You are required to identify four (4) issues and/or events, accounting or otherwise which may impact on the planning of the audit of Woodside Petroleum. They may, for example, relate to the ability of the entity to continue as a going concern; the risk of material misstatements in the financial reports; impacts of industrial economic or international markets that are specific to Woodside Petroleum and supported by your research; or perhaps the possibility of incentives for management to misstate information contained in the financial reports. ASA315 Appendix 2 will provide some further insight into the types of broader issues that may raise the risk of misstatementThe issues can relate to any aspect of the planning of an audit - ie they can relate to assessment of inherent risk, business risk, control risk, the ability to collect sufficient evidence to form an audit opinion and the assessment of business risk to name a few. This list is not exhaustive - focus on any issues you believe to be relevant to the planning of the audit of Woodside Petroleum and/or the collection of sufficient evidence to form an opinion in relation to the financial reports of Woodside Petroleum. Remembber Woodside Petroleum is a real world entity. INDEPENDENT research is required on the entity to complete this assignment.You must alsoalso use intext referencing as evidence of the research.
You are required to use research outside of the Woodside Petroleum website - for example, online newspaper sites and library databases (using their newspaper or serial directories - eg ProQuest), ASX announcements, business news websites etc. External aand independent websites are a rich source of information because they provide an independent assessment of the entity. Focusing on Woodside's website may mean you do not identify the key issues impacting on Woodside for the period in question as you are only obtaining the news Woodside want released and in the way they would like it received.
You need to be as specific as possible to Woodside Petroleum in the identification and explanation of the issues or events - the more detail you provide the easier it is to see how the issue directly relates to the planning of the audit. Broad general statements and discussion will not accrue many (if any) marks.
For example, you might find an article which says that 150 staff had their jobs terminated because they were stealing from the company. This would help you with discussion of issues or events in that it appears that certain types of assets may be susceptible to fraud and theft, and there may be some concerns about the company's control environment. Events identified in this assignment can relate to any aspect of the planning of the audit.
Therefore you can discuss issues related to control risk, materiality, acceptable audit risk, evidence mix, and planned detection risk. The key thing is that you need to provide a brief explanation as to how the information will impact on the planning of the audit.
b) Having identified 4 issues in part (a), you are now required to identify evidence that the auditor would collect to assess the issue that has been identified. For example, if an issue identified was that 150 staff had just lost their jobs, examples of the evidence to be collected might be the to collect details of the amount of employee entitlements paid to those who had lost their jobs; a review of redundancy liabilities outstanding at balance date; a closer review of leave provisions and payments during the year; and the issue of a solicitor's letter to determine if there is any litigation from disgruntled employees for wrongful dismissal. Evidence is easier to identify if you focus on documentary evidence specifically related to the issue identified in part (a). The more specific you are in your discussion in part (a), the easier it will be to answer part (b). Conversely, general discussion in part (a) will make it very hard to answer part (b)