SANTOS – ASSIGNMENT:
BACKGROUND INFORMATION:
Santos is one of the largest publicly listed companies in Australia. The company has been in the media spotlight recently due to their focus on the production of gas, highlighting the importance of ensuring financial information is presented in a true and fair manner. Santos provides an excellent case study for illustrating the importance of planning an audit and in particular, assessing inherent risks in the planning stage. (Further information relating to Santos is available from their website: https://www.santos.com/company-profile.aspx ).
Additional Information:
Details relating to the requirements of the major assignment can be found over the page. You will be required to assess and analyse Santos from an auditing perspective, in the period leading up to reporting periods ending on or after 30th June 2013.
The Internet is a valuable source of information for obtaining background information on a client.
You are encouraged strongly to use the Internet and other media to assist you in collecting further information relating to Santos. To do well in the assignment, it is reasonably expected that you will undertake research on the entity beyond merely the Santos homepage and their annual reports.
Required:
Question 1: Identify what you consider to be the ‘key’ inherent risk factors that could have an impact on the audit of Santos for the year ended 30th June 2013 and/or future audits.
Question 2: Using the information you have collected to assist you in answering question 1 (above), explain and justify your overall assessment of inherent risk for Santos. Using the audit risk model and refer to the risk factors you raised above, discuss briefly how your assessment of inherent risk will impact on the evidence mix for the planning of the audit of Santos in the areas of risk you identified .
Question 3: Identify what you consider are the inherent risk factors which would impact on the audit of Santos.
Question 4: This question has two distinct parts. An auditor is required to form an opinion as to the overall inherent risk applicable to the company chosen. You are first required by the question to make a judgment about the overall inherent risk in the Santos audit. Second you must apply the audit risk model to identify the evidence mix when planning the audit of the entity in the areas where you have identified the risk. Have a look at the material covering the audit risk model and the steps involved in determining the evidence mix and apply this to the areas of Santos which you identified in question 1.