Company - Qantans Australia
Individual Assignment
In your individual Assignment A, you have chosen a company listed in ASX. Now, assume you are the engagement partner on the audit of this company for the financial year ended 30 June 2018. You asked the members of the audit team to commence the process of gaining an understanding of the client in according with ASA315. One audit manager is leading the group investigating the industry and economic effect while another audit manager, is leading the group examining issues at the entity level.
Required
1. Identify and discuss three main factors that will be investigated by each audit manager's group. Your discussion should be relevant and specific to your chosen company.
2. The audit manager, Ruth, is discussing with you the importance of internal control in determining the amount of audit evidence required for an audit engagement. Ruth maintains that the audit firm requires a careful evaluation of the internal control system, and a modification in the evidence accumulated based on the controls and deficiencies in the system. She normally prepares a standard internal control questionnaire on every audit as well as a flow chart of every transaction area. In addition, she suggests, regardless of the size of the companies, the audit team needs to assess the internal controls and then set the control risks of all companies in a similar manner.
Evaluate Ruth's views and suggestion of and express your own opinion about the approaches to understanding internal control and assessing control risk for different companies.
3. What do you and your audit team need to consider when making the preliminary assessment of materiality? How will you and your audit team's preliminary assessment of materiality affect audit planning?