Professional Documents
Culture Documents
SYNOPSIS
The subject introduces the practice of auditing in Malaysia. It reviews the roles and
responsibilities of auditors including legal liability issues and professional ethics. The
subject covers the process of an audit including the acceptance of the client, planning
the audit, audit evidence collection and documentation techniques and procedures,
assessment of risks, review of internal controls and substantive testing for the various
accounting cycles, audit completion and audit reporting issues. Other areas such as
sampling techniques, auditing in a computerised environment and the use of
computerised auditing techniques will also be covered. Although the main thrust of this
subject will be to cover statutory audits as required by the Companies Act 1965 other
types of audit will be introduced such as internal audit, forensic audit, performance
audit and compliance audit. Further, reporting on other audit related services such as
review engagements and special purpose audit engagements will be introduced.
OBJECTIVES
identify relevant audit risk issues to be addressed at planning stage and indicate the
necessary audit approach for specific scenarios;
discuss and apply relevant sampling techniques for both compliance and substantive
testing;
appreciate the audit process within a computerised environment and the application
of computerised audit techniques;
2
discuss completion issues and the various audit report opinions that may be
rendered including assessing case study circumstances and the appropriate audit
opinions, and
identify and discuss the different types of audit and assurance services offered by
the auditing profession and the various types of reports issued.
TOPICS
3
PRESCRIBED TEXTBOOK
Leung, P., Coram, P., Cooper, B.J. and Richardson, P. (2015) Modern Auditing and
Assurance Services, 6th edition, John-Wiley, Australia.
RECOMMENDED REFERENCES
Alvin A. Arens, Michigan State University, Randal J. Elder, Syracuse University, Mark
S. Beasley, North Carolina State University (2016), Auditing and Assurance Services
with ACL Software CD, 16th edition, Pearson.
Gay, G. and Simnett, R., (2015) Auditing and Assurance Services in Australia, 6th
edition, McGraw-Hill, Australia.
Arens, A.A, Elder, R.J. and Beasley, M. (2012) Auditing and Assurance Services, 14th
edition, Prentice Hall, US.
Crawford, L, Gray, I. and Manson, S. (2015) The Audit Process: Principles, practice
and cases, 6th edition, Cengage.
4
Subject Outline / Teaching Plan
Textbook : Leung, P., Coram, P., Cooper, B.J. and Richardson, P. (2015) Modern
Auditing and Assurance Services, 6th edition, John-Wiley, Australia.
5
ASSESSMENT DETAILS
There are 3 assessments items for this subject.
REQUIREMENTS:
Attempt ALL areas of assessment; and achieve a total result of 50% or better
overall.
** - Please check on the notice board and My Acel for the actual date. HELP
University reserves the right to make any changes to the above where appropriate.
6
HELP UNIVERISITY
ACC303 AUDITING & ASSURANCE SERVICES
ASSIGNMENT
Section 1 (50%)
It is important to note that the auditing is an evolving function; the objective of an audit
has changed over time and hence the objective of the present day audit is unlikely to be
the same as compared to 100 years ago.
Required
You are required to write an essay which outlines the historical development of an audit
function. Based on the literature in auditing, you are required to trace the history of
auditing and evaluate the progress of the duties of auditors over the years. Your essay
should be 1,000 to 1,500 words.
Question 2 (30%)
Required
7
Question 3 (20%)
As an audit senior you are required to oversee the audit of ABC Sdn. Bhd. To improve
the efficiency of the audit, you have decided to conduct the year-end audit of ABC Sdn.
Berhad using an audit software package called Audit Command Language (ACL).
You assigned an audit junior to carry out the following tasks on Payroll, Account
Payables and Account Receivables for the 2017 financial accounts.
Required:
Payroll (8%)
1) Identify the number of male employees in the company with the age above 50.
2) Identify the number of female employees in the company with the age above 45.
3) Identify the number of employees who is originated from the US.
4) Identity the total annual EPF contribution (employer portion only).
8
1. This is a group assignment consisting of 4 group members.
5. All journal articles cited in the essay are required to be submitted (soft
copy in a CD) together with the assignment.
6. Turnitin information:
9
GRADING SCHEME
Mark Range GRADE GRADE DEGREE MARKING RUBRICS
POINT CLASSIFICATI
ON
80 – 84 HD 2 3.75
THIRD CLASS
50 - 54 PS 2 2.00 PASS
10
HELP UNIVERSITY
ASSIGNMENT FEEDBACK/MARKING SHEET
ACC303
1. Student ID:_______________________________________
2. Student ID :_______________________________________
3. StudentID:________________________________________
Auditing & Assurance
4.. Student ID:________________________________________
Services
Overall presentation 5
11
Assignment No.:
Office
Module/Subject Information
Acknowledgement
Module/Subject Code
Module/Subject Name
Lecturer/Tutor/Facilitator
Due Date
Assignment Title/Topic
Declaration
. I/We have read and understood the Programme Handbook that explains on plagiarism, and I/we testify that,
unless otherwise acknowledged, the work submitted herein is entirely my/our own.
. I/We declare that no part of this assignment has been written for me/us by any other person(s) except where
such collaboration has been authorized by the lecturer concerned.
. I/We authorize the University to test any work submitted by me/us, using text comparison software, for instances
of plagiarism. I/We understand this will involve the University or its contractors copying my/our work and storing it
on a database to be used in future to test work submitted by others.
Note:1) The attachment of this statement on any electronically submitted assignments will be deemed to have the
same authority as a signed statement.
2) The Group Leader signs the declaration on behalf of all members.
Signature: Date:
mail:
12
Feedback/Comments*
Main Strengths
Main Weaknesses
Date: Date:
Note:
1)A soft and hard copy of the assignment shall be submitted.
2)The signed copy of the assignment cover sheet shall be retained by the marker.
3)If the Turnitin report is required, students have to submit it with the assignment. However, departments may allow
students up to THREE (3) working days after submission of the assignment to submit the Turnitin report. The
assignment shall only be marked upon the submission of the Turnitin report.
*Use additional sheets if required.
13
Department of Accounting & Finance
ACADEMIC INTEGRITY
What is Plagiarism?
Plagiarism is academic dishonesty or academic theft, and it is a serious academic
offence. Plagiarism includes, but is not limited to, the followings:
1. quote, paraphrase or summarize someone else’s ideas, theories or data, in whole
or in part, without appropriate acknowledgement
2. borrow ideas, opinion or words, in whole or in part, from other sources without
properly crediting the author(s)
3. use any facts, statistics, diagrams or graphs, in whole or in part, without
acknowledging the source clearly
4. claim or imply original authorship of someone else’s ideas, theories or data, in
whole or in part, as your own
5. employ or allow someone to help to revise, amend or write your work and pass
off as your own original work
6. collaborate with or allow other students to copy your work
7. draw on sources more than what you have acknowledged by citations
1
http://www.yale.edu/bass/writing/sources/plagiarism/warning.html, accessed May 18, 2008.
15
Once a student has selected a referencing style for his/her assignment, he/she must
follow the same style consistently throughout the assignment. We strongly suggest that
the student consults the lecturer/tutor about which method to use before submission of
his/her assignment.
Possible penalties for plagiarism range from mark reduction for the assignment to
expulsion from the University. The student will not be allowed to make up the
assignment. If plagiarism has been found to have occurred, the Department will take
action(s) as determined by the forms of plagiarism implicated:
1. Complete plagiarism
Verbatim copying another person’s work without acknowledgement
16
1st offence : A grade of “F” in the subject and a warning letter will be
issued
nd
2 offence : Expulsion from the University at the discretion of the Head of
Department
2. Substantial plagiarism
Near-verbatim copying another person’s work by simply altering the order of
the sentences or the format of presentation or by changing a few words or
phrases without acknowledgement.
1st offence : Zero mark on the assignment and a warning letter will be
issued
2 offence : A grade of “F” in the subject and a warning letter will be
nd
issued
3rd offence : Expulsion from the University at the discretion of the Head of
Department
3. Minimal plagiarism
Acknowledgement is made but paraphrasing by changing and/or eliminating
some words
1st offence : Deduction of 50% of available marks on the assignment and a
warning letter will be issued
2nd offence : A grade of “F” in the subject and a warning letter will be
issued
rd
3 offence : Expulsion from the University at the discretion of the Head of
Department
4. Unintentional plagiarism
Insufficient acknowledgement by not applying citation or quotation marks
correctly
1st offence : Deduction of up to 50% of available marks on the assignment
and a warning letter will be issued
2 offence : A grade of “F” in the subject and a warning letter will be
nd
issued
3rd offence : Expulsion from the University at the discretion of the Head of
Department
Pleading ignorance or unintentional plagiarism does not constitute valid reasons for
plagiarism and will not avoid the penalties from being imposed. Excuses for acts of
plagiarism such as the following, but not limited to, will not be entertained:
1. I don’t have time to do the assignment
2. I have too many assignments due on the same day
3. I don’t know, I really didn’t do it
4. I am not aware
5. I don’t understand what plagiarism means
6. I have no intention to plagiarize
7. I forgot to cite the reference
8. I forgot to include the bibliography
9. My English is not good
10. My lecturer/tutor did not explain to me
11. In my country, it is alright to copy someone else’s work
12. My friend copied my assignment when I let him/her to look at my assignment
13. My friend copied my assignment when I allow him/her to use my laptop
14. I did my assignment in the computer lab, someone must have copied my work
17
15. I asked my friend to submit my assignment and he/she copied my work
16. I discussed my assignment with my friends, so our answers are the same/similar
17. Even though I do not have in-text citation but I have bibliography/reference list
Students should be reminded that it is their responsibilities to take due care throughout
their written work to effectively reference or cite when they use others’ ideas from any
source.
18
DEPARTMENT OF ACCOUNTING & FINANCE
SEMESTER X, 20XX
This examination carries 70% of the total assessment for this subject.
Examiner(s) Moderator(s)
MR ABC MR XYZ
Day :
Time :
Date :
INSTRUCTION(S):
1. This examination consists of TWO (2) sections:
SECTION A: FOUR (4) Questions – Answer ALL questions in the answer booklet provided.
SECTION B: TWENTY (20) Questions – Answer ALL questions in the answer book provided.
2. Writing on the examination answer book is NOT permitted during reading time.
3. This is a CLOSED BOOK examination.
4. Students are NOT permitted to retain this examination paper.
5. Students MUST pass this examination to obtain a passing grade in this subject.
(This examination paper consists of 2 sections in XX printed pages, including cover page)
19
Answer ALL questions. Each question carries 20 marks
(a) Identify any Two (2) financial statement assertions for the audit of inventory
(account balance) and describe One (1) relevant substantive audit procedure for
each of the identified assertions.
(5 marks)
(b) You are nearing completion of the 31 December 2013 audit of ABC Wholesaler
Berhad. The Figures below have been extracted from the final draft financial
report.
RM’000
Operating profit before income tax 5,722
Operating profit after income tax 3,541
Total revenue 718,635
Current assets 253,881
Non-current asset 216,752
Total assets 470,633
Current liabilities 103,333
Non-current liabilities 132,760
Total liability 236,093
Equity 234,540
During your review of the audit files, you note the following items recorded on
the summary of audit differences.
(i) ABC Wholesalers have been involved in a long-running dispute with the
taxation authorities in relation to the amount of sales tax payable on
certain lines of merchandise. The case was resolved this year in favour
of the taxation authorities. The court ruled that ABC Wholesalers, as
well as paying the outstanding taxes, must pay a non-tax-deductible fine
of RM420,000.
(ii) Sales cut-off at one ABC Wholesaler’s store was incorrect, resulting in a
large sale of inventory made early in January 2014 being recorded in the
31 December 2013 year-end. The cost price of the inventory sold was
RM250,000. ABC Wholesalers mark up inventory by 40%
20
Required:
Consider items (i) and (ii) independently, Discuss with reasons whether the
amount involved would be considered material for the purpose of issuing an
auditor’s report.
(6 marks)
(c) Describe any Two (2) audit procedures that should be performed to determine
the adequacy of the provision for doubtful debts.
(4 marks)
(d) The business performance of XYZ Berhad has been declining over the years
and solvency is a concern.
Required:
Outline any Five (5) audit procedures that the auditor should perform when a
question arises regarding the going concern of a company.
(5 marks)
Consider the following independent and material situations found during the audit of
Dynamic Berhad. The balance date of Dynamic Berhad is 30 June 2013.
(a) Recent industrial action has seen trade unions win a pay increase of 4 per cent
for their members. Under the terms of the agreement, the pay increase will be
backdated to 1 January 2013. Management has agreed to the pay increase;
however, they have not made any corresponding adjustment to the 30 June 2013
financial report.
(b) A large order from an overseas supplier was shipped FOB (free on board) and
title passed on 1 June 2013. The order arrived on 20 July 2013. The purchase is
not reflected in the 30 June 2013 financial report.
(c) Some of the director related transactions were not disclosed in the financial
statements. The management refused to do so as they felt that it ‘requires
information to be disclosed to the public which should remain known only to
the parties concerned.’ You were satisfied with all other matters in the client’s
financial statement.
21
(d) Near the end of the financial year, a fire broke out and destroyed a substantial
amount of its accounting records and source documents. The accountant
managed to salvage and recover some of the records from their backup
computer files stored offsite. In spite of this, you are not satisfied that all the
transactions that occurred during the year are properly reflected in the financial
report and were unable to verify any of the material balances.
(e) An auditor was engaged to audit a client’s financial report after the annual
physical inventory count. The accounting records are not sufficiently reliable to
enable the auditor to become satisfied as to the year-end inventory balances.
Required:
Assume no adjustments have been made. For each of the issues outline above, identify
the type of audit opinion required, and explain the basis of your answer.
(each part carries 4 marks)
Question 3
(a) Your client, Mah Sing Berhad, engaged the service of Z & Co., a firm of real
estate valuers, to perform a valuation of all real estate held by the company. As
a result of this revaluation, property values on the balance sheet were
significantly increased, leading to a material increase in net asset backing per
share.
Required:
(i) Describe Five (5) audit procedures that you will carry out to check
whether the valuer has provided an accurate and independent valuation
of the property.
(5 marks)
(c) Whilst auditing trade creditors, your audit assistant Jessie Wong vouched a
sample of creditor’s balances to selected invoices. No errors were found. Jessie
concluded that the trade creditors were reasonably stated.
Required:
Determine whether sufficient appropriate audit evidence has been obtained to
support the conclusion reached. Suggest any one (1) audit procedure required if
evidence is insufficient
(5 marks)
22
Question 4 (20 marks)
(a) Consider each of the following independent and material situations. In each
case:
The financial year-end was 31 December 2012
The financial report and audit report was signed on 25 February 2013
The financial report and audit report were mailed to members on 13 March
2013
(i) On 18 January 2013, the financial controller informed you that a serious fire
occurred in one of the warehouses. Although it is covered by insurance, the
fire caused an estimated loss of RM5 million to the company.
(ii) Your client, Q&Q’s bank loan is conditional upon certain ratios being
maintained at all times. On 17 March 2013, you discovered that one of the
ratios was breached.
(iii)On 1 February 2013, your client ABC Berhad, an organic food producer in
Malaysia, has decided to acquire one of the competitors in the industry. The
board of director has approved the acquisition and it will cost RM20 million
for the company.
Required:
For each of the above events, state the appropriate Action A to D for the situation and
justify your response. The alternative actions are as follows:
(b) Explain the purpose of an engagement letters and with reference to the relevant
auditing standard, state Two (2) items included in such a letter.
(4 marks)
(c) Explain what analytical procedure is and how it helps the auditor in audit
planning?
(4 marks)
23
Section B. Answer All Questions. Each question carries 1 mark
1. The words that best describes the relationship which should exist between the
external auditor and the management of the client company are:
a. adversarial relationship.
b. mutual trust and respect.
c. advocacy of management’s position.
d. skeptical vigilance.
2. During the course of the audit engagement, the external auditor suggests an
adjustment to the financial statements. The suggestion is accepted by management
without argument. This suggests that:
a. the external auditor is primarily responsible for the fairness of the financial
statements.
b. the internal auditor has assumed responsibility for the changes made.
c. the external auditor has prepared the financial statements.
d. the client has assumed responsibility for the changes made.
5. In a credit sales environment, the documents that serves as the basis for internal
processing of an order is:
a. customer order.
b. sales order.
c. dispatch note.
d. sales invoice.
24
6. In the investigation of a potential new client, besides inquiring of the existing
auditor, the prospective auditor should make inquires of other third parties. Which
of the following is least likely to be included in this inquiry?
a. legal advisers/solicitors.
b. bankers.
c. customers.
d. the chamber of commerce.
9. After performing additional tests of controls, the auditor reassesses control risk
from the initial planning level of slightly below maximum to moderate. The auditor
should now:
a. decrease the level of detection risk, and decrease substantive testing.
b. increase the level of detection risk, and increase substantive testing.
c. increase planned substantive testing.
d. increase the level of detection risk, and decrease substantive testing.
10. When control risk is assessed at the maximum, the extent of documentation
required in the working papers is that:
a. no documentation is necessary.
b. the basis for the assessment and the conclusion must both be documented.
c. only the conclusion needs to be documented.
d. only the basis for the assessment must be documented.
13. Each income statement account is linked to at least one balance sheet account.
Which of the following would be the related income statement account for the
balance sheet account of inventories?
a. cost of sales.
b. depreciation expense.
c. sales.
d. none of the above.
14. Compared to balance sheet accounts, the audit of income statement accounts
generally relies more heavily on:
a. analytical procedures.
b. tests of detail of balances.
c. tests of detail of transactions.
d. both tests of detail of balances and of transactions.
15. An auditor may use sampling to obtain information about many different
characteristics of a population. However, most audit samples lead either to an
estimate of:
a. a dollar rate or a deviation amount.
b. the number of items in the population or the dollar amount of the population.
c. size of the population or the distribution of the population.
d. a deviation rate or a dollar amount.
17. The quantity ordered may not be displayed on the copy of the purchase order sent
directly to the:
a. requesting department.
b. vouchers payable department.
c. receiving department.
d. accounts receivable department.
26
18. The receiving department should be instructed to accept no goods without having
on file a properly authorised:
a. purchase requisition.
b. invoice.
c. receiving report.
d. purchase order.
19. Which of the following is not an income statement account related to property,
plant and equipment?
a. depreciation.
b. accumulated depreciation
c. loss on disposal of plant.
d. rent on operating leases.
20. The auditor identifies the specific audit objective: “determine that property, plant
and equipment (PPE) assets represent productive assets that are in use at balance
date”. This objective is derived from the:
a. existence assertion.
b. completeness assertion.
c. presentation and disclosure assertion.
d. rights and obligations assertion.
27