Following engagement, an auditor often develops an audit strategy to guide detailed planning. The strategy includes the auditors' preliminary assessment of business risks, likelihood of fraud or failure to operate as a going concern, assessment of audit risk elements for key accounts or classes of transactions and the implications this may have on the auditors approach.
Individually, students are to develop an audit strategy for CSIRO. Imagine that you are on a team from an audit firm that has recently won the tender to audit CSIRO's financial statements for 2010/11 on behalf of the Australian National Audit Office. You have been asked to submit an audit strategy to CSIRO's next Board Audit Committee. NOTE: The strategy should be for the financial year ending 30 June 2011 (past) and not 2012.
The assignment must be delivered via electronic submission and hard copy no later than 11.00am on the Thursday of Week 10 this semester. All assignments should be marked to the attention of your tutor and have attached the assignment cover sheet signed by you.
Aspects of audit planning to consider:
• You will need to gain an understanding of CSIRO. This could be from:
- Website: www.csiro.au
- Annual Report 2009/10: http://www.csiro.au/org/Annual-Report.html
- Media commentary
- A presentation on CSIRO that will be given at a lecture during weeks 5 - 6
- Written questions to their internal auditors.
- Do not make other direct contact with CSIRO. You can contact the CSIRO speaker for limited questions that cannot be addressed by the tutor.
• What are the key business risks to CSIRO and how will these impact the financial statements and your audit? What strengths or weaknesses in internal control have you identified?
• Through ratio, risk and other analysis form an assessment of going concern, the potential for fraud and the relevance of this for your audit. You may need to refer to the notes of CSIRO's financial statements to calculate current assets & liabilities. What further steps will you undertake during the audit with regard to the risk of fraud?
• For three significant classes of transactions or accounts, identify preliminary audit risk components, proposed audit approach and four specific audit procedures for each that you intend to perform, one of which needs to be performed around balance date.
• Develop a timetable of when you will undertake your audit procedures leading to Board approval of the financial statements and distribution in August 2011.