Auditing Assignment -

Learning Outcomes -

• Explain and apply the principles, practice and process of auditing to practical situations.
• Research, critique, interpret and communicate current and future auditing issues to specialist and non-specialist audiences.

Assignment Description -

This assignment is comprised of three parts.

Part 1 - Research on 'Big 4' and 'non-Big 4' audit firms (1200 words)

Audit firms are categorized in a number of ways; the two most common being the international 'Big 4' audit firms and the "non-Big 4' (or mid-tier) audit firms.

The Big 4 audit firms are (I) PriceWaterhouseCoopers (PwC), (ii) Ernst and Young (EY). (iii) KPMG, and (iv) Deloitte.

Most audit firms maintain a website that explains the services offered by the firm and provides resources to their clients and other interested parties. The services offered by most firms include both audit and non-audit services.

Required - Find the websites for: (a) a 'Big 4' audit firm and (b) a 'non-Big 4/mid-tier' audit firm. Present a 'business report' that addresses the following two requirements;

(a) Compares your two audit firms on the following ten characteristics: (1000 words).

i. Range of services provided.

ii. Geographic coverage (i.e. where their offices are located).

iii. Number of staff and special skills offered.

iv. Industries in which they claim specialization/expertise.

v. Publications and other materials provided to their clients or the general public.

vi. Key marketing message(s).

vii. A topic of your choice No. 1_

viii. A topic of your choice No. 2.

ix. A topic of your choice No. 3.

x. A topic of your choice No. 4.

Note, to find four 'topics of your choice, you will need to look-up (at least) four articles published in 'professional' and/or 'academic' accounting/auditing journals that have examined differences between 'Big 4' and "non-Big 4' audit firms. These articles (reference sources) must be cited in your responses, and listed appropriately at the end in a reference list.

(b) Makes a recommendation on which audit firm your group would prefer to work for and why. Your explanation must refer to the material presented in Part 1 (a). If the recommendation of your group is 'undecided', then explain why, again, referring to the material presented in Part 1 (a). (200 words)

In terms of Port 3's 'Format and presentation quality', your 'business report' for this part must have a/an;

(i) Executive summary (between 100 to 200 words),

(ii) Introduction that succinctly outlines the main theme (s) and requirements of this part of the assignment (no more than 200 words),

(iii) Body that specifically addresses the requirements of Part 1 (a) no more 1000 words),

(iv) Conclusion that specifically addresses Part 1 (b) (no more than 200 words), and

(v) Reference list containing all cited works.

(iv) Proper English grammar, appearance.

Part 2 - Research on Arthur Andersen/Enron (600 words)

In 2002, the audit firm Arthur Andersen (one of the then 'Big 5' audit firms!) collapsed following charges brought against it in the United States relating to the failure of its client, Enron. Some other clients announced that they would be dismissing Arthur Andersen as their auditor even before it was clear that. Arthur Andersen would not survive.

Required

(a) Using any two of the three theories outlined in Gay and Simnett (2015, Chapter 1, pages 20-21)) (i.e., the prescribed textbook) on the demand for assurance ((i) Agency Theory, (ii) Information hypothesis, and (iii) Insurance hypothesis), explain some reasons why these clients took this action.

(b) Present an argument of why a similar event is not likely to happen again. Your discussion should be (i) in context of what went wrong with Arthur Anderson/Enron and 0) make specific references to how regulations and auditing standards have changed since the collapse of Arthur Andersen.

Part 3 - Format and presentation quality

As mentioned above, Part 1 (a) and Part 1(b) should be presented in a 'business report' format.

A key aspect in your group's choice of format/layout should be to ensure you impart your key messages effectively (i.e., complete the requirements) and efficiently.