ASSIGNMENT BAO3306 AUDITING Semester 1, 2012 Overview Assignment is worth 20% of the overall assessment for this subject. Due date: Week 10 Length: Maximum word limit 3000 words (including Appendices)...

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ASSIGNMENT BAO3306 AUDITING Semester 1, 2012 Overview Assignment is worth 20% of the overall assessment for this subject. Due date: Week 10 Length: Maximum word limit 3000 words (including Appendices) Introduction This assignment requires you to form a group of two (2) to develop an audit plan. You must refer to Chapter 6 of the textbook for information relating to audit planning. Your submission for this assignment must not exceed 3000 words in length. You must attach the assessment declaration sheet to the front of your assignment. You must sign and date the assessment declaration sheet. For domestic students, submission should be made as instructed below. Offshore students should follow the instructions of the local lecturer. You must ensure the clarity of your answer and the overall presentation of your assignment. Presentation includes grammar, spelling and compliance with the word limit. You must complete your assignment in group of two (2). Submission instruction Assignment must be submitted electronically and in hardcopy. Electronic submission: must be submitted via turnitin located on webct. An originality report is available to students upon submission. Note: turnitin may take up to 24 hours to produce a report. Assignment with originality report level of more than 30% may indicate that the contents have more than 30% in similarity with assignment submitted by other students OR assignment has not been properly referenced. Assignment with originality report level exceeding 30% will be penalised by four (4) marks. Students can re-submit assignment on webct as many times as necessary but the final submission both in electronic and in manual format must be made by the due date. Hardcopy submission: must be submitted by the due date. A signed declaration form must be attached to the front of the assignment. Only one member of the group needs to submit the assignment. Students can submit assignment on Webct until 11:59PM on the due date. Assignments not meeting these requirements will be subjected to a penalty of four (4) marks for poor presentation. An additional penalty of two (2) marks per day will apply for late submission. Note: Webct will not accept late submission. Plagiarism Plagiarism is defined as presenting someone else’s work, including the work of other students, as one’s own. Any ideas or materials taken from another source for either written or oral use must be fully acknowledged, unless the information is common knowledge. All students are strongly advised to do the following: - goto http://wcf.vu.edu.au/GovernancePolicy/PDF/POA XXXXXXXXXXPDF - enter School of Accounting and Finance - enter Student Resources - read the PLAGIARISM POLICY. Background The rationale for BAO3306 – Auditing as per Unit of Study Outline is that on completion of this unit students should have a sound understanding of the underlying concepts of auditing and in particular of financial auditing. By adopting a logical, structured approach they should have the capacity to analyse the salient audit issues and apply relevant auditing theories and succinctly communicate their professional, ethical decision. One of the unit outcomes requires students to be familiar with key tools used by auditors for collecting and evaluating evidence, in both manual and computerised accounting information systems, which will enable them to express an opinion on the fair presentation of financial reports. To ensure the audit is carried out efficiently and in a timely manner, the auditor develops an audit plan for the conduct and scope of the audit. ASA300.5 states that the auditor shall plan the audit so that the engagement will be performed in an effective manner. Required 1. For the purpose of the assignment, you assume the role of an auditor and your firm has recently been appointed as external auditor of an entity. As required by Auditing Standard ASA300, you are preparing an audit plan for the audit of the entity’s financial statements. 2. The audit fee is $92,000 and had been communicated to the client in the Engagement Letter. 3. You are required to download the 2011 annual report published by the following entity: ACRUX (www.acrux.com.au) 4. Using the first four steps in the audit process as prescribed in Chapter 6 (pages XXXXXXXXXXof the textbook, plan the audit for the entity you have chosen. Since you are required to develop an audit plan for a real life entity, quoting directly from textbook does not meet the objective of the assignment. 5. Your audit plan must include the followings: 1. Executive summary 2. Introduction 3. Audit plan with the following headings: a. Understanding the entity and its environment b. Understanding internal control c. Assessing the risks of material misstatement (for 5 key accounts) d. Developing responses to assessed risks (for the accounts selected above) 4. Conclusion 5. References 6. Appendices Additional information For the purposes of the assignment, the following auditing standards are relevant: - ASA210 Terms of Audit Engagements - ASA220 Quality Control for Audits of Historical Financial Information - ASA230 Audit Documentation - ASA250 Consideration of Laws and Regulations in an Audit of a Financial Report - ASA300 Planning an Audit of a Financial Report - ASA315 Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement - ASA320 Materiality and Audit Adjustments - ASA330 The Auditor’s Procedures in Response to Assessed Risks - ASA520 Analytical Procedures Hints and Tips 1. You are required to plan the audit using only information that is publicly available. That is, you only use the information that is published by the entity either on its website or printed materials. 2. You must download and use the proforma audit plan on webct. 3. Information on the organisation’s internal control structure can be obtained by looking at the relevant section in the annual report, materials published on the entity website and comparing them to the Principles of Good Corporate Governance and Best Practice Recommendations published by the ASX Corporate Governance Council. 4. In assessing the risks of material misstatement, you are required to identify five (5) account balances at risk of being materially misstated. You are required to support your selection using the Audit Risk Model. 5. Quoting directly from textbooks and reports will increase the similarity index. Quoting without proper referencing will also increase the similarity index. You are advised to develop your own audit plan. 6. Turnitin has the facility to report on whether your assignment is copied from other sources. Penalty of four (4) marks applies for exceeding the 30% limit. Serious breaches will be reported to the disciplinary panel. 7. Only one student in the group needs to submit the assignment. 8. Word limit applies to the entire assignment except appendices, bibliography and references. Penalty of four (4) marks applies for exceeding the word limit. 9. If you want to remove the previous version of the assignment on turnitin, submit a blank assignment or a new version. 10. Turnitin may take up to 24 hours to generate originality report. Late submission is subjected to a penalty of two (2) marks per day

Answered Same DayDec 20, 2021

Solution

David answered on Dec 20 2021
3 Votes
Audit Plan
Audit Plan

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Audit plan for Acrux (ASX: ACR
Names
Institution
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1. Executive summary
Acrux limitedis a company that develops and commercialize a wide range of patients
pharmaceutical products around the world by the use of its technology that administers medicine
through the skin. Products for the company include; Axiron for the treatment of testosterone
deficiency, Evamist for treatment of menopause symptoms in women. Products under
egistration include Ellavie for menopause symptoms treatment and Recuvyra used for
controlling pain that iss associated with orthopaedic and soft tissue surgery in dogs.
Acrux revenues are from licensing its products throughout the world in pharmaceutical
markets. In the year ending June 2011, the company’s profits were $57.1 and shareholders were
offered 35 cents per share. In March 2010, the company signed the largest licensing deal in
Australia for a single product. In the month of November the same year the company was
approved to market in the United States by the US food and drug administration. In the same
year it received two Victoria export awards that included for innovation excellence. It declared in
the same year a dividend of 60 cents per share to the shareholders. In April 2011, Eli Lilly the
company’s worldwide licensee launched Axiom into the US market and it had a potential to
distribute into additional 142 countries.
The board is composed of one executive director and two non executive directors. The
chairman is Ross Dobinson while Bruce Parncutt and Ross Ba
ow are the non executive
directors the CEO is the executive director and is known as Dr Richard Treagus. Directors are
equired to independent in their views and judgments. The board charter requires the inclusion of
majority non-executive independent directors, independent chairman and have different to fill
chief executive and chairman’s role. The positions as well as association of the directors who
hold office has been reviewed to include two independent directors. Two committees assist the
Audit Plan

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oard in the day to day activities these are human capital committee and the audit and risk
committees.
Audit Plan

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1. Introduction
The objective of this audit is to audit the financial statements of Acrux (ASX: ACR for
the financial year ending 30
th
June 2012. We are supposed to present our finding of the effective
date in the next annual general. Our scope will include the entire company and its subsidiaries.
The management has confirmed their full support for the audit process. Audit report to be
prepared will be one for the entity and legal requirements relating to group accounts would be
used. Our audit will be in accordance to Australian Auditing Standards that require ethical
considerations in relation to engagement and planning to obtain reasonable assurance. We will be
auditing the following documents for the entity; cash flow statement, consolidated statement of
comprehensive income, consolidated statement of financial position, consolidates statement of
change in equity. In our auditing responsibility, we will use the functional cu
ency method to
eport subsidiaries accounts (Acrux annual report 2011).
2. Audit plan
a) Understanding the Entity and Its Environment
Acrux (ASX: ACR) is an Australia company that develops and commercialize
pharmaceutical products in the global market. Its proven medicines are administered through the
skin using innovative technology. The company produces unique products that are invisible fast
sprays, fast drying and liquids. These products are applied to the skin and the medicine is
delivered transdermally to the bloodstream. Scientist in the Monash University first invented the
delivery technology and patented it using a wide range of patents. Acrux Limited is registered
under the pooled development fund act of 1992 and shareholders are benefit from concessionary
tax treatment for capital gains and income in Australia (Acrux annual report 2011).
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The company operates in a very competitive environment that has numerous companies
in it. These companies include abort laboratories, Antares Pharma Inc, Eli Lilly & co, Endo
Health Solutions Inc, Watson Pharmaceutical Inc and View Industry Companies. The company
uses international financial reporting standards while preparing its books of accounts as required
y the Australian stock exchange. Acrux operates in the pharmaceuticals, biotechnology and life
science industry (Acrux annual report 2011).
) Understanding internal control
The board responsibilities are overseeing the performance of the company through the
evaluation of monitoring and approving strategic plans and performance objectives. The board
evaluate, approves and monitors annual budgets as well as business plans. The board evaluate
approves and monitors capital expenditures that are major to the company and all corporate
transaction. The board monitors and approves all financial reports and all other external
communications and reporting. They evaluate the board and each individual director. They
appoint the chief executive officer, remove him and review his performance as well as
succession planning (Corporate governance 2012).
The board oversee and ratify terms of appointment and removal of senior management
where applicable. They also monitor the performance of the senior management and how they
implement formulated strategies. The board has an important role to play to ensure that the
company’s performance in relation to corporate governance and best practice principle is
monitored. Lastly the board approves and monitors the company’s risk management
accountability systems and internal controls (Corporate governance 2012).
The board guides and monitors the business and all affairs of the company which
includes compliance with the set out corporate governance objectives. The board charter sets out
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the role of the board that was adopted. The board and management roles and responsibilities are
consistent to the one set out in ASX principle 1. The board over sees the performance of the
company. It delegates day to day...
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