Assessment task details and instructions
(a) Introduction
According to the international and the UK auditing standards, auditors are accountable for obtaining reasonable assurance that financial statements should be free from material misstatements (MM). However, it is not possible to detect some
MM even if properly planned in accordance with ISAs as fraud is likely to be concealed (ISA 240,5).
Over the last decades, many fraud and audit failures took place internationally. As for example, the 2001 Enron scandal, eventually led to the liquidation of the Enron Corporation, an American energy company, and the de-facto dissolution of Arthur Andersen, which was one of the Big Five largest international audit and accountancy firms. Based on the current context of UK, Smith, S. (Senior Manager, KPMG/UK, 2017), stated that: ‘‘Fraud is on the up and dominated by low- value cases, suggesting individuals are stealing less significant amounts of money in an attempt to avoid detection. The fact employee fraud has more than doubled in comparison to previous years is also concerning. It’s a stark warning that business leaders need to be observant when it comes to keeping an eye on potential fraudulent activity in their organisations, and highlights the importance of implementing appropriate fraud prevention measures. Only by doing so will management teams be able to effectively mitigate risk and protect their business.”
(b) Requirements:
By referencing to auditing literature and professional standards, you are required to:
- 1) Explain the concept of financial statements fraud, and the auditors’ legal and professional responsibility; (25%) 500 words
- 2) Discuss –
- the ways auditors can recognize symptoms of fraud existence,(12.5%) 250 words
- the situations they may have difficulty in detecting existing fraud activities (12.5%). 250 words
- 3) Discuss the actions by auditors when they detect fraud;(25%) 500 words
- 4) Critically analyse the impact of fraud on audited financial statements. (25%) 500 words
It is essential to talk about a recent fraud event such as Thomas Cook and Enron and Lehman Brothers throughout the assignment but mainly in part 4 to critically analyse
Assessed intended learning outcomes
On successful completion of this assessment, you will be able to:
Knowledge and Understanding
180
- Evaluation of the auditing profession
2. Appraisal of the professional auditing environment
3. Select, present and synthesize relevant auditing information - Understand the UK and International Corporate Governance regulatory framework.
Transferable Skills and other Attributes
- Effective use of written communications
2. Location of information
3. Construction of references/ bibliography using Harvard referencing
4.Development of presentational skills
Module Aims
To evaluate and appraise the role of the Professional Auditor in the UK 2. To consider and evaluate professional audit processes
- To reflect on the impact of the global business environment on the work of the Professional Auditor
Word count/ duration (if applicable)
The length of the assignment should not be more than 2000 words +/- 10% excluding bibliography and references. You should bear in mind that it is the quality of analysis that matters, not the number of words in the assignment.
