Deadline: 31 October 2006.
Perform research & submit a report covering the following topics. You can do this in group.
1. Expectation gap: (a) Identify and discuss the factors which contribute to the expectation gap (e.g. responsibilities for fraud & error, litigation) (b) Suggest ways in which the gap might be bridged.
2. Professional indemnity insurance: (a) Explain the terms ‘professional indemnity insurance’ and ‘fidelity guarantee insurance’. (b) Discuss arguments for and against mandatory cover.
3. Insider dealing: (a) Explain the term ‘insider dealing’ and why it is damaging. (b) Explain what are the fundamental principles of insider dealing. (c) Suggest measures to reduce the exposure of partners and staff to the risks of insider dealing.
The following students did not take their mid-semester exam:
Mohd Khairul Yusri bin Mat Jusof
Kindly note that if I do not receive a letter from you by 18 October 2006, stating an acceptable reason as to why you failed to take the exam (e.g. sickness with a doctor’s certificate), your mid-semester exam mark will be zero and you will not be allowed to take a replacement exam.
The following student still has not given me the Assignment 1: Aaronica Sembulan. Kindly do so asap.
As usual, there will be 4 questions – all compulsory, 25 marks each. 2 questions will be theoretical in nature, 2 will be practical/case-based.
Materials covered will be from Week 1 – Week 9 only. Materials from Week 10 – Week 13 are not included. Also, topics covered in the mid-semester exam MAY also be included in the final exam.
And now, for the tips…
Week 1: Auditors’ Report –> Different types of audit opinions, the basic elements of an auditors’ report. Issuance of the right type of opinion in different scenarios.
Week 2: Internal audit & operations –> The objectives, scope & responsibility of internal audit, similarities/differences between internal & external audit, concept /objectives /scope of operational audit.
Week 3 – 5: Auditors’ Reponsibilities & Legal Liabilities:
Ethics –> Ethical requirements including independence, objectivity, integrity, competence, proficiency, changes in professional appointment, confidentiality. MIA By-Laws. You must be able to answer & discuss case-based scenarios here.
Legal liability. Determination of negligence (the 5 elements) & fraud – ability to discuss a legal scenario is important.
Week 6: Corporate governance –> Objective, relevance, importance. Sarbanes-Oxley Act 2002. The Malaysian Code of Governance.
Week 7: Non-audit engagements –> Reviews, agreed-upon procedures, compilations, reporting on Prospectus & Prospective Financial Information, due diligence engagements, special purpose audits, reporting & communications. Ensure you are familiar with each type of engagement and the procedures involved, and are able to give examples of each type of engagement.
Week 8: Assurance Services Engagements –> Understand what are assurance services engagements, and the relevant standards. Elements of an assurance engagement, types of assurance engagements.
Week 9: Audit Investigation: The different types of audit investigations, i.e. Acquisition of companies (due diligence review), prospective lending, investigation under the Companies Act 1965 & back duty investigation. Ensure that you understand the purpose of each type of investigation and are able to discuss the specific procedures.
For the final 2 weeks of the semester (9 October 2006 & 16 October 2006), we will have group presentations.
Get yourselves in groups of exactly 13 each. (Only 1 group may comprise of 14 people.) You will be set 5 topics (detailed below). Please choose ONE. To select your presentation topic & group, please fill in your names on the sheet of paper pasted on my door.
Instructions for group presentation:
1. Do all the relevant research using books, journals & the internet.
2. Present your findings using presentation aids, if possible, e.g. posters, handouts, LCD/powerpoint. [To borrow the LCD, please check with Encik Jainurin. Encik Jai is holding an LCD belonging to the Pusat Perakaunan.]
3. Presentation must be done in English and must be very detailed in order to achieve a high score.
4. Each group member must be a presenter.
5. Each presentation must not be longer than 45 minutes, to be followed by a Q&A session from the rest of the class (no longer than 5 minutes).
6. Each group must hand in a written report of their findings. The report will be handed to the lecturer (me) and will be marked accordingly.
7. This assignment will carry 10% of your final grade (5% will be allocated to the presentation and 5% to the written report).
8. The topics and the presentation dates to be chosen are as follows:
9 October 2006: 9 am – 12 pm
Group 1 – Outsourced finance & accounting functions
(Guide: (i) Explain the different approaches to “outsourcing” and compare with “insourcing”, (ii) discuss the advantages and disadvantages of outsourcing finance & accounting functions including data/transaction processing, pensions, information technology, internal auditing, due diligence work, taxes (iii) explain the impact of oursourced functions on the conduct of an audit.)
Group 2 – Social & environmental audits
(Guide: Discuss the increasing importance of policies which govern the relationship of an organisation to its employees, society & the environment, explain the auditor’s main considerations with respect to social & environmental matters & give examples of how they impact on companies and their financial statements (e.g. impairment of assets, provisions, contingent liabilities), discuss how control over social & environmental risks may be exercised by management & evaluated by the auditor.)
9 October 2006: 2-5 pm
Group 3 – Information technology (IT)
(Guide: Describe recent trends in IT and their current & potential impact on auditors, e.g. identify & discuss the audit implications of financial reporting on the internet, explain how IT may be used to assist auditors and discuss the problems which may be encountered in automating the audit process.)
Group 4 – Multinational accountancy firms
(Guide: Describe the different ways in which the auditing profession and audit markets are regulated, discuss the advantages & disadvantages of partnership status, limited liability partnerships & incorporation of audit firms, describe the current developments in the limitation of auditors’ liability and the practical ways in which the risk of litigation & liability can be reduced, distinguish between ‘global auditing firms’ & second-tier firms.)
16 October 2006: 9 am – 12 pm
Group 5 – Small Medium Enterprises & audit exemption
(Guide: State the case for and against audit exemption for small businesses, discuss audit exemption provisions in Malaysia and other countries, explain how auditing standards affect smaller audit firms, discuss how the potential problems associated with the audit of small enterprises may be overcome.)
Download the lecture notes here.
The case answers for Bling Bling Bad Guys can be downloaded here.
Sorry everyone, I forgot to upload these before the lecture.
Lecture notes –> here.
Tutorial answers –> here.