Background information

Professional and Ethical Standard, (PES) 1, requires that professional accountants have the competence to undertake an audit. ISA (NZ) 315 outlines procedures that auditors must follow in gaining an understanding of a business.

Assume that you are a manager in an auditing firm in New Zealand and your firm has been approached by the Office of the Auditor General (OAG) to carry out their audit of Air New Zealand for the year ended 30 June 2020. You have been asked by one of the audit partners in your firm, who is considering whether to propose for the audit engagement, to gather some information about the company.

There are a number of sources that you can access for research in preparing information for the audit partners. For example the Air New Zealand website would be a good place to start your research.

Questions to be addressed by those presenting and for those not presenting, in your bullet-point summaries, are:

1. What are the business activities of Air New Zealand Limited that you will need to understand to carry out a successful audit? Using information you obtain about the company, and the industry it isin, come to an informed view as to the 'business' and 'industry' risk for this prospective client. Be sure to set out the basis (reasons) for your decision.