Case Study Assignment for Auditing

This assignment consists of two (2) separate components, a group based component and
an individual component.
The first component (group case study assignment) is based on Woolworths Limited and
its controlled entities (Woolworths Group) and consists of a written report to be completed
in groups. Groups of four (4) are to be formed within your tutorial groups. Only one
submission per group is to be made by the due date and time i.e. you should nominate one
member to submit.
The objective of the group case study component is to develop your communications skills
and to test your ability to integrate skills learnt in this unit of study, i.e. to analyse a real
company from the auditor’s perspective. The successful completion of this case study
requires extensive research on Woolworth Group’s internal and external environments,
operations, strategies and an analysis of the 2012 annual report. You are expected to
demonstrate ability to synthesise relevant background financial and non-financial
information and apply analytical skills to this information to critically evaluate potential
significant audit risks in relation to the Woolworths Group.
The second component is an individual reflection report. Each student must make an
independent (individual) submission electronically by the due date and time.
The objective of the individual reflection component is to develop your capacity for
reflective practice in instilling an orientation to lifelong learning, and to facilitate the transfer
of knowledge and skills from the course into the professional workplace.
Part 1 (Group written submission – 30 marks worth 15% of the total assessment)
For the purposes of the group case study assignment, assume that you are a member of
the team responsible for the Woolworths Group audit engagement. You have been
assigned to gather relevant background information and prepare audit workpapers in
relation to the following specified planning issues.
1. From the background information you have gathered in relation to the Woolworths
Group, identify and explain eight (8) significant business risk factors that the
auditor needs to consider for the Woolworths Group engagement. [Max 3 pages]
(4 marks)
2. Provide a list of four (4) specific laws/regulations from different categories (other
than general corporate law, accounting standards, taxation, and ASX listing
requirements) that would be applicable to the Woolworths Group. [Max 1 Page]
(2 marks)
3. Identify one (1) account you consider to be susceptible to misappropriation and
one (1) account susceptible to fraudulent financial reporting within the
Woolworths Group and explain why. [Max 1 Page] (3 marks)
4. Assess the potential level of the reliance that could be placed on the overall
control environment of the Woolworths Group. Justify your decision with specific
reference to Woolworth Group’s corporate governance statement and any other
relevant source/s. [Max 1 Page] (3 marks)
ACCG340 Auditing and Assurance Services Session 1, 2013
Case Study Assignment 2
5. Briefly justify a planning materiality base and percentage (%) that could be
applied to the Woolworths Group. Calculate the $ planning materiality level
using the base and percentage determined above. [Max 1 page] (4 marks)
6. You are conducting preliminary analytical procedures as part of your initial audit
planning. With reference to the results of your analytical procedures (refer table
below) as well as your knowledge of the Woolworths Group and its environment
(including the financial statements and discussion provided in the 2012 Annual
Report) provide a brief commentary on the following aspects of the Woolworths
Group’s financial performance: Liquidity and Efficiency/performance [Max 1
page] (4 marks)
Formula used Results
2012
Results
2011
Liquidity
Serviced Gearing
ratio (%)
Per annual report 33.76 33.83
Debt ratio Total liabilities to total assets 0.61 0.62
Current ratio Current assets to Current
liabilities
0.86 0.79
Quick ratio Cash and Trade and other
receivables to Current liabilities
0.25 0.30
Service cover ratio
(times)
Per annual report 11.90 12.53
Efficiency and performance
Cost of doing
business (%)
Per annual report 20.18 19.85
Return on equity Per annual report 27.22 28.01
Inventory turnover
(times)
Cost of goods sold divided by
average inventory
10.97 10.85
7. Your business risk analysis and analytical procedures have highlighted
the following Woolworths Group’s accounts to be at significant risk. For
each of the following accounts – Goodwill and Inventory [Max 1 page]
(5 marks)
a) Outline why the account is at significant risk (1 mark) and
b) Provide the key assertion at risk (0.5 mark) and
c) Provide one (1) relevant substantive audit procedure to address the
assertion at risk identified in b) above. (1 mark)
8. For each of the following accounts and key assertions at risk, describe
two (2) controls that would mitigate the risk in relation to the key
assertion – Trade and other payables: Completeness and Employee
Benefits Expense (Casual Employee Wages): Occurrence [Max
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