Impact on the planning of the audit of bhp




Q: (a)  Identify four  issues (accounting or otherwise) in the above case that may  have an impact on the planning of the audit of BHP for the year ending 30th June 2012.

(b) State what audit evidence you would gather in assessing the issues identified in  part (a) above, for inclusion in the planning strategies for the audit of BHP.       

Question (a)

You are required to identify four (4) issues, accounting or otherwise which may impact on the planning of the audit of BHP. They may, for example,  relate to the ability of the entity to continue as a going concern; the risk of misstatements in the financial reports; impacts of industrial economic or international markets; the possibility of incentives or the like existing for management to misstate information contained in the financial reports

Question (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 200 staff had just lost their jobs with BHP, 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).

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Auditing: Impact on the planning of the audit of bhp
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