Part 1: Risk of Material Misstatement (Inherent Risk) at the Financial Report Level (6 marks; around 300 words)
From your Understanding of the Client (i.e., Part 1), identify one(1) specific account balance (not account classifications!) that you consider at significant risk of material misstatement. For your chosen account balance:
a) Explain why the account balance is at significant risk of material misstatement (3 marks)
b) Explain one, key assertion at risk of not being valid (1 mark)
c) Detail one (1) relevant substantive audit procedure to address the assertion at risk as identified in b) above (1 mark)
d) Detail one (1) relevant practical internal control that would mitigate the risk in relation to the assertion at risk as identified in b) above.
Part 3: Format and Presentation Quality (4marks)
As mentioned above, Part 1 should be presented in a ‘report’ format.
A key aspect in your audit team’s (group’s) choice of format/layout should be to ensure you impart your key messages effectively (i.e., complete the requirements) and efficiently (i.e., it should be succinct and take into account the word limit).
As per the Submission Guidelines on page 1, the report also should be coherent, and so consistency is expected throughout (e.g., formatting, language style, linkages between the parts, page numbering).
Note, groups who split up the requirements and work independently are likely to have more difficulty accomplishing this objective compared to groups who work on each of the parts collaboratively (i.e., as an ‘audit team’). An assignment that has been put together last minute will be obvious to the marker and, therefore, will not earn many marks for this part.
Make sure all pages are numbered, and the text fits within the margins of your pages. Start each part on a new page and start each requirement of a part on a new page, making sure to include the relevant heading.
In terms of this part (worth 4 marks out of 40 marks), your ‘report’ for this part must have a/an;
(i) Executive Summary (around 100 to 150 words – not included in word count),
(ii) Introduction that succinctly outlines the main theme (s) and requirements of this part of the assignment (around 150 to 200 words),
(iii) Conclusion that specifically addresses (summarizes) Parts 1 and 2 (around 100words),
(iv) Reference list containing all cited works and
(v) Proper English grammar, appearance.