Question 1: Company Analysis (12 marks)

Retrieve the financial report of a listed Australian company within the manufacturing industry for the 2022 financial year and answer the following questions:

a) Identify TWO accounts that you believe would warrant additional audit effort in the year 2022, along with TWO relevant assertions at risk for each account. (8 marks)

b) Identify ONE audit procedure to test each assertion listed for each account in Question 1 Part (a) above. (4 marks)

In answering Question 1 Part (a), the use of analytical procedures based on the financial statement is highly recommended.

Question 2: Key audit matters and COVID19 (5 marks)

The COVID-19 pandemic has significantly reshaped the economic landscape and created some challenges for financial reporting and audits. Make a detailed key audit matters section which includes TWO (2) key audit matters and audit procedures that could be a result of COVID-19. The KAMs you provide should refer to potential risks communicated in the notes to the financial statements and not part of the current audit report. Additionally, the KAMs should be different from the issues identified in Question 1.

KAM title	KAM detailed description	Audit procedures

Question 3: Current developments in auditing (6 marks)

In response to warnings by ASIC regarding audit quality in Australia based on their audit inspections, a Parliamentary Joint Committee (PJC) on Corporations and Financial Services was established in August 2019. The PJC prepared an interim and final report following submissions from interested parties and public hearings held across November and December 2019. Ten recommendations were provided, [1] among which the following was present:

Recommendation 3

The committee recommends that the Financial Reporting Council, in partnership with ASIC, by the end of the 2020-21 financial year, oversee consultation, development and introduction under Australian standards of:

• defined categories and associated fee disclosure requirements in relation to audit and non-audit services; and
• a list of non-audit services that audit firms are explicitly prohibited from providing to an audited entity.

REQUIRED: Discuss the advantages and disadvantages of this recommended practice.