Audit, Assurance and Compliance

HI6026 Audit, Assurance and Compliance

HOLMES INSTITUTE

FACULTY OF

HIGHER EDUCATION

Group Assessment Details and Submission Guidelines

Trimester T2 2020

Unit Code HI6026

Unit Title Audit, Assurance and Compliance

Assessment Type Group Assignment

Assessment Title Auditors and Legal Liability

Purpose of the assessment (with ULO Mapping)

Students are required to research a recent legal case where an Audit firm was sued for

professional negligence. Students are required to analyse the root causes and the

pertinent issues from their selected case and then specify what measures can be taken

by auditors in the audit approach and in other ways, to minimise the risk of litigation

and ensure professional integrity and reputation.

Learning Outcomes:

• Demonstrate an understanding of the reporting requirements of auditing standards (ULO 1)

• Demonstrate an understanding of the auditor's professional, legal and ethical responsibilities to their clients and third parties (ULO 2)

• Understand the audit planning procedures, evaluate the business risk and assess the internal control (ULO 4)

• Prepare auditing procedures for transactions and balances by conducting control and substantive tests (ULO 5)

Weight 40% of the total assessments

Total Marks 40

Word limit 3,000 -3500 words

Due Date Week 10

Submission Guidelines

• All work must be submitted on Blackboard by the due date along with a completed Assignment Cover Page.

• The assignment must be in MS Word format, single spacing, 12-pt Times New Roman font and 2cm margins on all four sides of your page with appropriate section headings and page numbers.

• Reference sources must be cited in the text of the report, and listed appropriately at the end in a reference list using Harvard referencing style.

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HI6026 AUDIT, ASSURANCE AND COMPLIANCE

Purpose

Assignment Specifications

This assignment aims to enhance students’ critical thinking skills and higher order application abilities by researching and analysing a legal case involving the litigation of an auditor/audit firm. Students will need to propose and document mitigating measures to address the risk of litigation and make appropriate recommendations to the audit approach, in terms of the audit strategy adopted, the audit procedures required in the audit program and other appropriate ways for the auditor to mitigate against both professional reputational damage and financial losses.

The assignment structure must be as follows: 1. Holmes Institute Assignment Cover Sheet – Full Name, Student No., Campus, Session No. 2. Executive Summary

• The Executive summary should be concise and not involve too much detail. • It should make commentary on the main points only and follow the sequence of the report. • Write the Executive Summary after the report is completed, and once you have an overview

of the whole text.

• The Executive Summary appears on the first page of the report. 3. Contents Page – This needs to show a logical listing of all the sub-headings of the report’s

contents. Note this is excluded from the total word count. 4. Introduction – A short paragraph which includes background, scope and the main points raised

in order of importance. There should be a brief conclusion statement at the end of the Introduction.

5. Main Body Paragraphs with numbered sub-headings – Detailed information which elaborates on the main points raised in the Introduction. Each paragraph should begin with a clear topic sentence, then supporting sentences with facts and evidence obtained from research and finish with a concluding sentence at the end.

6. Conclusion – A logical and coherent evaluation based on a thorough and an objective assessment of the research performed.

7. Appendices – Include any additional explanatory information which is supplementary and/ or graphical to help communicate the main ideas made in the report. Refer to the appendices in the main body paragraphs, as and where appropriate. (Note this is excluded from the total wordcount.)

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HI6026 AUDIT, ASSURANCE AND COMPLIANCE

Assignment Topic – Auditors and Legal Liability Read the following extract from the ACCA (the Association of Chartered Certified Accountants) website, which is the global body for professional accountants, as stated:

“Over the past two decades the bill for litigation settlements of Big Four audit firms alone has run into billions of dollars. Examples include Deloitte’s 2005 settlement of $250m regarding its audit of insurance company Fortress Re and PwC’s $229m settlement in the lawsuit brought by the shareholders of audit client Tyco in 2007.”

“Auditor liability is increasingly concerning, both in terms of audit quality and the reputation of the profession but also in terms of the cost to the industry and the barriers this creates to competition within the audit market.” (Source: www.accaglobal.com)

Required Given the importance of professional liability to auditors and the negative publicity this creates for the profession as a whole, research a recent case (Post 2000) where an auditor/audit firm was sued for professional negligence. Students may research cases from the UK, USA, NZ or Canada in addition to Australian cases.

With reference to the facts of the selected case, the significant Auditing and Accounting issues and the final judgement handed down in your selected case:

• Provide a brief description of the key events and the factual issues behind the case • Explain the culpability or which parties were deemed responsible and why. Outline the

damages imposed or the penalties and consider whether they were appropriate.

• investigate and explain the relevant issues in Auditing and Accounting raised by the case,

• The root-cause of the issues such as; market pressure, organisational culture, fraud etc.

• any problems, mistakes or misrepresentations made by the defendants, which contributed to the adverse judgement and the awarding of damages,

• Finally, provide recommendations and possible improvements to: o the Audit Strategy, o the Audit Program, o Other effective measures;

which would prevent the recurrence of the same litigation in the future and maintain the professional reputation of auditors.

Resources and Reference Links: 1. https://asic.gov.au 2. https://www.accaglobal.com/gb/en.html 3. “Are Auditors fit for purpose?”- https://www.bbc.co.uk/programmes/m0002mg6 4. Textbook: Gay & Simnett, Auditing & Assurance Services in Australia, 6th Edn, McGraw Hill

Education, 2017

5. Students may explore the following high-profile cases (Students are not allowed to select the following cases):

o Deloitte’s 2005 settlement of $250m regarding its audit of insurance company Fortress Re.

o PwC’s $229m settlement in the lawsuit brought by the shareholders of audit client Tyco in 2007

o Royal Bank of Scotland (RBS) vs Bannerman Johnstone MacLay (Bannerman) (2002)

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HI6026 AUDIT, ASSURANCE AND COMPLIANCE

Group Formation and Group Assignment Students are required to work on the assignment in groups of 4

Both assessment items must be submitted on Blackboard. The written assignment must be in a report format and submitted through safe-assign prior to final submission. The originality percentage should be as low as possible. The written submission must be double-checked, edited and rephrased if the originality percentage and plagiarism risk is noted as high, as per safe-assign.

Marking Criteria

Group Assignment Marking Criteria Weighting Executive Summary 5%

Main Body of the Report 25%

Conclusion 3%

Punctuation, Spelling, Grammar, Word Choice, Academic English Expression 2%

Report presentation, formatting and effective use of any additional materials 2% Correct referencing, In-text citation, acknowledgement of sources, consistency 3%

Weight 40%

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HI6026 AUDIT, ASSURANCE AND COMPLIANCE

Marking Rubric

Excellent (80-100%)

Very Good (70-79%)

Good (60-69%)

Satisfactory/ (50-59%)

Unsatisfactory (0-49%)

Executive Summary (5

marks)

Very effectively written synopsis with clear communication of the main points in a concise paragraph.

Competently composed a strong synopsis. The main points are communicated well.

Synopsis is well written with all the expected points raised.

Synopsis is clearly written, but it is brief or has some errors.

Synopsis is deficient and poorly written. Too brief.

Main Body Including

Introduction (25 marks)

Excellent. Well organised. Main points are logically ordered; sharp sense of structuring and arrangement of key information. Supporting details are specific to the main points and adequate facts and other evidence is provided and well- articulated.

There are valid points raised with a good argument / thesis statement, paragraphing is noted, and the points in the introduction are explained in more detail with supporting evidence.

There are valid points raised, paragraphing is noted, and the points in the introduction are explained in more detail with supporting evidence.

Some organization; main points are there but they are disjointed; Minor structuring issues.

Poorly organized; no logical progression; beginning and ending are vague. No structure. Lacks substance. No research noted.

Conclusion (3 marks)

Very well composed conclusion with a clear and logical evaluation with conclusive and persuasive statements based on an intelligent assessment of the evidence acquired.

Conclusion is well written as a concise summary which logically evaluates the main argument with evidence used and examples.

Conclusion is logical and an evaluation is made, but there is some lack of evidence or depth of analysis, which would have improved the overall persuasiveness of the report.

Conclusion is noted and an evaluation is presented, but it is lacking in sufficient detail or supporting evidence. Requires more analysis and some proof- reading.

Conclusion is poorly written with no evaluation and no logical coherence. No evidence of analysis. Poor effort.

Spelling and

Grammar (2

marks)

No errors. Well proofread. Clearly edited and refined prior to submission.

Edited and refined prior to submission with one or two errors.

Only minor

errors. Needs

some editing.

Numerous minor errors. Not proofread or edited effectively.

Numerous major and minor errors which distract from understanding and clarity. Not proofread. Not edited. Academic English level is low.

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HI6026 AUDIT, ASSURANCE AND COMPLIANCE

Report

Format and

Presentation

(2 marks)

Very well formatted with sub-headings, page numbers, appendices, and effective use of tables/graphics

Formatting is well set out and clear, but there are minor issues in subheadings, page numbers, appendices and/or graphics.

Formatting is above standard and meets all the basic requirements with a contents page, sub- headings and page numbering.

Formatting is coherent and clearly structured, but page numbers are missing or subheadings or contents page is brief

No formatting or lack of structuring.

Referencing

and Citation

(3 marks)

References are consistently correct using Harvard style or APA style. No missing citations. A strong reference list with relevant and credible sources used. Evidence of extensive research.

References are consistently correct using Harvard style or APA style. No missing citations. References used are good, but not extensive.

Generally correct referencing using Harvard style or APA style. More references required.

Some References are used, but not used consistently. Not enough research done.

References are missing or do not comply with correct referencing style.

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HI6026 AUDIT, ASSURANCE AND COMPLIANCE

Academic Integrity

Holmes Institute is committed to ensuring and upholding Academic Integrity, as Academic Integrity is

integral to maintaining academic quality and the reputation of Holmes’ graduates. Accordingly, all

assessment tasks need to comply with academic integrity guidelines. Table 1 identifies the six categories

of Academic Integrity breaches. If you have any questions about Academic Integrity issues related to your

assessment tasks, please consult your lecturer or tutor for relevant referencing guidelines and support

resources. Many of these resources can also be found through the Study Sills link on Blackboard.

Academic Integrity breaches are a serious offence punishable by penalties that may range from deduction

of marks, failure of the assessment task or unit involved, suspension of course enrolment, or cancellation

of course enrolment.

Table 1: Six categories of Academic Integrity breaches

Plagiarism Reproducing the work of someone else without attribution. When a

student submits their own work on multiple occasions this is known as

self-plagiarism.

Collusion Working with one or more other individuals to complete an assignment,

in a way that is not authorised.

Copying Reproducing and submitting the work of another student, with or

without their knowledge. If a student fails to take reasonable

precautions to prevent their own original work from being copied, this

may also be considered an offence.

Impersonation Falsely presenting oneself, or engaging someone else to present as

oneself, in an in-person examination.

Contract cheating Contracting a third party to complete an assessment task, generally in

exchange for money or other manner of payment.

Data fabrication and

falsification

Manipulating or inventing data with the intent of supporting false

conclusions, including manipulating images.

Source: INQAAHE, 2020