximum marks allocated for the assessment task,
i.e. 1 day late 10% deduction, or 2 days late 20% deduction. An example of the calculation would be:
Maximum marks allocated = 20
Penalty for one day late = 2 marks (so, a score of 18/20 becomes 16/20 and a score of 12/20
becomes 10/20).
If an assignment is due on a Friday but is not submitted until the following Tuesday, then the penalty
will be four days (40% deduction or 8 marks in the example above).

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Submissions more than 10 days late will be acknowledged as received but will not be marked.
Resubmission
Not applicable for this subject
Assignment Return
You should normally expect your marked assignment to be despatched/returned to you within three
weeks of the due date, if your assignment was submitted on time. If an assignment is submitted on
time but not returned by the return date, you should make enquiries in the first instance to the subject
lecturer. If the subject lecturer is not available, contact Reception.
Feedback
Your lecturer will give you feedback on your assignments in class.
Sample exam paper
A sample exam paper with solutions will be provided in the resources section of the subject’s Interact
site.
Assessment Items

Item number Title Type Value Due date* Return date**
1 Online Quiz Assignment 5% 15-Mar-2013
2 Assignment 1 Assignment 15% 20-Mar-2013 10-Apr-2013
3 Assignment 2 Assignment 20% 15-May-2013 05-Jun-2013
4 Final Exam Exam 60% To be Advised.

* due date is the last date for assessment items to be received at the University
** applies only to assessment items submitted by the due date
Assessment item 1
Online Quiz
Value:
5%
Due date: 15-Mar-2013
Return date:
Submission method options
Alternative submission method
Task
Multiple Choice Quiz – Test Centre
Students will be required to complete a multiple choice quiz consisting of 20 questions by the end of
week 2 of the session (week commencing 11 March and ending 15 March 2013). The quiz will be
conducted using Test Centre (an online assessment system). To attempt the Test Centre quiz, click on
the Test Centre link in the left-hand menu of your ACC331 Interact site, then select the quiz named
“Assessment Item 1”.
The quiz will cover content from Topic 1 & Topic 2 and will be 60 minutes in duration.
Please note that students must click on the ‘Finish’ button with at least 2 minutes prior to the expiry of
the quiz time limit to ensure that that command reaches the University server before the time limit
expires. An additional allowance of 2 minutes will be provided to students (i.e. 62 minutes in total).
Further details regarding the quiz will be available on the Interact site at the commencement of

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1.
2.
session.
Rationale
Assessing topics 1-2 in general, this assignment has been specifically designed to assess your ability
to:
apply sound ethical decision making techniques to issues involving financial reporting.
demonstrate an understanding and relevant application of legal principles.
Marking criteria
Marking criteria
Marks awarded for this assessment task will be based on the degree to which students:
• Comply with the required aspects of each question.
Assessment item 2
Assignment 1
Value:
15%
Due date: 20-Mar-2013
Return date: 10-Apr-2013
Length: 1500 to 2000 words
Submission method options
Hand delivery (option applies to Internal only)
Alternative submission method
Task
Question 1 – Ethics (7.5% of total subject assessment)
Question 1
Jimmy Ford, a senior audit manager for Fitzgerald & Milhouse Chartered Accountants, has recently
been informed that the firm has plans to promote him to partner within the next year or two so long as
he continues to perform at the same high level of performance as he has achieved in the past. Jimmy is
particularly good at dealing effectively with people, including the staff of clients, professional staff,
partners and potential clients. He has recently built a bigger home for himself which he uses to
entertain people, and he has been granted memberships of his local community’s most prestigious
country clubs. Jimmy is very confident about his future with Fitzgerald & Milhouse.
Jimmy has recently been assigned to the audit of Engines International Ltd, a large wholesale
company that ships goods throughout the world. It is one of Fitzgerald & Milhouse’s most prestigious
clients representing a substantial proportion of audit revenues. During the audit, Jimmy determines
that Engine International uses a method of revenue recognition called ‘bill and hold’, which involves
billing customers for goods that are not shipped until a considerable time later. This method has
recently been questioned by the Australian Securities and Investment Commission. After considerable
research, Jimmy concludes that the method of revenue recognition is not appropriate for Engine
International. When Jimmy discusses the matter with the senior audit partner, she concludes that the
accounting method has been used for more than ten years by the company and is appropriate. The
partner is certain the firm will lose the client if the revenue recognition method is found inappropriate
by the auditors. Jimmy argues that, although the revenue recognition method was appropriate in
previous years, the ASIC comments suggest it is inappropriate in the current year. Jimmy recognises
the partner’s responsibility to make the final decision, but he feels strongly enough to state that he
plans to include a statement in the working papers that he disagrees with the partner’s decision. The

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partner informs Jimmy that she is unwilling to permit such a statement because of the potential legal
implications. She is willing, however, to write a letter to Jimmy stating that she takes full
responsibility for making the final decision if a legal dispute arises. She concludes by saying, “Jimmy,
partners must act like partners, not like loose cannons trying to make like difficult for the other
partners. You have some growing up to do before I would feel comfortable with you as a partner”.
Required:
What should Jimmy do? Decide your response using the AAA ethical decision model
Question 2 – Legal liability of auditors (7.5% of total subject assessment)
NFD Ltd is a distributor and warehousing facility for chemicals and fertilizer. It was reported to be
carrying a very high level of inventory in its audited balance sheet at the time a successful takeover
offer was made by Edge Ltd. Two months after the takeover, it is discovered that those inventories
NFD does hold were considerably over valued and that they do not in fact possess the quantity of
inventory claimed at the time of the audit. In the court action subsequently filed by Edge against
NFD’s auditors, the following matters were established in evidence:
The auditors did not attend all stocktakes at year-end. They were present at those for the Sydney based
operations of the company only. 50% of the company’s inventory is purportedly held at the company’s
Bathurst facility and it is this inventory that does not exist. The Sydney based inventory is determined
to have been overvalued by 35%. Although the auditors correctly verified the quantity of Sydney
stock, they accepted managements valuation, which did not take account of considerable obsolescence.
It is also raised in evidence that the auditors were subjected to considerable pressure by NFD’s
management to complete the audit within one month of the balance date. The auditors had held this
audit for the past six years and there was no evidence of any previous misstatements of the value of
inventory. Edge asserted that they had relied on the audited financial statements, as supplied to them
by NFD in making their takeover offer. There is no evidence that the auditors were aware of this
intended use of the accounts.
Required:
a) Prepare the case for Edge in their efforts to sue the auditors for negligence. Refer to relevant
case law and precedents.
b) Will Edge be successful in their legal action? Justify your position making reference to the
relevant cases and precedents.
c) Would your answer to b) change if Edge had written to the auditors telling them that they
intended to buy NFD and were relying on the audited financial statements to assist them in making
their decision?
Rationale
Content assessed: Topics 1-2
This assignment has been designed to assess your ability to:
1. Apply the ethical rulings of the accounting bodies using sound ethical decision-making
techniques.
2. Explain the concept of reasonable care and skill and define negligence and indicate to what
extent a duty of care may be owed to third parties.
3. Discuss influences on the audit processes, including the Corporations Act, Common Law,
Australian and International professional standards, professional bodies and public expectations within
a global market.
Marking criteria
Marks will be awarded for responses to question 1 based on the extent to which you:
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·
·
·
·
·
Effectively identified and critically analysed the relevant ethical issues
Adhered to the structure outlined in the AAA decision model
Reached a decision that logically flows from a use of the AAA ethical decision model
Communicated your response in an understandable and concise manner
Provided evidence of some research in the appropriate format
Marks will be awarded for responses to question 2 based on the extent to which you:
· Demonstrated an understanding of the legal principles involved in negligence, particularly ‘duty
of care’
·
·
Applied the relevant legal principles and case law to the specific case presented
Evaluated the application of legal principles to justify a position.

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Assessment item 3
Assignment 2
Value:
20%
Due date: 15-May-2013
Return date: 05-Jun-2013
Length: 2500 to 3000 words
Submission method options
Hand delivery (option applies to Internal only)
Alternative submission method
Task
Question 1 Inherent Risk, Control Risk and Audit planning (6% of total subject assessment)
You are the audit senior responsible for the audit of Delilah Ltd. You are currently planning the audit
for the year ended 30 June 2012. During your initial planning meeting held with the financial
controller, he told you of the following changes in the company’s operations:
(i) Due to the financial controller’s workload, the company has employed a treasurer. The financial
controller is excited about the appointment because in the two months that the treasurer has been with
the company he has realised a small profit for the company through foreign-exchange transactions in
yen.
(ii) Delilah has planned to close an inefficient factory in country New South Wales before the end of
2012. It is expected that the redeployment and disposal of the factory’s assets will not be completed
until the end of the following year. However, the financial controller is confident that he will be able
to determine reasonably accurate closure provisions.
(iii) To help achieve the budgeted sales for the year, Delilah is about to introduce bonuses for its sales
staff. The bonuses will be an increasing percentage of the gross sales made, by each salesperson,
above certain monthly targets.
(iv) The company is using a new general ledger software package. The financial controller is
impressed with the new system, because management accounts are easily produced and allow detailed
comparisons with budgets and prior-period figures across product lines and geographical areas. The
conversion to the new system occurred with a minimum of fuss. As it is a popular computer package,
it required only minor modifications.
(v) As part of the conversion, the position of systems administrator was created. This position is
responsible for all systems maintenance, including data backups and modifications. These tasks were
the responsibility of the accountant.
(vi) The managing director has returned from the USA, where he signed a contract to import a line of
clothing that has become the latest fashion fad in the USA. The company has not previously been
engaged in the clothing industry.
Required:
For each of the scenarios above, identify which of the components of audit risk (inherent, control or
detection risk) are affected. In your answer you will need to justify you choice. Format your answer as
follows:
Part Inherent Risk or CR Justification
i
ii
iii
iv

Charles Sturt University Subject Outline
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Question 2 – Internal Controls and Substantive Testing (6% of total subject assessment)
You are the auditor of PC Ltd., a company that produces low cost electronic goods to children and
young adults. The audit has a year end of 30
th June 2012.
There are four main people involved with the acquisitions of inventory for PC Ltd. Ms Auburn is the
purchases officer; Mr Brown is the Accounts Payable Clerk; Mr Crimson is the Financial Controller
and Ms Dark is the Payments Officer.
The acquisitions system works as follows:
· Ms Auburn is responsible for purchases within PC ltd. There is a computerised inventory system and
whenever the inventory level goes below a certain level, Ms Auburn prepares a purchases requisition
to buy new stock from one of three suppliers that PC uses.
· Ms Auburn then prepares a three part prenumbered purchase order. Every Month Mr Crimson
reviews a listing of purchase orders issued to ensure all have been accounted for. The original copy of
the purchase order is sent to the vendor. The receiving department within PC is sent the second copy,
which is then used as a receiving report. The third and final copy is kept on file within the purchases
department along with the original purchases requisition.
· When the purchased goods arrive they are immediately sent to the receiving department where the
receiving report (which is the second copy of the invoice) is filled out by the store-room employee and
authorised by the store-room supervisor. A copy of this document is taken and kept in the store-room.
The original is sent to Mr Brown in accounts payable.
· When the supplier invoice is received it is forwarded to Mr Brown. He checks the price on the
invoice, compares the quantities to the details on the receiving report and checks the footings and
calculations. Once this is done he enters the details of each invoice into the computer system that
updates the purchases journal and accounts payable master file.
· The invoice is then sent to Mr Crimson for authorisation. Attached to the invoice is a copy of the
materials purchase requisition and the receiving report. After Mr Crimson has approved the invoice for
payment the documents are sent to the person responsible for cheque preparation in the accounting
department (Ms Dark).
Required:
a) Identify three controls that operate within this system and state the potential errors they are aimed at
preventing.
b) Describe two additional controls (or improvements to controls) that you would implement into this
system and why.
c) Describe the substantive tests that you would perform on transactions in the acquisitions cycle of
this system to gain adequate assurance over the assertions of completeness, cut off and accuracy.
Question 3 – Analytical procedures and Substantive Testing (8% of total subject assessment)
Below are the financial statements and additional information for Tehran Ltd.
Balance Sheet
30/06/2012 30/06/2011
$’000 $’000
Current Assets

Cash 58 73
Receivables 4579 3928
Inventories 3624 2047
Total Current Assets 8261 6048
Non Current Assets
Property Plant & Equipment
28763 29417
Receivables 2000 2000

Charles Sturt University Subject Outline
ACC331 201330 S I-12 February 2013-Version 1 Page 17 of 23

Total Non Current Assets 30763 31417
Total Assets 39024 37465
Current Liabilities
Bank Loan – Secured
5000 7500
Accounts Payable 2500 2473
Provisions 643 610
Total Current Liabilities 8143 10583
Non Current Liabilities
Bank Loan – Secured
22000 20000
Provisions 547 510
Total Non Current Liabilities 22547 20510
Total Liabilities 30690 31093
Net Assets 8334 6372
Shareholders Equity
Share Capital 5000 5000
Retained Profits 3334 1372
Total Shareholders Equity 8334 6372

Income
Statement
30/06/2012 30/06/2011
$’000 $’000
Revenue 20007 19943
COGS 13305 15428
Gross Profit 6702 4515
Operating Expenses 3486 3047
Net Profit Before Tax 3216 1468
Tax 1254 572
Net Profit After Tax 1962 896
Retained Profits: Beginning 1372 476
Retained Profits: End 3334 1372
Tehran Ltd manufactures carpets. Approximately 80% of the company’s sales arise as a result of
exports. When Tehran sells abroad the customers are billed in the currency of that country.
The main raw material used by Tehran is wool, which is purchased locally in Australia. You have been
informed that the company’s profitability has improved due to a recent slump in wool prices.
With the exception of the managing director, Hank Largow, all of the management of Tehran are from
Australia. Hank is on a five year contract which was put in place by Tehrans’ US parent company.
Hank has a reputation for delivering results from subsidiaries which have not performed well in the
past. Hank does not much like Australia and has every intention of returning to the US when his
contract is finished. The US parent company was dissatisfied with the company’s 2011 performance
and has paid close attention to the company’s performance in 2012.
The company operates a standard costing system and the finished goods inventory is valued at
standard cost. Raw materials are valued at actual invoiced cost. No work in progress exists at year end.
During 2012, production has been increased by 10% compared to 2011 levels. His has resulted in
favourable absorption variances which have contributed to the improved profitability during 2012.
Tests on the compnay’s inventory and debtors controls in prior years have shown the systems to be
reliable. The systems are capable of producing reports on the ageing of inventory and debtors and the
sales history of individual profit lines.
Approximately 80% of the company’s receivables are overseas customers and the debt is denominated
in foreign currency. Most of these customers are on 60 day credit terms.

Charles Sturt University Subject Outline
ACC331 201330 S I-12 February 2013-Version 1 Page 18 of 23
Midway through the year a new financial controller, Mr Pink, was appointed after the previous
financial controller resigned. Mr Pink has informed you that a number of customers have complained
about the quality of Tehran’s products.
The property plant and equipment account is broken down as follows:
Property – factory building 27,000,000

Plant & Equipment (including vehicles) 1,763,000
28,763,000

Additions and disposals of fixed assets have not been substantial during 2012. The factory itself was
acquired 6 years ago and since that time no independent valuation has been carried out. Hank has
assured you that the current market value of the company is not less than $27,000,000.
The bank loans are secured by a fixed charge over the company’s buildings. A loan repayment of $5
million due on 30
th November 2012 was reduced to $500,000. Hank has stated that this was done
with the agreement of the bank and that the bank is comfortable with the company’s performance.
Hank also pointed out that the company has made all of its interest payments on time.
The non-current receivable is an export market development grant from the federal government.
In prior years no serious differences between the auditors and the management have arisen. The audit
has always been completed on time with an unqualified opinion issued.
Required:
a) Calculate the following ratios: Gross Margin, Net Profit Ratio, Return on total assets, Current Ratio,
Quick Ratio, Inventory Turnover, Accounts Receivable turnover, Debt to Equity Ratio (NB, for
inventory turnover and accounts receivable turnover, assume the balances for 2010 are the same as
2011).
b) Making reference to the ratios you calculated in part a) and the additional information provided,
describe what you consider to be the risk factors that will impact on the audit of receivables and
inventory.
c) What other risk factors (aside from those related to receivables and inventory) do you think will
impact on the audit?
d) In respect to the accounts of Inventory, Accounts Receivable and Land and Buildings, outline the
substantive procedures you would perform. (In your answer you will need to identify the audit
assertion(s) most at risk for each of these accounts).
Rationale
Content assessed: Topics 3 – 7
This assignment has been designed to assess your ability to:
1. Understand the knowledge required by an auditor in preparing an audit strategy and audit plan.
2. Outline the types of and uses for analytical procedures.
3. Explain how the auditor undertakes an assessment of control risk and how this assessment
impacts upon audit procedures.
4. Undertake substantive tests of balances and substantive tests of transactions on key cycles with
reference to the financial report assertions.
Marking criteria
Marks will be awarded for responses to question 1 based on the extent to which you:
· Identify the component of audit risk affected
– Justify your selection of the relevant component of audit risk

Charles Sturt University Subject Outline
ACC331 201330 S I-12 February 2013-Version 1 Page 19 of 23
Marks will be awarded for responses to question 2 based on the extent to which you:

·
·
Identify the relevant internal controls and the errors they are aimed at preventing.
Describe two additional controls or improvements to the existing controls that you would
implement and why.
· Describe the audit procedures you would perform in relation to the assertions identified in the

question.
Marks will be awarded for responses to
question 3 based on the extent to which you:

·
·
Correctly calculate all ratios
Effectively and consistently apply the results from those ratios calculations to identify account
areas at risk.
· Outline the audit procedures and related assertions used to address the risks identified in part b).

Assessment item 4
Final Exam
Value:
60%
Date: To be advised
Duration: 2 hours (10 minutes reading time)
Submission method options
N/A – submission not required/applicable
Rationale
Assessment of all aspects of the subject in a closed book exam.
Requirements
Final exam to be sat within the university’s official examination period 10-21 June 2013.
Marking criteria
The examination consists of three short answer questions in Part A worth five marks each (for a total
of
15 marks) and three problem questions in Part B worth 15 marks each (for a total of 45 marks). Marks
for requisite
parts of questions in Part B will be clearly stated on the paper. Marks will be awarded for correct
answers and no marks decucted for incorrect answers. All questions must be answered.
Material provided by the University
Answer Booklet (1 X 24 page)
Material required by the student
Writing implements, battery/solar operated (no printer, non-programmable) calculator
Auditing Handbook unmarked (highlighting and tabbing is permitted)
Support Services
Student Central
Student Central is the first point of contact for currently enrolled students to access all non-teaching
services. Student Central liaises closely with Divisions and Schools to ensure the timely and accurate
resolution of student enquiries.

Charles Sturt University Subject Outline
ACC331 201330 S I-12 February 2013-Version 1 Page 20 of 23
You may direct your enquires in person to Student Central staff situated within the Learning
Commons found on campus at Albury-Wodonga, Bathurst, Dubbo, Orange, and Wagga Wagga.
You may also contact Student Central through:
[email protected] (mailto:[email protected])
1800 ASK CSU (1800 275 278)
Phone from outside Australia: + 61 2 6933 7507
Information on Your Library Services
Finding Information
CSU Library provides you with free access to over 600,000 books and 50,000 journals, and much
more. Get an introduction to your library with the
Library Orientation Toolbox
(http://www.csu.edu.au/division/library/find-info/toolbox).
Primo Search
Finding the resources you need is easy with Primo Search
(http://primo.unilinc.edu.au/primo_library/libweb/action/search.do?dscnt=1&dstmp=1328694476534&vid=CSU&from
Search most of the Library’s collections, including online resources, print publications and CSU
research. Plus, you can easily place loan requests, view your current loans, and renew items online.
Online Resources
You’ll find journal databases, eBook collections, and other useful online information sources listed
under
Key Resources (http://student.csu.edu.au/library/find-information).
Borrowing
Your borrowing privileges depend on your enrolment. Visit Information for Students
(http://student.csu.edu.au/library/help/information-for-students) to find out what you are eligible for.
The
Library FAQs (http://www.csu.edu.au/division/library/how-to/faq) have more information on
borrowing and access to resources.
Need help?
CSU Library staff are available to answer your questions by phone, Live Chat, email, forum, or in
person. See
Ask a Librarian (http://student.csu.edu.au/library/contacts/ask-a-librarian) for more
information.
Keep up to date with what is happening in your Library through Facebook, Twitter and our blog.
CSU Library Facebook (http://www.facebook.com/CSULibrary) CSU Library Twitter
(http://twitter.com/CSU_Library) CSU Library Blogs
(http://student.csu.edu.au/library/about-your-library/library-blog)
Academic Learning Assistance
Learning Skills provides individual, group support and materials that can assist in making your
learning and understanding easier. This support is available face to face, via telephone and online,
providing assistance in a range of areas such as: academic language and learning, maths and statistics,
critical reading and thinking, analytical thinking, essay and report writing, avoiding plagiarism,
referencing, how to do oral presentations and exam preparation.
STUDYLINK provides access to a variety of short, non-award subjects in preparation for university
study. Subjects are available throughout the year through flexible, online delivery, and each is
designed to help you gain confidence, skills and knowledge for your university studies.
Student Support – http://student.csu.edu.au/support
Charles Sturt University Subject Outline
ACC331 201330 S I-12 February 2013-Version 1 Page 21 of 23
A wide range of services are provided to support your student academic experience. Services are
available on campus with relevant services also available via telephone and online. Services provided
include:
Orientation
Student mentoring
Scholarship and financial assistance
Counseling support and referral
Academic appeals and legal advice referral
Disability, welfare and equity support and referral
Health and wellbeing
Social and recreational activities
Graduation
Indigenous student support
International student support
Residential Student Support – http://student.csu.edu.au/campus/residences/residential-advisors
The Residential Support Scheme operates across all campuses to provide for the pastoral care and
welfare of residents and actively encourages student participation and involvement in all aspects of
residential life. The residential community is supported and structured to provide an environment to
support student academic achievement.
For assistance and initial contact go to
Student Central
Email:
[email protected] (mailto:[email protected]) ( mailto:[email protected] (http:// [email protected]))
Phone: 1800 ASK CSU (1800 275 278)
Phone from outside Australia: + 61 2 6933 7507
Academic Language and Learning Assistance
Learning Support (http://student.csu.edu.au/study) (http://student.csu.edu.au/study) provides learning
advice to individual students and student groups and materials that can assist you to develop your
learning skills and understanding of the requirements of studying at university. This support is
available face to face, via telephone and online, and provides assistance in a range of areas such as:
academic language and learning, maths and statistics, critical reading and thinking, analytical thinking,
essay and report writing, avoiding plagiarism, referencing, how to do oral presentations and exam
preparation.
Studylink (http://www.csu.edu.au/student/studylink/) (http://www.csu.edu.au/student/studylink/)
provides access to a variety of short, non-award subjects in preparation for university study. Subjects
are available throughout the year through flexible, online delivery, and each is designed to help you
gain confidence, skills and knowledge for your university studies.
Career Development
Career Development (http://student.csu.edu.au/study/careers) (http://student.csu.edu.au/study/careers)
includes a range of services, from first through to the final year of study, which support students’
self-assessment, awareness of opportunities, improvements to decision making, and gaining the
necessary skills for making successful transitions post-study. This support is available face to face, via
telephone and online.
Policy and Procedures
University Policies and Regulations
Academic matters are defined by, and are subject to, Charles Sturt University policies and regulations.
Charles Sturt University Subject Outline
ACC331 201330 S I-12 February 2013-Version 1 Page 22 of 23
Your Subject Outline should be read in conjunction with all such academic regulations and policies, as
some of these may affect the outcome of your studies.
Variations to Subject Outlines
Should it be necessary to change the content of the Subject Outline during a teaching session, it will be
done in consultation with the Head of School and other support services of the University. You then
will be notified of the changes in writing by the subject coordinator.
Variations to Assessment
Should it be necessary to vary the assessment in this subject, you will be notified in writing by the
Subject Coordinator, or Subject Convenor where one is appointed. The variations to assessment
include variations to the assessment tasks and/or assessment procedures for assignments, examinations
and any other assessment task published in the Subject Outline. The variations will be communicated
only after the Subject Coordinator or Subject Convenor has obtained approval from their Head of
School. The overriding principle is that such changes will not disadvantage students and is made in
accordance with the Awards, Courses and Subjects policy (
Part L6.3
(http://www.csu.edu.au/acad_sec/academic-manual/docs/l6-3.pdf), Section 1.4) of the Academic
Manual.
Evaluation of Subjects
It is University policy that all subjects are evaluated every time that they are offered. The University’s
Division of Learning and Teaching Services administers surveys through the Online Evaluation
Survey System. Staff in the faculties and schools value your feedback very highly and take account of
your comments when reviewing learning and teaching in each subject. If you are interested in the
details of any enhancements to this subject as a result of the latest survey, please contact the subject
coordinator.
Surveys for each of the subjects you are enrolled in for this session will be available for you to
complete for a period of 4 weeks from the last week of the teaching session. An email message will
alert you to the availability of the surveys online.
Please complete the subject evaluation by following the link:
http://online.csu.edu.au/evaluations/
Individual subject results are reported to the subject coordinator and Heads of Schools after grades
have been submitted for each teaching session (except where subjects have one student the results are
not reported to staff). The aggregated results for subjects are available within 3 weeks of the release of
grades. They can be accessed online at:
http://www.csu.edu.au/division/landt/evalunit/online
Special Consideration
Academic regulations provide for special consideration to be given if you suffer misadventure or
extenuating circumstances during the session (including the examination period) which prevents you
from meeting acceptable standards or deadlines.
Applications for special consideration must be submitted in writing and include supporting
documentary evidence. Such applications should be sent to the Student Administration Office.
For further information about applying for special consideration please refer to
Part C3 – Special
Consideration Regulations
(http://www.csu.edu.au/acad_sec/academic-manual/docs/c3.pdf) of the
Academic Manual.
Assessment Regulations
The assessment practices of all University subjects are conducted in accordance with the University?s
Assessment regulations (http://www.csu.edu.au/acad_sec/academic-manual/docs/g1.pdf).
Charles Sturt University Subject Outline
ACC331 201330 S I-12 February 2013-Version 1 Page 23 of 23
Academic Conduct
The University expects that you, as a student, will be honest in your studies and research and that you
will not do anything that will interfere with or frustrate the studies and research of other students. In
particular, you are expected to:
acknowledge the work of others in your assignments and other assessable work;
not knowingly allow others to use your work without acknowledgment;
report honestly the findings of your study and research; and
use only permitted materials in examinations.
Details of expected academic conduct are provided in:
the
Student Academic Misconduct Rule
(http://www.csu.edu.au/acad_sec/academic-manual/docs/g6.pdf);
the
Academic Progress regulations
(http://www.csu.edu.au/acad_sec/academic-manual/icontm.htm);
Students are also expected to be responsible in the use of University facilities and resources and to
abide by University rules concerning the Library and electronic resources.
the
Rule of the Library (http://www.csu.edu.au/division/library/about/policies/rule.htm); and
the
Code of Conduct for Users of Electronic Facilities
(http://www.csu.edu.au/adminman/tec/PER12.rtf).
Copies of the Rule of the Library and Code of Conduct for Users of Electronic Facilities can also be
obtained from the Library or the Division of Information Technology (DIT) Service Desk.
Penalties for breaching the above Rules and Code include suspension or exclusion from the
University.
Students also have expectations of the University and of other students in the cooperative endeavour of
studying. Details of these expectations are provided in the
Student Charter
(http://www.csu.edu.au/student/charter/).
Subject Outline as a Reference Document
This Subject Outline is an accurate and historical record of the curriculum and scope of your subject.
University policies (
L6.3 ? 1.3.8(f)
(http://www.csu.edu.au/acad_sec/academic-manual/docs/l6-3.pdf)) require that you retain a copy of
the Subject Outline for future use such as for accreditation purposes.