FORMATIVE ASSESSMENT 2 [100 Marks] This project will explore the Auditing process that you will follow to complete the Audit successfully. Research and select an organisation that you are familiar with and is willing to assist you in this project. You have been appointed as the Auditor for a major Auditing firm and need to audit the selected organisation. Students may need to make assumptions during this process and when responding to the questions. These assumptions must be stated and qualified. Answer ALL the questions in this section. Question 1 1.1 Summarise in a tabular format the nature of the business with the following as a minimum: (5 marks) 1. Name and type of the business? 2. The value proposition of the business? 3. Target market & customers? 4. Size of the business in terms of Annual turnover? 5. Size of the business in terms of number of employees? 1.2 Summarise and discuss the different inputs into the Public Interest Score (PIS) for the selected organisation? (8 marks) 1.3 The table below can be used to provide your response. Criterion No. Criteria 1 Description Selected Org details wrt criteria Using the table in the previous section, calculate the PIS for the selected organisation and determine the financial reporting standards that the selected company must adopt and justify why based on the Companies Act No. 71 of 2008 (New Companies Act) commenced on 1 May 2011? Question 2 (7 marks) You have been requested to Audit the selected organisation. It is in the interest of both client and auditor that the auditor sends an engagement letter, preferably before the commencement of the engagement to help in avoiding misunderstandings with respect to the engagement. The engagement letter documents and confirms the auditor's acceptance of the appointment, the objective and scope of the audit, the extent of the auditor's responsibilities to the client and the form of any reports. The client signs the engagement letter as evidence of accepting the terms of engagement. 2.1 Tabulate and discuss the main required elements of this letter? (10 marks) 2.2 Compile an Audit Engagement Letter for your Audit to be issued to your client? (10 marks) Question 3 The objective of the auditor (you) is to implement quality control procedures at the engagement level that provide the auditor with reasonable assurance that: 1. The audit complies with professional standards and applicable legal and regulatory requirements; and 2. The auditor's report issued is appropriate in the circumstances. 3.1 Propose the leadership responsibilities for quality on audits and summarise your and your team's responsibilities? (5 marks) 3.2 Summarise the ethical requirements of the engagement partner? (5 marks) 3.3 Summarise the conditions that you can accept the audit engagement? (5 marks) 3.4 Summarise the competence and capabilities of your engagement team? (5 marks) Question 4 (20 Marks) The auditor should develop an audit plan for the audit to reduce audit risk to an acceptably low level. Propose an Audit Plan for your project with at least 5 tests of controls and substantive tests? Question 5 The objectives of the auditor are: (a) To form an opinion on the financial statements based on an evaluation of the conclusions drawn from the audit evidence obtained; and (b) To express clearly that opinion through a written report 5.1 Summarise the requirements of the applicable financial reporting framework that the auditor needs to evaluate to form an audit opinion? (10 marks) 5.2 Propose and summarise the different elements of the Audit report that you will include in your Audit report? (10 marks) Number Question FORMATIVE ASSESSMENT 2 1 Question 1 2 3 Summarise in a tabular format the nature of the business with the following as a minimum: Marks Guidelines Allocation Your response should not exceed 2 pages 1. Name and type of the business? 2. Value proposition of the business? 3. Target market & customers? 4. Size of the business in terms of Annual turnover? 5. Size of the business in terms of number of employees? Summarise and discuss the different inputs into the Public Interest Score (PIS) for Table the selected organisation? Using the table in the previous section, calculate the PIS for the selected organisation and determine the financial reporting standards that the selected company must adopt and justify why based on the Companies Act No. 71 of 2008 (New Companies Act) commenced on 1 May 2011? The response must be tabulated. Table 20 5 7 5 Question 2 6 co Research is required to answer this question and the response should not exceed 2 pages. 20 20 Tabulate and discuss the main required elements of this letter? At least 10 of the 12 Elements 10 7 Compile an Audit Engagement Letter for your Audit to be issued to your client? Letter with the relevant elements addressed Research is required to 10 8 Question 3 6 Propose the leadership responsibilities for quality on audits and summarise your and your team's responsibilities? answer this question and the response should not exceed 2 pages. Leadership 20 responsibilities for quality on audits and summarise 5 the team's responsibilities 10 Summarise the ethical requirements of the engagement partner? Ethical requirements 5 11 Summarise the conditions that you can accept the audit engagement? Conditions 5 Competence and 12 Summarise the competence and capabilities of your engagement team? capabilities of the engagement team 5 13 Question 4 14 Question 5 Your response should not exceed 2 pages. Plan format Ref to Risk Assessment procedure Test of controls Substantive test 20 20 Research is required to answer this question and the response should not exceed 2 pages. 20 15 Summarise the requirements of the applicable financial reporting framework that the auditor needs to evaluate to form an audit opinion? 5 requirements of the applicable financial reporting framework 10 16 Propose and summarise the different elements of the Audit report that you will include in your Audit report? Report requirements 10