ACCT3005 Auditing Theory Practice

ACCT3005 Auditing Theory Practice


udy Period 5, 2017

ACCT3005 Auditing Theory PracticeAssignment Booklet

Course Co?ordinator: Chris Kandunias

University of South Australia 2017

MAJOR ASSIGNMENT Due 11:00pm* Sunday 8th of October 2017 Word Limit – 2,000 words**

*All references to submission times refer to Adelaide time (CST) **Penalties will be applied if your assignment exceeds 2,200 words

(Word count excludes reference list and appendices – it includes in-text referencing, headings, text contained in tables and footnotes)


Coca Cola Amatil (Coca Cola) is Australia’s largest company by turnover with a considerable market share. For more company information and annual reports see:

You will be required to assess and analyse Coca Cola from an auditing perspective, in the period leading up to reporting period ending on 30th September 2017 (although the reporting date for Coca Cola is not the 30th September, for the purposes of this assignment, we will be assuming that the reporting period for Coca Cola encompasses 1/10/20XX-30/9/20XY and is based around the due date of the assignment). This will allow you to collect articles up to and including the 30th of September.

The Internet is a valuable source of information for obtaining background information on a client, as well as the UniSA Library databases (eg EBSCO/ProQuest) available on the UniSA library link on the Course Homepage. The link to the UniSA library HomePage is here: / You are encouraged strongly to use the Internet and other media to assist you in collecting further information relating to Coca Cola. To do well in the assignment, it is required that you will undertake research on the entity beyond merely Coca Cola’ 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 large listed company. Coca Cola, as a live case provides students with the opportunity to experience more ‘real’ issues in the planning of an audit.

You will focus on collecting information relating to Coca Cola in the period leading up to September 30 2017 (as a general guide, you should focus your identification of appropriate information in the period 1st November 2016 onward for issues that will affect the planning of the audit for the period ended 3oth September 2017).

The objective of this assignment is to illustrate the nature of auditing – as all topics are connected in some way. The identification of relevant events, for example, will be important in identifying relevant inherent risks, as events often give rise to the identification of risks of material misstatement. It is this integration of the topics that makes auditing unique.

ACCT3005 Auditing Theory Practice

This ‘live’ case is only being used to illustrate the importance of planning an external audit. As such, please do not assume that this is a first time audit of the entity – you are to use the Coca Cola case like an auditing training tool rather than undertaking the audit of Coca Cola yourself. This means that you have to be very specific with your identification and discussion of relevant risks associated with the audit of the entity. The textbook for example, on pages 239–241 outlines some “generic” inherent risks which may be relevant in assessing inherent risk. One of these general inherent risks identified in the text is “initial versus repeat engagement”. Students cannot for example, use this as an inherent risk as this is a broad generic risk and we are also assuming that you are not the auditor of the

entity. It also makes it almost impossible to identify a specific potential misstatement in the financial reports associated with this risk or specific impact on the audit of the entity – one of the key requirements of the assignment is to identify specific potential misstatements so you need to stay away from identifying and discussing broad general issues. Students who identify this as an initial engagement as one of the risks associated with the entity, will receive no marks for discussion of this risk.

Academic Integrity: Please be aware of the dangers of plagiarism – we use Turn-it-in software and it is VERY reliable. Please refer to the discussion on academic integrity on the Course website – if you are caught and found responsible you will, as a minimum, score zero for a piece of assessment. Use the software available to you to ensure that your work, once submitted, meets the requirements of the University and is representative of YOUR OWN WORK. Try your best in this assignment. Part of the learning process is to apply the theory you have been learning in your degree to a practical situation. Such skills are vital when you are working in a professional environment and will hold you in good stead for your professional career.GNMENT (2,000 words): Due Date Sunday 8th October 2017 11:00pm Adelaide (Central Standard) time.


  1. Identify what you consider to be the ‘key’ inherent risk factors that could have an impact on the audit of Coca Cola Amatil for the year ended 30th September 2017 and/or future audits. (Again, remember, for the purposes of this exercise we are assuming the reporting date is the 30th of September, not the 30th of June).

For each of the inherent risk factors identified above, describe the risk clearly and state how and why you consider the issue may create the risk of potential material misstatement in the financial statements of Coca Cola for the year ended 30th September 2017. You are expected to identify four (4) critical inherent risks. It is expected that you will identify an appropriate Accounting Standard or mandatory disclosure requirement as part of your discussion of the potential misstatement. You must also identify an appropriate audit objective which you think is relevant to each of the risks you have identified and explain how you arrived at the identification of the audit objective (ie you must justify the identification of the audit objective).

(4 x15 = 60 Marks)

  1. Using your understanding of the audit evidence mix, discuss briefly how each of the risks you identified will impact on the evidence mix for the planning of the audit of Coca Cola. When referring to the evidence mix to use, reference should be made to the tests of balances, transactions and analytical procedures and the like (refer to the lectures for a complete list of types of evidence used by the auditor), indicate which specific areas in the accounting system would be critical and comment on the nature and extent of the testing required (see guidance notes in appendix). 

HINT: You are only required to assess the impact of the individual risk on the nature of the evidence mix. You are not required to identify an overall inherent risk and audit risk assessment for the entity. You are not required to determine an overall evidence mix for the entity. Focus only on the impact of each individual risk on the evidence mix required to assess the impact on each risk you have identified.(4 x 5 = 20 Marks)


Refer to Appendix four and guidance notes in Appendix 2.

(10 Marks)

TOTAL MARKS FOR THE ASSIGNMENT                                                              (90 Marks)

The above should be read in conjunction with the guidance notes, in the appendices at the back of this assignment booklet.


Index to Appendices

Appendix 1        Submission of Assignment

Appendix 2        Assignment guidance notes

  • Word limits
  • Late lodgement penalties
  • Objectives of the assignments
  • Assignment Broad Guidance Notes Appendix 3 Frequently Asked Questions and hints Appendix 4 Assignment feedback sheet/marking schedules Appendix 5 Note on Academic Integrity and use of Facebook Groups Appendix 6 Submission of a draft for question 1

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