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This report is based on the following requirement - - BACKGROUND INFORMATION
- Santos is one of the largest publicly listed companies in Australia. The company has been in the media spotlight recently due to their focus on the production of gas, highlighting the importance of ensuring financial information is presented in a true and fair manner. Santos provides an excellent case study for illustrating the importance of planning an audit and in particular, assessing inherent risks in the planning stage.
- (Further information relating to Santos is available from their website:
- HYPERLINK "http://www.santos.com/company-profile.aspx" http://www.santos.com/company-profile.aspx ).
- Additional Information
- Details relating to the requirements of the major assignment can be found over the page. You will be required to assess and analyse Santos from an auditing perspective, in the period leading up to reporting periods ending on or after 30th June 2013.
- The Internet is a valuable source of information for obtaining background information on a client.
- You are encouraged strongly to use the Internet and other media to assist you in collecting further information relating to Santos. To do well in the assignment, it is reasonably expected that you will undertake research on the entity beyond merely the Santos homepage and their annual reports.
- Important Note to Students:
- The focus of this assignment is to illustrate the importance of planning the audit of a listed entity. Although Santos is a successful and “healthy” reporting entity during the period in question, the company provides students with an excellent study tool in understanding the nature of planning an audit.
- You will focus on collecting information relating to Santos in the period leading up to June 30th 2013 (as a general guide, you should focus your identification of appropriate information in the period 1 January 2012 onward for issues that will affect the planning of the audit for the period ending 30 June 2013 and/or the following year).
- The objective of this assignment is to illustrate the nature of auditing .
- ASSIGNMENT 1 (1,000 words)
- REQUIREMENTS/QUESTIONS
- Required:
- (a) Identify four (4) issues (accounting or otherwise) in that may have an impact on the planning of the audit of Santos for years ending on or after 30th June 2013.
- (HINT: Students should use initiative in answering this question. Remember auditors are trying to find conditions or events that might give rise to material misstatement. Whilst not necessarily related to Santos, ASA 315 provides some examples of common conditions and events that may indicate the existence of ‘risks of material misstatement’. Please go to the Appendix of ASA315 of your Auditing Handbook for a list of possible events or conditions that might possibly apply to Santos.
- Please be warned however that you MUST demonstrate clearly (with substantive research evidence) that an identified issue relates specifically to Santos and the planning of its audit.
- Inclusion of evidence of research is critical. Be sure to use in-text referencing.
- (b) State what audit evidence you would gather in assessing the issues identified in
- part (a) above, for inclusion in the planning strategies for the audit of Santos.
- HINT: When auditors identify conditions or events that give rise to the risk of material misstatement, they design information (evidence) gathering procedures in order to establish whether or not the identified risk exists and may result in material misstatement in the financial reports. This question is asking you to use your ‘best judgement’ to identify relevant audit evidence you might seek in the audit of Santos.
- The different types of audit evidence that might be referred to, is shown in paragraphs A10 to A25 of ASA 500. The challenge for students is to make the evidence gathering activities SPECIFIC to the risks you identified in part (a) above. Broad answers (eg look at sales documents for evidence of unusual sales) will not be sufficient. Think about the specific information you might seek in a real world situation. Where appropriate, be sure to use in-text referencing.
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