ACF5957 Auditing and Assurance – Semester 1, 2025

Individual Assignment (20%)

Due Date: 11.55 PM, Friday, 4 April 2025

Recent corporate scandals around the world have highlighted the need to define and enhance the role of auditors in responding to fraud. In response to stakeholders’ demands for enhancing the role of auditors relating to fraud, the International Auditing and Assurance Standards Board (IAASB) proposed a significant strengthening of its standard on auditors’ responsibilities relating to fraud.

The proposed revisions clarify expectations related to fraud, delineate more rigorous procedures, and improve transparency about the auditors’ duties and fraud-related procedures in the auditor’s report. The proposed revisions are intended to reduce the expectations gap and enhance the extent to which auditors are able to meet evolving public expectations as to the identification of material misstatements due to fraud.

The IAASB released an exposure draft (ED) of Proposed International Standard on Auditing 240 (Revised), The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial

Statements and Proposed Conforming and Consequential Amendments to Other ISAs (ED- 240).1 Some of these questions include:

1.   Does ED-240 reinforce the exercise of professional skepticism about matters relating to fraud in an audit of financial statements? If not, what suggestions do you have for increasing the focus on professional skepticism and why? (See Explanatory Memorandum Section 1-D, paras. 19-28; See Exposure Draft, paras 12–13 and 19–21)

2.   Does ED-240 appropriately build on the foundational requirements in ISA 315

(Revised 2019)2  and other ISAs to support a more robust risk identification and assessment as it relates to fraud in an audit of financial statements? If not, what suggestions do you have for increasing the focus on risks of material misstatements and why? (See Explanatory Memorandum Section 1-F, paras. 36-46; See Exposure Draft, paras 26-42)

3. Does ED-240 appropriately enhance transparency about matters related to fraud in the auditor’s report? If not, what do you propose and why? (See Explanatory Memorandum Section 1-H, paras. 58-78; See Exposure Draft, paras 61-64).

Assignment Requirements

You are required to complete ALL the following questions:

Please select ONE of the above questions for your assignment. Your analysis should focus only on the question you select, that is, do not cover all of the questions listed above.

1. Describe in your own words why this topic (issue) might be of concern. (4 marks, maximum 300 words)

Your    answer     should     refer    to     the     proposed    changes     in     ED240     (Revised) (https://ifacweb.blob.core.windows.net/publicfiles/2024-02/IAASB-Exposure-Draft-

Proposed-ISA-240-Revised-Fraud.pdf) compared to the auditing standards you have learned during the semester. Your answer should also relate to why the proposed change in ED240(Revised) is relevant for a financial statement audit.

2. Refer to the submissions of comment letters by organisations (such as accounting firms, accounting professional bodies, regulatory bodies and entities), choose TWO submissions by organisations (not the individual submissions) and compare and contrast their responses/ concerns/ suggestions/ recommendations related to the topic (issue) you select from Question 1. Make sure you write down the name of the organisations clearly. See the submitted comment letters: https://www.iaasb.org/publications/proposed-international-standard-

auditing-240-revised-auditor-s-responsibilities-relating-fraud-audit (5 marks, maximum 400 words)

3. Identify TWO academic journal articles relating to the topic covered by the question.

Provide a succinct summary of both articles.  Explain if the findings ofthe articles support/ refute the discussion about the potential effectiveness of the proposed change. (6 marks, maximum 500 words)

The answer should reference at least 2 peer-reviewed articles from A*/ A ranked accounting journals according to the ABDC rankings published within the last 5 years. Access to the journal rankings can be found from the following link: https://abdc.edu.au/research/abdc- journal-quality-list/

4. Provide potential suggestions to better implement or improve the implementation of the recommendation in the Australian audit context, with an example. (3 marks, maximum 200 words)

In answering this question, avoid repeating recommendations proposed by the comment letters by organisations in Question 2 and the journal articles selected in Question 3 above. Recommendations will be assessed on their practicality.

Overall: Writing Style, Clarity & Structure (2 marks)

Submission Guidelines

•    The assignment must include appropriate referencing. Information sources and references should be stated clearly in-text and in the reference list.

•    Al tools may be used to aid with the completion of the task, assisting with brainstorming, generating ideas, and proofreading, but the work submitted must be the original thought and the effort. Inappropriate AI use and/or AI use without acknowledgement will be considered a breach of academic integrity. If you use AI tools, you need to include a separate acknowledgement (not included in the word count) detailing how Al was used in the process.

•    No restriction on your style. However, clear presentation and communication are expected.

•    Words limit: 10% allowance exceeding the maximum word limit for each question, not including references.

•    The PDF or Word document submission must be in 12 font-size, Times New Roman, 1.5 spacing, and 1-inch page margins.

•    No cover sheet is required. Student name, ID and tutorial class should be indicated on top of every page.

•    Your submission should be your (original) work and succinct. Any plagiarism or direct copy/paste from any materials will be severely penalised. Moodle (Turn-it-in)  will not only compare your submission to those of your peers but also to the materials on which the assignment is directly based.

Assignment Submission

•    Please submit a softcopy (PDF only) via Moodle. Further details will be disclosed in the Moodle page.

Submission Deadline

•   4 April 2025 (Friday), 11.55 pm.

•   The penalty for late submission is 5% per business day late with no assignment to be accepted seven business days after the due date.