| EXAMINATION DETAILS |
| Course Code: ACCT1111 Main ONLINE TIMED ASSESSMENT Course Description: Assurance and Forensic Accounting Date of exam: 29/10/2021 Start time of exam: 2pm Duration of exam: 2 hours + 15 minutes reading time + 5 minutes downloading time + 10 minutes uploading time Total number of pages (incl. this cover sheet) 5 pages |
| ALLOWABLE MATERIALS AND INSTRUCTIONS TO CANDIDATES |
| Your assessment is scheduled to conclude at 4.20pm Melbourne Time. At that time your assessment period is over, and you have <10 minutes remaining to submit your assessment. Please note that you MUST submit your assessment BEFORE 4.30pm as Canvas automatically indicates LATE submission at 4.30pm. Any assessment pieces that are not uploaded before 4.30pm will not be accepted and will be regarded as a non-submission/non-attempt. It is your responsibility to ensure that you have allowed sufficient time to submit and that your submission has been completed successfully BEFORE 4.30pm. Bandwidth latency is hard to predict and depending on your own set-up may result in a slow upload. Please make sure that you have factored this in and that you have completed your submission well before 4.30pm. Your submission must be in a newly created MS Word document (.doc or .docx) and be named as StudentID Full Name ACCT1111 S2 2021 MAIN Assessment Please label each question very clearly and start each question on a new page. The final assessment is open book. The assessment comprises three sections and totals 50 marks: Section A Short Answer Questions 10 marks Section B Practical Application Questions 30 marks Section C Case Study Question 10 marks Attempt all questions. To obtain a pass in this course, candidates must obtain an overall mark of at least 50% for the whole semester. Upload your completed file at the start of the allotted time (i.e., 4.20pm). You will only be allowed to submit once. You must be a properly enrolled student in this course to be eligible to sit for this examination and to receive an official result. You are not entitled to sit this examination and no result will be recorded unless you are properly enrolled or have gained special permission from the Program Leader to sit this examination at this time. |
SECTION A
SHORT ANSWER QUESTIONS
Section A totals 10 marks. Answer both questions.
QUESTION ONE
Define audit risk and explain the THREE components of the audit risk model.
Audit risk is the risk that the auditor gives and inappropriate audit opinion when the financial statement is materially misstated.
(5 marks)
QUESTION TWO
Discuss accounting symptoms, analytical symptoms, and behavioural symptoms that can relate to the detection of inventory fraud. Your answer must include one example of each symptom.
(5 marks)
SECTION B
PRACTICAL APPLICATION QUESTIONS
Section B totals 30 marks. Answer both questions.
QUESTION ONE
You are considering purchasing a small-sized cafeteria founded 15 years ago by the vendor. The business has been very successful during this time. Financial records show earnings steadily increasing by 8% per annum, even during the Covid-19 Pandemic. Your review of the business identifies the following behaviours suggesting that fraud could be occurring:
- Employees regularly override internal controls and are not monitored by management.
- Two employees have free access to inventory kept in the cold store.
- There are friendly relationships between the manager, who also purchases inventory for the business, and three major suppliers.
- The manager has been observed taking cash regularly from the cash register.
REQUIRED:
- Discuss the fraud symptoms reflected by these behaviours.
- Discuss any fraud preventative measures that may be implemented to address these behaviours.
(Total: 5 + 10 = 15 marks)
QUESTION TWO
The last audit of Howard Ltd. was extremely difficult, as the client did not maintain appropriate books and records during the year. Although the statutory registers were maintained, the accounting records were not updated for the first nine months of the year, as the company was without an accountant during this period. An accountant was later employed in March and has tried to reconstruct records from the details of receipts and payments available. However, the accountant has been unable to reconcile thAe bank account and she is not satisfied that all transactions that occurred during the year are reflected in the financial report. The audit fee submitted last year was 15% higher than the previous year, mainly because of these record keeping issues.
The finance manager has been seething ever since. It is now three weeks before the annual general meeting. As the partner of another audit firm, you have been approached by the finance manager, to determine if you are interested in taking over the audit and, if so, how it would have to be arranged.
REQUIRED:
(a) List the factors you would want to clarify before you would consider taking on such an audit. List at least six (6) factors.
(b) Describe the steps which would have to occur to remove the former auditor and to appoint you as the new auditor. Describe at least three (3) steps.
(Total: 6 + 9 = 15 marks)
SECTION C
CASE STUDY QUESTION
Section C totals 10 marks. Answer this question.
QUESTION ONE
Currently, more complex audit procedures have become more automated due to the routine nature of these tasks. This shift from the more traditional audit to the more automated audit in the future will not happen because auditors choose to do so. A main driver of Audit and Big Data application by auditors is client-side demands. Changes in audit methodologies and technologies have been promoted by several large audit firms in response to the challenges of the information age. The need for Artificial Intelligence (AI) driving Audit Data Analytical tools has been brought about by client demands and the need for new perspectives related to fraud detection and prevention techniques used by auditors.
REQUIRED:
What issues or concerns has automation created for the audit and forensic accounting services market? Discuss your answer using complete sentences and using examples of real cases of fraudulent activities and relevant research discussed during the semester (do not write in point form).
(10 marks)
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