Welcometo22522AssuranceServicesandAudit1. SubjectIntroduction2. OverviewofAuditing3. TheImportanceofCorporate

Governance

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1.SUBJECTINTRODUCTION

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Whoisincharge?

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Classetiquette:Allstudentsareexpectedtobehaveinaprofessionalmanner.Thisincludesthefollowing: Allmobilephonesshouldbeturnedoffduringclass Bepunctual yourlecturer/tutorhasrighttorefuseentrytolatestudents Berespectfulofyourlectureranddonotpackupbeforetheclasshasended.

If something is in the subject outline and is not discussed in the lecture (perhaps because oftime limitations) it is still examinable and you must learn it! Homework policyThis policy states that any student that wishes to attend class must complete the

required homework. Your lecturer can randomly check homework at any time. Anystudent found in the class without completed homework may be asked to leave.Students may only return to the class when they can show that their homework hasbeen completed.

Coordinator Dr AmandaWhite

Office location CM05.C.3.13

Phone 95143637,0410650179

Email Amanda.W.White@uts.edu.au

Consultation CheckUTSOnline fordetails

Expectations

Assessmentformat Midsemester exam 15% Classpresentations 25%

WatchthevideoonUTSOnlinethatexplainshowtheClassPresentationassessmentworks.

BeginsinWeek2.VitalyouattendtutorialsinWeek1. Finalexam 60%

Workload _____hoursperweek Readingtextbook,auditingstandardsandpreparingtheclasspresentationseachweek

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Expectations

Thissubjectwillrequirestudentstodevelopthefollowingskills: Workingaspartofateam Problemsolving Criticalthinking Presentationandcommunication Timemanagement

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Modern Auditing and Assurance Services, 5thEdition Value Pack

Value Pack 1: = RRP $230.95Includes: Leung Print book with e-Text and iStudy, plus Auditing and Assurance Handbook 2014 with e-Text, and Cloud 9

OR

Value Pack 2: = RRP $166.95Includes: Leung e-Text and iStudy, plus Auditing and Assurance Handbook 2014 with e-Text, and Cloud 9

The above value packs are only available from your UTS Co-op bookshop.

Requiredtexts

Animportantnoteabouthandbooks

2014editionsonlycanbebroughtintotheFINALexam(notthemidsemester)

Theycanbeannotated youcanwriteasmanynotesinthehandbookasyoulike!

Thehandbookcanbehighlightedandunderlined Youcantabpagesorstandardsofinterest YouCANNOTwriteonthetabs(tabsmustbeblanktobetakenintothefinalexam)

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2.ANOVERVIEWOFAUDITING

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Auditobjective

Toexpressan__________ aboutwhetherthe________________ispreparedinallmaterialrespectsinaccordancewitha________________framework (ASA200)

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Ademandforaudits

Agencytheory The_________________relationship

Informationhypothesis Improvingthequalityofmanagements_____________

Insurancehypothesis Shiftingsomeresponsibilityforthecorrectnessoftheaccountsontotheauditor

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Regulation

Annualauditsrequiredby: Companies,registeredschemes&disclosingentities(excludessmallproprietarycompanies)

Commonwealth&stategovernmentdepartments,statutoryauthorities,governmentcompaniesandbusinessundertakings,municipalities

Notforprofitorganisations

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Providersofaudits

Financialauditsprovidedby___________auditors

MustberegisteredwithASICtobeabletoperformauditsonreportingentities

Criteriasetoutins.1280CorporationsAct Educationalqualifications Workexperience MemberofICAAorCPAAustralia

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Assurance

Whereinformationispreparedbyonepartyandthenattestedtoitsaccuracybyanotherparty

Levelofassurancecanvaryaccordingtotheparticularengagement Reasonable,limitedandnoassuranceengagements

Maybefinancialornonfinancial Whatwearestudying:

Financialauditsimplyareasonablelevelofassurance Arethemostpopulartypeofassuranceengagement

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Auditingenvironment Professionalbodiesworktodevelopstandardsforpractice,

educationandqualifications. ASICenforcestheCorporationsAct

Responsibilityforaccountingandauditingstandardsettingsundergovernmentcontrol

Specificrulesforauditingandauditorindependence CompaniesAuditorsandLiquidatorsDisciplinaryBoard

(CALDB) EstablishedunderASICAct HearsbreachesunderCorporationsActofauditorsand

liquidators Auditingfirmsconductassuranceengagementsforclients

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Doestheauditmeetdemandsofusers?

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Doauditsprovidegoodvalue?

Assessingvaluecanbeexaminedbyasking: Howoftenaretheyassociatedwithcompanyfailure?

Doauditorsgettheauditreportcorrect? Howmuchdotheycost? Doauditsprovideeconomicvalueinthemarket?

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Auditexpectationgap thedifference

betweenwhatauditorsactuallydowhentheyconductanauditandwhatshareholdersandothersthinkauditor'sdo,orshoulddo,inconductingtheaudit(ReportofHIHRoyalCommission)

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Auditexpectationgap

Remediestoaddressunrealisticexpectations: _______________ofstakeholdersaboutwhatanauditprovides

Remediestoaddressdeficientstandards: Reportingoninternalcontrol Detectionoffraud Evaluationofgoingconcern

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GOVERNANCEANDTHEAUDITOR

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WhatisGovernance?

Theexerciseofeconomicandadministrativeauthoritytomanageanentitysaffairs

Concernedwithprocessesbywhichdecisionsaremadeandimplemented

Applicabletoallentities characterisedbyparticipation,transparency,accountability,ruleoflaweffectiveness,equity..Goodgovernancereferstothemanagementofgovernmentinamannerthatisessentiallyfreeofabuseandcorruption,andwithdueregardfortheruleoflaw(OECD)

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Governance

Agencystructure Separationofownershipand_____________ Members(shareholders)replyonmanagement(agents)

Agentsconductthebusinessonbehalfofmembers Authorityofgoverningbodyunderpinnedbytransparencyandaccountability

Independentauditoraddstothecredibilityoftheconductoftheagent

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EnterpriseGovernance

thesetofresponsibilitiesandpracticesexercisedbytheboardandexecutivemanagementwithgoalofprovidingstrategicdirection,ensuringtheobjectivesareachieved,ascertainingthatrisksaremanagedappropriately,andverifyingthattheorganisationsresourcesareusedresponsibly.

CIMA&IFAC

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EnterpriseGovernance

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EnterpriseGovernance Basedonorganisation'sentireaccountabilityframework

Includes: rolesofchairoftheboardandtopmanagement composition,skill,remuneration&trainingoftheboardanditscommittees

adequacy&reasonablenessofexecutivecompensationschemes

internalcontrolstructure,riskmanagement&roleofinternalaudit

financialreportinganddisclosureregime independenceoftheauditfunction

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AuditorsandGovernance

Overallobjectiveoftheauditor: toobtainreasonableassuranceaboutwhetherthefinancialreportasawholeisfreefrommaterialmisstatement,whetherduetofraudorerror..(ASA200)

Effectivenessoftheauditfunctiononauditorsrelationshipwiththeentitysmanagementandgovernancebody

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AuditorsroleinEnterpriseGovernance

Providesassuranceofverifiability,complianceandaccountabilityoftheorganisation

Mayalsoberequiredtoensuretheorganisationandboardofdirectorshavecompliedwithrelevantlegislationandregulations

Performancedimensionincludessettingstrategicdirections,managingriskandkeyperformancedriversanddecisionmakingprocesses

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CorporateGovernanceandAuditing

Corporategovernance Frameworkofrules,relationships,systemsandprocessesbywhichauthorityiscontrolled

Includesstructure,systemsandrelationshipsbetweenboardofdirectors,management,auditorsregulatorsshareholders&thepublic

Encouragecompaniestocreatevalueandprovideaccountabilityandcontrolsystemscommensuratewithrisksinvolved

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AuditTrinityConcept

Externalaudit,internalauditandauditcommitteeasatripartite

Auditfunctionistoperformspecificdutiesthatcomplementandinterlockwiththeothermembers

Internalauditincludescorporategovernanceandaccountabilitymatters

Auditcommitteesoverseeinternalauditandexternalauditfunctions

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IssuesinGovernance

Internalcontrolandriskmanagement Effectivegovernanceandaccountabilitybasedoneffectivefunctioningofinternalcontrolandriskmanagement

Riskmanagementistheculture,processandsystemestablishedtomanageopportunitiesandminimise/controladverserisks

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Otherformsofauditing Internalauditing

Assuranceoveracompanysfinancialinformationandoperations

Toimproveefficiencyandeffectiveness InternalauditorsgainindependencebyreportingtotheAuditCommittee

Operationalauditing Evaluatesuseofresourcestowhethertheyarebeingusedinthemostefficientandeffectivemanner

Threeapproaches Riskbasedauditapproach Valueformoneyapproach Processauditapproach

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Whenauditingpublicsectorentities

Specialistauditorsarerequired Arangeofauditsandengagementsareconducted Financialstatement Performance _____________withlawsandregulations

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AuditCommittees

Enhanceeffectiveinternalaccountability Facilitatesparticipationofindependentdirectorsingovernanceprocess

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WhatdoyouneedtodoforWeek2?

GetintoaClassPresentationGroup Purchaseyourtextbookpack PreparehomeworkANDPRESENTATIONSreadyforWeek2(evenifyouvemissedoutonformingagroup)

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