Auditing case study – 2500 + 10% word report - individual assessment.

Subject Learning Outcomes

a) Apply the various auditing standards and procedures taking into consideration the professional legal and ethical standards relevant to audits by the application of these to the conduct of an audit.

 b) Apply the concepts of risk analysis, internal controls, audit testing procedures and audit sampling techniques as they apply to audit practice.

 c) Evaluate information of audit practice and audit reports with reference to current auditing standards.

Assessment Type: Auditing case study – 2500 + 10% word report - individual assessment.

Purpose: To allow students to demonstrate their ability to research, critically analyse trends and issues in auditing and assurance services, identifying problems as would arise in a modern organisation. This assessment relates to Learning Outcomes a, b and c.

Topic: in research question below

Task Details: 2500 + 10% word short report. Based on the information provided, and using current theories and models in auditing and assurance services, students need to analyse how they apply to the given situation. Specific research supported recommendations need to be provided

Research requirements : Students need to support their analysis with references from the text and a minimum of ten (10) suitable, reliable, current and academically acceptable sources – this should include at least 4 peer-reviewed academic journal articles. Academic acceptability of other sources is as advised by the lecturer/tutor.

Research Question

Auditor’s Report

The new auditing standard ASA701 Communicating Key Audit Matters in the Independent Auditor’s Report is developed in the wake of the global financial crisis, in particular the collapse of Lehman Brothers. This development is in response to calls from shareholders to know more about the companies they invest in. You are required to research the auditing issues surrounding the collapse of Lehman Brothers. Further you are required to relate the issues that led to the development of the new auditing standard ASA701 Communicating Key Audit Mattersin the Independent Auditor’s Report. As a result of your research, provide the key audit matters which would be required to be disclosed in the audit report to the members of Lehman Brothers if the new auditing standard ASA701 (ISA 701) had applied in the period leading up to the collapse of Lehman Brothers.

 Required

Using the reference materials available on the internet, research the topic and discuss the auditing issues surrounding the collapse of Lehman Brothers. Explain how this was not forewarned in the auditor’s report which gave an unqualified opinion before its collapse. Explain how the new auditing standard ISA 701 Communicating Key Audit Mattersin the Independent Auditor’s Report may provide additional information about the impending collapse of Lehman Brothers, explaining clearly what these matters are. Also, state clearly what the auditor of Lehman Brothers would have disclosed in “Key Audit Matters” if ASA 701 was applicable then as well explain how this would be an improvement in auditing practice.

The report should include title page, executive summary, table of contents, appropriate headings and sub headings, recommendations,reference list (Harvard-Anglia style), attachments if relevant,single spaced, font Times New Roman 12pt. The marking guide will be as follows: