Assessment 2: Group Project – Audit Planning
(Weighting Total – 30%)
Due Sunday 10th May 2020 at 11.59pm
Group Formation Your group of 4 will remain the same as the group you were part of in Assessment 1 (unless agreed with Unit Coordinator)
Working in a group You will now work with that group for the assessment task. You can use the email in this group area to communicate with group members and also save and share files between the group members. There is also a blog tool you can use to communicate.
Group Task Complete the Green Made Steel Ltd (GMS) Current File – Audit Planning Work Papers in the excel file provided on Blackboard under Assessment>Assessment 2
Submit the completed excel file online at the Group Project Submission link at Assessment>Assessment Item 2: Group Project in AYB301 Blackboard site.
Only one group member needs to submit on behalf of the group.
Blackboard will automatically link all group members to this submission
All marks and feedback will be provided electronically via Blackboard back to all group members.
Individual Task Each Student in the unit must also undertake a group project peer evaluation survey at Assessment>Assessment Item 2: Group Project by the due date and time.
• This evaluation score will be used to determine part of the teamwork marks for each group member.
• You need to give specific detailed comments when you rate each of your team members performance.
• Please be careful that the scores you give align with the comments you have provided for each item for each team member. The scores range from 5 (highest) to 1 (lowest).
Weighting Submission of completed GMS Current File Audit Working Papers (22%)
Individual Peer Evaluation Survey (5%), team minutes (3%)
Grading will be based upon the text that is within the word limit (or 10% above)
Length Word Limit (2000 words +10% maximum)
Note: The analytical review worksheet, the materiality calculation worksheet and the trial balance worksheet are not counted as part of the submission word count.
This assessment item assesses the following learning outcomes and AoL goals:
HO2.1 Investigate real world business issues and situations through the effective analysis, evaluation and synthesis of theory and practice
PC3.1 Professionally communicate accounting and legal knowledge, advice and recommendations in written forms to both accountants and non-accountants.
TS4.2 Apply teamwork knowledge and skills to work effectively with others across diverse accounting purposes and contexts.
Late Assessment and Extensions
As the group project is an assessment that involves a group of three students and the group has a number of weeks to complete the assessment task, students will be unable to apply for an extension via the QUT Late Assessment Policy. Further information on late assignments and extensions can be found at https://www.student.qut.edu.au/studying/assessment/extension. The MOPP Policy relating to Late Assessment and Extensions can be found here: http://www.mopp.qut.edu.au/E/E_06_08.jsp
AUDIT PERMANENT FILE INFORMATION UPDATE– Please refer to the information you considered in relation to client notes in Assessment 1 for STC – Chartered Accountants and Green Made Steel Ltd (GMS).
STC have resolved all ethical, legal and client evaluation issues and have signed the engagement letter with Green Made Steel Ltd (GMS) – a listed public company. This will allow STC to continue with the audit of GMS for June 30, 2020. The following information is additional to the Permanent File contents for GMS previously provided.
Summers, Trantor & Collins (STC) – Chartered Accountants
• Jacinta is remaining in the audit team and will be the Audit Engagement Manager (AEM). Her husband Matt has taken a job with a different organisation.
• Joanne Simpson STC Tax Partner has declared her shares in GMS as a minority (less than 5%) and has agreed not to undertake any tax work for GMS. She has been assigned a new Perth-based client and so will often be away from the STC Brisbane office.
• Sam Spelling remains as the Senior Auditor.
• Simon Hapland remains as the Audit Engagement Partner (AEP) as all ethical, legal and client evaluation issues related to the GMS audit were resolved.
• A new fee arrangement was agreed with GMS for the 2020 audit engagement as part of the signed engagement letter.
• Patrick Qu has been replaced in the GMS audit team by Andy Zhang who is an intermediate who worked on the GMS audit when he was an undergraduate auditor. He has been working at STC on other audit clients for the last two years.
• Miranda Strong has been replaced by your group of undergraduate auditors (you have no ethical issues or conflicts on interest in relation to the GMS audit).
Audit Client – Green Made Steel Ltd (GMS)
• GMS has advertised through the Australian Institute of Company Directors (AICD) for three (3) new independent board members to strengthen their governance position and construction industry experience. Two executive staff are attending board meeting.
• The travel bans on GMS products have been resolved and sales have increased as a result for the last quarter of the audit year.
• See the client meeting notes in the GMS Current Audit File (ACM1.1) for further insights into GMS accounting and auditing issues.
PLANNING THE AUDIT OF GMS LTD 2020 (22%)
To start the planning process, Jacinta Purdu (AEM) and Simon Hapland (AEP), had an initial meeting with the CEO and CFO of GMS. They provide the audit team with the following information from their meeting:
Current Audit File for GMS by setting up the work paper and worksheet templates:
Planning Meeting Work paper (AP1) is to be used in preparation for the audit team planning ‘brainstorming’ meeting
Analytical, Materiality and Risk Work Paper (AP2),
Analytical Review Worksheet (AP2.1)
Materiality Calculation Worksheet (AP2.2)
Trial Balance Analysis and Audit Risks (AP2.3)
Meeting notes taken at discussions with GMS Senior Management (ACM 1.1)
Meeting notes about the trial balance figures (ACM1.2)
Further details on the purpose of each of the work papers is provided below and on the following page.
Your group has been assigned to work with Jacinta’s audit team. Jacinta, Sam and Andy and your group (undergraduate auditors) are about to start work on the audit of GMS audit for the year ending 30 June 2020. This is a continuing audit of GMS by STC audit division. Jacinta has advised your group that any clarifications of the information provided should be addressed to her in the first instance.
Client Meeting Notes ACM1.1 provides the notes from the meeting between Jacinta, Simon and the GMS management team discussing the key management assumptions and accounting treatment of the items in the Trial Balance is in ACM1.2. This meeting was attended by Jacinta, Sam and Andy with the GMS CFO and relevant operational staff.
The AEP Simon Hapland has invited the whole audit team to a planning ‘brainstorming’ meeting to discuss:
The potential audit risk areas and their impact on the GMS 2020 audit
The potential strategy for the conduct of audit of the audit
Performance Materiality issues and concerns
Possible fraud or scepticism issues
As you are new graduates, Jacinta has asked your group to work together to prepare the following audit documentation for the audit planning “brainstorming’ meeting. Complete the documentation in the order listed below. Jacinta has agreed to provide additional information to the graduates if needed to clarify any information provided.
AP2.3 -Trial Balance Analysis & Risks Worksheet
This is a supporting worksheet that provides audit planning details of all trial balance accounts for GMS
It shows the final June 2020 balances (actuals as processed) and the comparative full year audited account balances for 30th June 2019.
• You will need to complete the analysis columns in this worksheet
• assessment of the inherent risk and control risk for each account balance (Col H)
• Interpret the variance and percentage movement information (Cols F & G)
• Identify the impact on the audit plan for each account balance (Col I)
This worksheet assists in determining the potential high-level audit approach for the GMS audit based on your knowledge of the Trial Balance accounts. STC must determine whether to use a lower assessed level of control risk approach OR a predominantly substantive audit approach for the audit overall based on these account assessments.
This worksheet will assist your group to Complete AP2 Analytical Review, Materiality and Risk Work Paper.
You should record the overall audit materiality from AP2.2 Materiality Calculation Worksheet in Row 8 of AP2.3 the Trial Balance Worksheet.
AP2.2- Materiality Calculation Worksheet
This is a supporting worksheet and will assist your group to calculate the materiality threshold for GMS, by comparing the data from 2019 and 2020 from AP2.3 Trial Balance Worksheet and commenting on the calculations.
You will need to discuss this information in the AP2 – Analytical Review, Materiality and Risk Work Paper.
This worksheet will assist your group to complete AP1 Planning Meeting Work Paper, AP2 Analytical Review, Materiality and Risk Work Paper and AP2.3 Trial Balance Worksheet.
AP2.1- Analytical Review Worksheet
This is the supporting worksheet for AP2 Analytical Review, Materiality and Risk Work Paper.
It will assist the group to calculate and consider the ratios for the current year 2020 and compare with calculations of the same ratios for the prior year 2019.
The group will need to use the Trial Balance figures to calculate the ratios and you are expected to use Excel formulae to automatically link between the Trial Balance worksheet and the Analytical Review worksheet.
You can insert a legend for your calculations if that assists you in analysing information.
This worksheet will assist your group to complete AP2 Analytical Review, Materiality and Risk Work Paper.
AP2 – Analytical Review, Materiality and Risk Work Paper (Supporting Schedule)
This work paper will summarise the findings from the analytical review, materiality and risks identified from the Trial Balance worksheet.
Each group will need to bring forward a summary of the key concerns and impact of materiality from the above worksheet analyses.
This worksheet will assist your group to complete AP1 Planning Meeting Work Paper
AP1 – Planning Meeting Work Paper (Lead Schedule)
This work paper should include the key findings of your group’s brainstorming from all the information provided and the completed work papers and worksheets.
The focus of this work paper is to identify the key impacts on the audit plan for GMS for the 2020 audit with sufficient detail for your group to present and discuss at the audit planning team meeting.
The group will need to consider the all the other work papers and worksheets in completing this work paper.
PEER EVALUATION OF GROUP PROCESSES – Completion of Survey, Meeting Minutes & Team Contract (8%)
Each Student in the unit must individually complete the Group Project Peer Evaluation Survey under Assessment>Assessment Item 2: Group Project in the AYB301 Blackboard Site.
This online assessment is a required element of the group project assessment task and is summative in nature (worth 5%). You will be required to answer a series of questions about how individual members of your group managed the group project process. Please read the notes on the front page of this document as well in relation to this peer assessment. In addition, your team contract and team minutes will also form part of this assessment process (3%).