Explain the role of the audit committee.
Define inherent risks in your own words. Identify and explain the inherent risks in EJL.
b) Define control risks in your own words. Identify and explain the control risks in EJL.
c) Identify and explain the internal control strengths in EJL.
d) Assess inherent risk and control risk.
e) Define detection risk in your own words. Assess detection risk.
f) Based on your assessment of inherent, control and detection risk, what audit strategy would you
adopt? Explain why.
g) Calculate planning materiality. (This should be expressed as a dollar amount). Show and explain
Question 5 (4 + 2 + 4 + 4 + 4 + 4 = 22 marks)
Find the latest annual report of your company2 in http://www.asx.com.au/prices/companyinformation.html. Your company will have an audit committee.3
a) Explain the role of the audit committee.
b) What is the percentage of independent members on your company’s audit committee?
c) What is:
(i) the name of the company,
(ii) the company’s financial year end, and
(iii) the name of the firm which provided the external audit service?
d) What is:
(i) the name of the audit partner who signed the Auditor’s Report,
(ii) the date the Auditor’s Report was signed, and
(iii) the audit opinion?
e) Which components of the annual report did the auditor express an opinion on?
f) (i) What are non-audit services?
(ii) Did the auditor in your company provide non-audit services?
(iii) If yes, what were the nature of these services and what is the ratio of non-audit services to
the audit fee?
See Appendix to determine your company.
Some companies will call their audit committee an ‘audit and risk committee’ or an ‘audit risk committee’.
You are assigned to the company accordingly to the last number of your student identification
|2||ANZ||ANZ Banking Group Ltd|
|5||MQG||Macquarie Group Ltd|
|6||QBE||QBE Insurance Group|
|7||SUN||Suncorp Group Ltd|
|9||WBC||Westpac Banking Corp|
For example, if you student identification number is 215049776 your company is QBE – QBE Insurance
Note: some companies are also listed in the United States of America, so they make a Form 20-F
available for investors. International companies which are listed in a United States of America stock
exchange have to submit Form 20-F to the Securities Exchange Commission (SEC). Hence, the
information submitted follows US regulations instead of Australian regulation. For this assignment you
have to use the Australian annual report, which is lodged with the Australian Securities Exchange
You must use the Australian annual report. You do not need Form 20-F.