Taskback to topBackground:You a member of the audit team at Miller Yates Howarth...Taskback to...

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Accounting

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Background:
You a member of the audit team at Miller Yates Howarth (MYH), anaccounting firm with offices throughout the major regional centresof NSW and Queensland. Although a medium sized firm by nationalstandards, MYH is the second largest regional accounting firm inAustralia. Most of MYH’s audit clients are in the agriculture,mining, manufacturing and property industries. All those industriesare currently under pressure, either from a downturn in commodityprices or fierce competition from overseas competitors. MYH havenow been appointed auditors of a community bank. Two auditdirectors have previous experience auditing in the banking sectorand need to raise the awareness of staff with respect to thegovernance issues that have recently impacted the bankingsector.
Question 1 (7%)
Required:
You have been asked to:
read audit standard ASA315 focusing on audit responsibility withrespect to client governance,
read the web page on the ASIC report on the Commonwealth bankwhich details the governance issues raised by ASIC(http://www.apra.gov.au/MediaReleases/Pages/18_17.aspx), and
prepare a report that:
summarises and justifies the auditor’s responsibility to reviewthe governance of an audit client, and
Includes a table for use in the audit which explains the impactof each of the ASIC identified Commonwealth Bank governance issueson audit risk. The table should further explain why each of theASIC recommendations would reduce audit risk. The template belowshould be used.
Issue
Impact on raising audit risk
Recommendation
Reduction in audit risk because of therecommendation

Answer & Explanation Solved by verified expert

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Auditors responsibility to review the governance of an audit client The auditor shall perform risk assessment procedures to provide a basis for the identification and assessment of risks of material misstatement at the financial report and assertion levels Risk assessment procedures by themselves however do not provide sufficient appropriate audit evidence on which to base the audit opinion Risk Assesment procedure includes 1 Enquiries of management of appropriate individuals within the internal audit function if the function exists and of others within the entity who in the auditors judgement may have information that is likely to assist in identifying risks of material misstatement due to fraud or error 2 Analytical See Answer

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In: AccountingTaskback to topBackground:You a member of the audit team at Miller Yates Howarth...Taskback to topBackground:You a member of the audit team at Miller Yates Howarth (MYH), anaccounting firm with offices throughout the major regional centresof NSW and Queensland. Although a medium sized firm by nationalstandards, MYH is the second largest regional accounting firm inAustralia. Most of MYH’s audit clients are in the agriculture,mining, manufacturing and property industries. All those industriesare currently under pressure, either from a downturn in commodityprices or fierce competition from overseas competitors. MYH havenow been appointed auditors of a community bank. Two auditdirectors have previous experience auditing in the banking sectorand need to raise the awareness of staff with respect to thegovernance issues that have recently impacted the bankingsector.Question 1 (7%)Required:You have been asked to:read audit standard ASA315 focusing on audit responsibility withrespect to client governance,read the web page on the ASIC report on the Commonwealth bankwhich details the governance issues raised by ASIC(http://www.apra.gov.au/MediaReleases/Pages/18_17.aspx), andprepare a report that:summarises and justifies the auditor’s responsibility to reviewthe governance of an audit client, andIncludes a table for use in the audit which explains the impactof each of the ASIC identified Commonwealth Bank governance issueson audit risk. The table should further explain why each of theASIC recommendations would reduce audit risk. The template belowshould be used.IssueImpact on raising audit riskRecommendationReduction in audit risk because of therecommendation

Issue	Impact on raising audit risk	Recommendation	Reduction in audit risk because of therecommendation