Welcometo22522

AssuranceServicesandAudit
1. SubjectIntroduction
2. OverviewofAuditing
3. TheImportanceofCorporate
Governance
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1.SUBJECTINTRODUCTION

Whoisincharge?
Coordinator

Dr AmandaWhite

Office location

CM05.C.3.13

Phone

95143637,0410650179

Email

Amanda.W.White@uts.edu.au

Consultation

CheckUTSOnline fordetails

Classetiquette:Allstudentsareexpectedtobehaveinaprofessionalmanner.
Thisincludesthefollowing:
Allmobilephonesshouldbeturnedoffduringclass
Bepunctual yourlecturer/tutorhasrighttorefuseentrytolatestudents
Berespectfulofyourlectureranddonotpackupbeforetheclasshasended.
If something is in the subject outline and is not discussed in the lecture (perhaps because of
time limitations) it is still examinable and you must learn it!
Homework policy
This policy states that any student that wishes to attend class must complete the
required homework. Your lecturer can randomly check homework at any time. Any
student found in the class without completed homework may be asked to leave.
Students may only return to the class when they can show that their homework has
been completed.
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Expectations
Assessmentformat
Midsemester exam
Classpresentations

15%
25%

WatchthevideoonUTSOnlinethatexplainshowtheClass
Presentationassessmentworks.
BeginsinWeek2.VitalyouattendtutorialsinWeek1.

Finalexam

60%

Workload
_____hoursperweek
Readingtextbook,auditingstandardsandpreparing
theclasspresentationseachweek
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Expectations
Thissubjectwillrequirestudentstodevelop
thefollowingskills:
Workingaspartofateam
Problemsolving
Criticalthinking
Presentationandcommunication
Timemanagement

Requiredtexts
Modern Auditing and Assurance Services, 5th
Edition Value Pack
Value Pack 1: = RRP $230.95

Includes: Leung Print book with e-Text and

iStudy, plus Auditing and Assurance Handbook

Value Pack 2: = RRP $166.95

Includes: Leung e-Text and iStudy, plus Auditing

The above value packs are only

Animportantnoteabouthandbooks
2014editionsonlycanbebroughtintotheFINAL
exam(notthemidsemester)
Theycanbeannotated youcanwriteasmany
notesinthehandbookasyoulike!
Thehandbookcanbehighlightedandunderlined
Youcantabpagesorstandardsofinterest
YouCANNOTwriteonthetabs(tabsmustbeblankto
betakenintothefinalexam)

2.ANOVERVIEWOFAUDITING

Auditobjective
Toexpressan__________ aboutwhetherthe
________________ispreparedinallmaterial
respectsinaccordancewitha________
________framework (ASA200)

Ademandforaudits
Agencytheory
The_________________relationship

Informationhypothesis
Improvingthequalityofmanagements
_____________

Insurancehypothesis
Shiftingsomeresponsibilityforthecorrectnessof
theaccountsontotheauditor
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Regulation
Annualauditsrequiredby:
Companies,registeredschemes&disclosing
entities(excludessmallproprietarycompanies)
Commonwealth&stategovernmentdepartments,
statutoryauthorities,governmentcompaniesand
businessundertakings,municipalities
Notforprofitorganisations

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Providersofaudits
Financialauditsprovidedby___________
auditors
MustberegisteredwithASICtobeableto
performauditsonreportingentities
Criteriasetoutins.1280CorporationsAct
Educationalqualifications
Workexperience
MemberofICAAorCPAAustralia
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Assurance
Whereinformationispreparedbyonepartyand
thenattestedtoitsaccuracybyanotherparty
Levelofassurancecanvaryaccordingtothe
particularengagement
Reasonable,limitedandnoassuranceengagements

Maybefinancialornonfinancial
Whatwearestudying:
Financialauditsimplyareasonablelevelofassurance
Arethemostpopulartypeofassuranceengagement
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Auditingenvironment
Professionalbodiesworktodevelopstandardsforpractice,
educationandqualifications.
ASICenforcestheCorporationsAct
Responsibilityforaccountingandauditingstandardsettings
undergovernmentcontrol
Specificrulesforauditingandauditorindependence

CompaniesAuditorsandLiquidatorsDisciplinaryBoard
(CALDB)
EstablishedunderASICAct
HearsbreachesunderCorporationsActofauditorsand
liquidators

Auditingfirmsconductassuranceengagementsforclients

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Doestheauditmeetdemandsof
users?

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Doauditsprovidegoodvalue?
Assessingvaluecanbeexaminedbyasking:
Howoftenaretheyassociatedwithcompany
failure?
Doauditorsgettheauditreportcorrect?
Howmuchdotheycost?
Doauditsprovideeconomicvalueinthemarket?

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Auditexpectationgap
thedifference
betweenwhat
auditorsactuallydo
whentheyconduct
anauditandwhat
shareholdersand
othersthink
auditor'sdo,or
shoulddo,in
conductingthe
audit(Reportof
HIHRoyal
Commission)
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Auditexpectationgap
Remediestoaddressunrealisticexpectations:
_______________ofstakeholdersaboutwhatan
auditprovides

Remediestoaddressdeficientstandards:
Reportingoninternalcontrol
Detectionoffraud
Evaluationofgoingconcern

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GOVERNANCEANDTHEAUDITOR

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WhatisGovernance?
Theexerciseofeconomicandadministrative
authoritytomanageanentitysaffairs
Concernedwithprocessesbywhichdecisionsare
madeandimplemented
Applicabletoallentities
characterisedbyparticipation,transparency,
accountability,ruleoflaweffectiveness,equity..
Goodgovernancereferstothemanagementof
governmentinamannerthatisessentiallyfreeof
abuseandcorruption,andwithdueregardfor
theruleoflaw(OECD)
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Governance
Agencystructure
Separationofownershipand_____________
Members(shareholders)replyonmanagement
(agents)
Agentsconductthebusinessonbehalfofmembers

Authorityofgoverningbodyunderpinnedby
transparencyandaccountability
Independentauditoraddstothecredibilityofthe
conductoftheagent
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EnterpriseGovernance
thesetofresponsibilitiesandpractices
exercisedbytheboardandexecutive
managementwithgoalofprovidingstrategic
direction,ensuringtheobjectivesare
achieved,ascertainingthatrisksaremanaged
appropriately,andverifyingthatthe
organisationsresourcesareusedresponsibly.

CIMA&IFAC
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EnterpriseGovernance

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EnterpriseGovernance
Basedonorganisation'sentireaccountability
framework
Includes:
rolesofchairoftheboardandtopmanagement
composition,skill,remuneration&trainingoftheboard
anditscommittees
adequacy&reasonablenessofexecutivecompensation
schemes
internalcontrolstructure,riskmanagement&roleof
internalaudit
financialreportinganddisclosureregime
independenceoftheauditfunction
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AuditorsandGovernance
Overallobjectiveoftheauditor:
toobtainreasonableassuranceaboutwhether
thefinancialreportasawholeisfreefrom
materialmisstatement,whetherduetofraudor
error..(ASA200)

Effectivenessoftheauditfunctionon
auditorsrelationshipwiththeentitys
managementandgovernancebody
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AuditorsroleinEnterprise
Governance
Providesassuranceofverifiability,compliance
andaccountabilityoftheorganisation
Mayalsoberequiredtoensuretheorganisation
andboardofdirectorshavecompliedwith
relevantlegislationandregulations
Performancedimensionincludessettingstrategic
directions,managingriskandkeyperformance
driversanddecisionmakingprocesses

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CorporateGovernanceandAuditing
Corporategovernance
Frameworkofrules,relationships,systemsand
processesbywhichauthorityiscontrolled
Includesstructure,systemsandrelationships
betweenboardofdirectors,management,
auditorsregulatorsshareholders&thepublic
Encouragecompaniestocreatevalueandprovide
accountabilityandcontrolsystemscommensurate
withrisksinvolved
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AuditTrinityConcept
Externalaudit,internalauditandaudit
committeeasatripartite
Auditfunctionistoperformspecificduties
thatcomplementandinterlockwiththeother
members
Internalauditincludescorporategovernance
andaccountabilitymatters
Auditcommitteesoverseeinternalauditand
externalauditfunctions
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IssuesinGovernance
Internalcontrolandriskmanagement
Effectivegovernanceandaccountabilitybasedon
effectivefunctioningofinternalcontrolandrisk
management
Riskmanagementistheculture,processand
systemestablishedtomanageopportunitiesand
minimise/controladverserisks

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Otherformsofauditing
Internalauditing
Assuranceoveracompanysfinancialinformationand
operations
Toimproveefficiencyandeffectiveness
Internalauditorsgainindependencebyreportingtothe
AuditCommittee

Operationalauditing
Evaluatesuseofresourcestowhethertheyarebeingused
inthemostefficientandeffectivemanner
Threeapproaches
Riskbasedauditapproach
Valueformoneyapproach
Processauditapproach
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Whenauditingpublicsectorentities
Specialistauditorsarerequired
Arangeofauditsandengagementsare
conducted
Financialstatement
Performance
_____________withlawsandregulations

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AuditCommittees
Enhanceeffectiveinternalaccountability
Facilitatesparticipationofindependent
directorsingovernanceprocess

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WhatdoyouneedtodoforWeek2?
GetintoaClassPresentationGroup
Purchaseyourtextbookpack
PreparehomeworkANDPRESENTATIONS
readyforWeek2(evenifyouvemissedout
onformingagroup)

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