ACC331: The Expanding Role of Auditors- Legal Liability- Auditing Assignment Help

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Question 1

Over 40 countries currently have mandatory reporting for greenhouse gas (GHG) emissions, including the US, the UK, the EU, Canada, Japan, New Zealand and Australia. In Australia, GHG reporting is governed the National Greenhouse and Energy Reporting Act 2007 (NGER Act) and overseen by the Clean Energy Regulator. While it is not mandatory for GHG reports to be audited unless requested by the regulator, some reporting entities will voluntarily have their GHG reports audited. If an audit is completed, it must be conducted within the guidelines of the National Greenhouse and Energy Reporting (Audit) Determination 2009 legislation and relative Australian Auditing and Assurance Standards.

In addition, many companies that lodge GHG Reports will also include details about their greenhouse gas emissions in an annual sustainability report. Assurance of sustainability reports is also not compulsory. However, there appears to be an increasing trend for these reports to be assured. In Australia, Woodside Petroleum Limited (Woodside) and AGL Energy Limited (AGL) are two companies that report to the NGER and issue audited Sustainability Reports.

Required:

(a)  Summarise the structure and content of both companies’ GHG emission disclosures in their annual sustainability reports, including any additional voluntary reporting material. Compare this content to the disclosures on the NGER site.

(b)  Identify and explain the NGER audit requirements.

(c)  Explain the type of assurance opinions provided on Woodside’s and AGL’s 2016 Sustainability Reports, the criteria used to assess the subject matter of the engagement and the assurance standards employed by the auditors.

(d)  Indicate and explain which two (2) audit assertions would be of the most concern for an auditor in GHG reporting.

Question 2

CFW Ltd (CFW) is a distributor and warehousing facility for chemicals and fertilizer. It was reported to be carrying a very high level of inventory in its audited balance sheet at the time a successful takeover offer was made by Warehousing Ltd. Two months after the takeover, it is discovered that those inventories CFW does hold were considerably over valued and that they do not in fact possess the quantity of inventory claimed at the time of the audit. In the court action subsequently filed by Warehousing Ltd against CFW’s auditors, the following matters were established in evidence:

1. The auditors did not attend all stocktakes at year-end.

2. CFW were present at those for the Sydney based operations of the company only, this inventory is determined to have been overvalued by 35%. Although the auditors correctly verified the quantity of Sydney stock, they accepted managements’ valuation, which did not take account of considerable obsolescence

3. 50% of the company’s inventory is purportedly held at the company’s Bathurst facility and it is this inventory that does not exist.

4. It is also raised in evidence that the auditors were subjected to considerable pressure by CFW’s management to complete the audit within one month of the balance date. The auditors had undertaken this audit for the past six years and there was no evidence of any previous misstatements of the value of inventory.

Warehousing Ltd asserted that they had relied on the audited financial statements, as supplied to them by CFW in making their takeover offer. There is no evidence that the auditors were aware of this intended use of the accounts.

Required:

a) Prepare the case for Warehousing Ltd in their efforts to sue the auditors for negligence. Refer to relevant case law and precedents.
b) Will Warehousing Ltd be successful in their legal action? Justify your position by referring to the relevant cases and precedents.
c) Explain if your answer to (b) would change if Warehousing Ltd had written to the auditors telling them that they intended to buy CFW and were relying on the audited financial statements to assist them in making their decision.

Uploaded By : jack
Posted on : April 07th, 2018
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