School of Accountancy

110.279 Auditing Administration Guide Extramural & Internal Palmerston North Auckland Wellington Semester 2, 2009

<www-accountancy.massey.ac.nz>

Copyright
This course pack may be used only for the Universitys educational purposes. It includes extracts of copyright works copied under copyright licences. You may not copy or distribute any part of this course pack to any other person. Where this course pack is provided to you in electronic format you may only print from it for your own use. You may not make a further copy for any other purpose. Failure to comply with the terms of this warning may expose you to legal action for copyright infringement and/or disciplinary action by the University.

Contents
Page

Introduction
Welcome.................................................................................................................................1 Paper Coordinator and Campus Co-ordinators ......................................................................2

Essentials
Aims .......................................................................................................................................3 Topics Covered.......................................................................................................................3 Textbooks and Recommended Reading .................................................................................4 Assessment .............................................................................................................................5 Studying Auditing ..................................................................................................................5

Details
Massey University Credit System from 2007 .........................................................................7 Suggested Study Programme ..................................................................................................8 Lectures, Tutorials, Workshops and Clinics ...........................................................................9 Assignment and Test Details ................................................................................................10 - Overview ...........................................................................................................................10 - Presentation of Written Work ...........................................................................................10 - Assignment Submission and Honesty Declaration ...........................................................11 Due Dates, Extensions and Penalties ....................................................................................14 Academic Ethics, Dishonesty and Plagiarism .....................................................................15 Assignment 1 ........................................................................................................................16 Assignment 2 ........................................................................................................................19

Posting, Courses & Contacts

Posting of Materials..............................................................................................................20 Contact ................................................................................................................................20 Extramural Contact Course ..................................................................................................21 General Contacts ..................................................................................................................22 Complaints ...........................................................................................................................22

Internet Resources
WebCT ................................................................................................................................23 Discussion Forums ...............................................................................................................23 Internet Links .......................................................................................................................23 Accessing the Online Resources...........................................................................................24

Library and Referencing

Library Service .....................................................................................................................26 Citing References .................................................................................................................27

Final Examination
Final Examination Important Details and Regulations ......................................................29 The 2009 Examination Paper and Past Examination Papers ................................................29 Sample Examination Paper...................................................................................................30

Introduction
> Welcome
Welcome to the 110.279 Auditing paper! Significant changes in Auditing (and Accounting) in New Zealand and globally have been taking place recently and this is expected to continue during 2009. It is appropriate therefore that some significant changes have been made to this paper for 2009: The paper is based on a new text and we are using the latest edition, published in 2009, so that we are able to work with the most up-to-date material available, The 110.279 Auditing and 110.379 Advanced Auditing papers have been restructured so that they integrate better and reflect changing professional requirements that were signalled towards the end of 2008 for those wishing to qualify as Chartered Accountants in New Zealand, There will be a significant change in the nature of questions used in tutorials, tests and the final examination. These questions will place more emphasis on testing the depth of your understanding of important concepts and less emphasis on your ability to simply recall information than has been the case in past years. Knowledge of Auditing concepts is essential for professional accountants; even for those who do not intend to practice as auditors. An understanding of how to assess risk and materiality, for example are critical tools for an accountant to be able to work efficiently and effectively. In addition, managerial ability is significantly enhanced by an understanding of assurance services (Audit is only one of these services) and how and when it is appropriate to use them. It is no surprise therefore, that 110.279 Auditing is a Major Requirement for the BBS (Accountancy) Degree and a compulsory paper for the BAcc Degree. The 110.279 Auditing Paper is concerned mainly with developing your understanding of a puzzle known as The Audit Process. Students should therefore regard the topics in the paper as pieces of a puzzle which are related to each other, rather than as discrete units to be studied in isolation. You also need to understand the relationships between given topics/ elements of auditing, for example, you may be asked to explain how audit risk and audit materiality affect audit planning. This clearly demands a deeper understanding than simply an ability to recall the notion of risk or materiality. This means that you will need to work consistently right from the start of the semester, so that you dont have gaps in earlier fundamental knowledge that you will need to draw on, to understand later steps in the Audit Process. We hope you will enjoy this paper it has the potential to develop your thinking skills in ways that will promote your chances of success in life let alone an accounting career!

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> Paper Co-ordinator and Campus Co-ordinators

Paper Co-ordinator and Albany Campus Co-ordinator: Warwick Stent
Telephone Office Office Hours Fax Email Postal Address (09) 414 0800 Extn 9542 Room QA3.18 Thursday 10.00 11.00am and 2.00 - 3.00pm (09) 441 8133 w.j.stent@massey.ac.nz School of Accountancy Private Bag 102 904 North Shore Mail Centre Auckland

Palmerston North (Internal) Campus & Extramural Co-ordinator: Lindsay Hawkes

Telephone Office Office Hours Fax Email Postal address (06) 356 9099 Extn 2157 Room 1.31, Social Science Tower Wednesday 10.00 -12.00am (06) 350 5617 L.C.Hawkes@massey.ac.nz School of Accountancy Private Bag 11 222 Palmerston North.

Wellington Campus Coordinator: John Arcus

Telephone Office Office Hours Fax Email Postal address (04) 801 5799 Extn 6887 5C22 Wednesday 9.00am-10.00am & Thursday 10.00am-11.00am (04) 801 2885 j.d.arcus@massey.ac.nz School of Accountancy Private Bag 756 Wellington

Students who require assistance with the course material should contact their campus coordinator in the first instance. The 110.279 teaching staff will respond to student enquiries outside of the above office hours - where these are reasonable. We do not, however, welcome student enquiries outside of normal business hours, i.e., at nights or weekends.

110.279 Administration Guide

Essentials
> Aims
The Prescription for this paper is: An introduction to the basic principles of auditing, including the function of audits and the concepts that govern audit processes and practices. The Learning Outcomes which Paper 110.279 seeks to promote are that you, the student, should be able to:
1. 2. 3. 4. 5. 6.

Explain the nature, scope, and objectives of audit and assurance services. Evaluate selected theories that purport to explain the New Zealand financial attest audit. Discuss the effect that contemporary issues have on the financial attest audit. Demonstrate an understanding of the New Zealand financial attest auditors professional and legal responsibilities. Evaluate the role of ethics, independence, risk, internal controls, materiality, and evidence in a financial attest audit. Demonstrate an understanding of the principal tests, techniques, and types of report used by a financial attest auditor.

The Overall Result for you, we hope, is that you will obtain knowledge of auditing and auditing concepts, which we believe is essential for any financial manager or professional accountant, even if you do not intend to practice as an auditor. The concepts should enable you to work more efficiently and effectively (e.g. how to assess what is risky and material); the understanding of auditing and other assurance services should promote your ability to assess when you need assurance and what type of assurance to seek.

> Topics Covered

See Suggested Study Program.

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> Textbooks and Recommended Reading Required Text

Modern Auditing & Assurance Services by Leung, Coram, Cooper and Richardson (4th Edition), published by John Wiley & Sons Australia Limited, 2009. Copies of the textbook are held by the library.

Recommended Text
Auditing: Theory and Practice in New Zealand by Karen Van Peursem and Michael J Pratt (5th Edition), published by Prentice Hall (Pearsons), 2006. Copies of this text are also held by the library.

Study Guide
It is essential to use the study guide for this paper, as it provides additional material to supplement the main text. All Readings, Tutorial Questions, and Additional Material provided or referred to in the Study Guide are examinable. In other words, you will be presented with examination questions that depend on having studied these elements of the Study Guide.

WebCT
Suggested solutions to the Tutorial Questions will be made available to you on WebCT, as well as other material such as occasional updates and current issues. See Internet Resources/ WebCT further on in this Guide for further information relating to use of WebCT and our expectations of you in this regard.

Ordering of Text Books

You may obtain or order your text books from any Bennetts University Bookshop. For extramural students, please use the contact details below: Bennetts University Book Centre Freepost 118333 Massey University Palmerston North Telephone: (06) 354 6020

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> Assessment
Extramural Students Two assignments have been set for extramural students and must be submitted to NSATS for marking by the paper coordinator. Internal Students One assignment and one test has been set for internal students. The assignment is compulsory for internal students and must be submitted for marking by the paper coordinators. All internal students must sit the test on the date set. An internally registered student who submits the assignment set for extramural students in lieu of sitting the test may get zero for that piece of assessment.
Assignment Assignment One (All students) Test (Internal students only) 19 Assignment Two (Extramural students only) Final examination (All students)
th th

Due Date 21st August 2009 Saturday September 2009 September 2009
th

Weighting 15%

15% 70% 100%

30

30 October 2009

Course work is worth 30% of the total marks for paper 110.279. The balance of the assessment comprises a final examination worth 70% of the total marks for the paper. NOTE: As the course work comprises only 30% of this papers total marks, the Universitys regulations prohibit the awarding of an AEG pass where this would normally otherwise be merited.

> Studying Auditing

Auditing deals with judgment, ethics, and other abstract concepts. Consequently, auditing is not an easy subject to grasp when first encountered - it is far less numbers and rules based than many of the other subjects/ papers you will study. It cannot be learned by merely memorising a series of rules. It is a second-year paper and we strongly recommend that you wait until your second year to do it, as it requires a degree of academic maturity to deal with topics that often have no simple definition and and/or complex relationships, which must be properly appreciated to fully understand the Audit Process. Understanding is the key to success in 110.279. To achieve understanding requires consistent hard work throughout the semester. It is a big mistake to allow yourself to get left behind and think you will catch up at the end of the semester a mistake which is likely to end in failing the paper! You must read the material, think about it, read it again, test yourself by attempting the tutorial questions properly, puzzle over what you do not
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understand, return to the text or other material for clarification, and if necessary, ask your tutor or lecturer for help. It is also important that students have sufficient grasp of English to cope with these demands. Students who have a disadvantage in English must ensure that they have the appropriate understanding of the terms used in this paper and, where necessary, must confirm their understanding with the lecturer/tutor concerned. You may wish to try what I have found to be a particularly effective learning strategy the SQ3R Method: Survey: The topic for each week in the Study Guide always starts with Learning Objectives. This overview of what we hope students will learn is effectively the equivalent of surveying what is to come. You should supplement this by skim reading the relevant chapter or reading concerned, concentrating on the Introduction and Summary, as these are normally provided in order to give you a broad overview. Question: You then need to move from a passive to an active state of mind. Having surveyed the material, you should frame questions in your mind, that you want to answer by reading the material in more depth. Also grab a pencil or highlighter and be ready to make brief notes or highlight key points during the next phase. Read: This is the detailed Study phase, that is required to properly understand the material. Review: Reflect back on each learning objective, test your learning with some questions and recap/summarise briefly what has been covered. This phase is like doing the Survey again, only this time after your detailed read if you look at headings within the text and cannot remember much of what you have just read, you may need to read it again carefully. Revise: Apparently studies have shown that even after all of the above steps have been taken, you still need exposure to the material concerned again, within 48 hours. A good way of doing this and killing two birds with one stone is to complete the tutorial questions and to do tutorial preparation within 48 hours (current timetabling constraints mean that tutorials themselves only take place within 120 hours for the 110.279 course). As noted earlier, Auditing is a systematic process, not a collection of independent rules and ideas. You must appreciate how individual concepts relate to each other they are all part of the risk reduction process that is Auditing.

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Details

> Massey University Credit System from 2007

The University has converted from a 100 point standard equivalent full-time year for academic programmes to one of 120 credits. As from February 2007, it will use the expression credits to replace points. For existing Massey students, the change will have minimal impact. They will be required to pass the same number of papers to complete their programmes. The conversion from points to credit is straightforward. Credits for papers completed before 2007 are multiplied by 1.2. For example, 12.5 point papers become 15 credit papers and 25 point papers become 30 credit papers. Transitional arrangements have been put in place to see to papers with odd numbers of points to ensure that no students will be disadvantaged. In the past, the point system gave an indication of the total amount of time that a student might reasonably expect to spend on each paper in order to satisfactorily complete the assessment requirements (including lectures, laboratories, tutorials, visits and study time for an internal student, or campus and/or regional courses, study groups and private study time for an extramural student). Converted into a number of hours per week, this was referred to as the effective weekly hours for the paper. With the introduction of the credit system, the total hours required for a student to study a paper remains the same. On average, a student is expected to spend approximately 12.5 hours per week for a 15 credit paper. The course outline for each paper should indicate the effective weekly hours and how these might typically be spent.

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> Suggested Study Programme

Semester 2, 2009
Week 1 Starts 13/7/09 Topic Auditing, Assurance and the Profession. 2&3 20/07/09 Overview of the Audit of Financial Statements and The Audit Report. Text Reference (Leung 4th Edition) Examinable Material Ch. 1. NZICA Explanatory Foreword to Engagement

Standards NZICA - Framework for Assurance Services

Ch. 4. secs 4.1 and 4.5 to 4.7 Study Guide Reading: Knechel et al (2007) Study Guide Reading: See Additional Information) Study Guide Readings from Van Peursem (2006): Ch. 5 and Ch. 7 extracts as provided, Study Guide Readings from Statute: Cos Act extracts provided, Financial Reporting Act extracts provided

3/08/09

Legal Environment

10/08/09

Professional Ethics and Conduct.

Study Guide Readings: van Peursem (2006) - Ch. 6, Cox G. (2003) Gray J. (2005) Ch. 6

17/08/09

Client Evaluation and Planning

Mid-Semester Break w/c 24/08/09 & 31/08/09 7 8 9 10 7/09/09 14/09/09 21/09/09 28/09/09 Business and Audit Risk Assessment Materiality & Evidence Tests of Controls Designing Substantive Procedures Ch. 7 Ch. 8 Ch. 9 Ch. 10 Recap of Audit Report (from Wk 2&3 Additional Information) as scene setter for other types of assurance covered in wks 11 & 12 Ch. 18 Study Guide Readings: van Peursem (2006) - Ch. 5, pgs 84-86 Appendix 16 to the NZX Listing Rules: Corporate Governance Best Practice Code About Us - Controller and Auditor General (NZ) Ch. 17.(excl 17.5) Recap of Week 1 Readings from NZICA: Explanatory Foreword to Engagement Standards Framework for Assurance Services

11

5/10/09

Governance, Internal Audit & Public Sector Audits

12

12/10/09

Other Assurance Engagements

Lectures may vary slightly from the topics listed for a particular week.
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> Lectures, Tutorials, Workshops & Clinics

Lectures
Internal 110.279 students are required to attend two hours of lectures per week. Students at each campus should consult the relevant campus coordinator about lecture times, venues, and format as lectures and tutorials/workshops will not be uniform across all campuses. Note: Lectures are intended to introduce the main issues. They may not cover every examinable aspect of the course. The main learning resources for 110.279 are the prescribed text and the study guides/notes. You should Survey this material before attending lectures.

Tutorials/Workshops
Internal 110.279 students should attend one hour of tutorials/workshops per week. Tutorials/workshops are scheduled for weeks 2 to 12, inclusive, unless otherwise advised. Not all times and venues booked for 110.279 tutorials/workshops, per the University timetable will be used. Lecturers will advise you via WebCT, noticeboards and at lectures, of arrangements, venues and times for your tutorials, before or during the first week of the program. Accordingly, before arranging your timetable, you should confirm the arrangements that apply to you.

Importance of Tutorials/Workshops
Tutorials/workshops are an essential element of the course program and are designed to assist you in the understanding and application of concepts covered in lectures. A record of attendance may be kept for these one hour sessions. If you choose not to attend tutorials (or lectures) do not expect that the 110.279 teaching staff will provide you with any special assistance to compensate for that non-attendance. Tutorial questions give you a chance to test your understanding of material covered in the previous lecture. If you regard them as practice/ coaching sessions for the exam and spend time completing the questions set for each week and noting issues/ difficulties to raise with your tutor, it is likely to improve your final grade significantly.

Additional Workshops & Clinics on the Timetable

These will be used on an as needed basis. Class representatives are encouraged to liaise with their class and inform lecturers where a need is perceived for a workshop or clinic to be run. The lecturer will then advise the class when such sessions will be held

Note: This means that tutorials, workshops and clinics per the University timetable will NOT all be used as scheduled for all students. Your lecturer will advise you which one hour tutorial you are scheduled for and which workshop and clinic sessions will be held.

110.279 Administration Guide

> Assignment & Test Details

Overview
1. There are two course work elements/ assessments for all students, which contribute to the Year Mark for this paper: First Assessment (15%): o All students must submit Assignment 1, Second Assessment (15%): o Only Internal students must write a test, o Only extramural students must submit Assignment 2. Due dates appear below:

2.

Assignment 1 (compulsory for all students)

Due Date: Coverage: Due Date: Coverage: 21st of August, 2009 Weeks 1 - 3

Test (only required/ compulsory for internal students)

Saturday, 19th of September, 2009 Weeks 4 - 6

Assignment 2 (only required/ compulsory for extramural

students)

Due Date: Coverage:

30th of September, 2009 Weeks 4 - 6

3.

The questions for Assignments 1 and 2 may be found at the end of the Details section of this Guide.

Note: Reference to appropriate library resources is likely to enhance the quality of your assignment and the learning you gain as a result of completing it.

Presentation of Written Work

The nature of your response to assignment (and examination) questions must be such that the response is: legible; logically presented; appropriate (relevant); and complete. In essence, an answer must address the full question set and must have the potential to persuade the examiner that you do, indeed, comprehend and can articulate on the issues in question. Except in the case of assignments where an answer template is provided, submitted work should generally comply with the following requirements. All written work must be submitted on A4 (21cm x 29.7cm) sized paper. Please write on one side of the paper only. Leave a 4cm margin on the left-hand side for markers comments. Use double or 1 line spacing.
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Pages should be numbered in one continuous sequence. Commence numbering from the page following the title page. Print your last name, the paper number, and assignment number at the top of each page. Number each question (or sub-question) appropriately. All sheets should be stapled together at the top left-hand corner. Do not clip, pin, use sticky-tape, or fold pages to secure them. Do not embellish the paper with a cover. regarding cover page requirements. See Assignment Submission below

Word limits associated with an assignment question are intended as a guide only. We will not count the number of words in any answer, nor will anyone who exceeds the recommended word limit be penalised in any way.

Assignment Submission & Honesty Declaration

Retain a copy of any assignment submitted for assessment. Staple the School of Accountancy cover page as the top/cover page of your work (see copy over page) and ensure that you complete all details and sign the Honesty Declaration If you are an extramural student add an NSATS cover page to your work (see below for further details).

For Extramural students NSATS Cover Sheets

Palmerston North based students and all Extramural students must submit all assignments via NSATS. Individual assignments must be submitted under separate cover sheets, that is, every individual assignment must be accompanied by its own cover sheet. Do not submit multiple assignments under one cover sheet as there is a strong possibility that an assignment will be misdirected or lost. You may hand-deliver assignments to the NSATS Assignments Office located in the NSATS building on Albany Drive, Turitea Campus. Simply drop your assignment in the post slot adjacent to the main entrance of this NSATS building. You may also post assignments to: NSATS Assignments Office Massey University Private Bag 11 555 Palmerston North New Zealand

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M AS S E Y U N IVE R S IT Y
School of Accountancy
Lecturers Name Paper Number Paper Name

Honesty Declaration I declare that this is an original assignment and is entirely my own work. Where I have made use of the ideas of other writers, I have acknowledged (referenced) the source in every instance. Where I have used any diagrams or visuals produced by others, I have acknowledged (referenced) the source in every instance. This assignment has been prepared exclusively by me for this paper and has not been and will not be submitted as assessed work in any other academic paper. I am aware of the Code of Student Conduct on the Massey University web site http://calendar.massey.ac.nz/statutes/dr.htm, clause 2 (f), wherein it states [Students shall] act with honesty and integrity in submitting material or imparting information to the university. Assessment & Examination Regulations clause (6) clarifies further that dishonesty is a breach of the Code of Student Conduct and will be dealt with accordingly.

Family Name

Given Name(s)

ID number

Student Signature

Date

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Palmerston North Internal Students

Palmerston North internal students must place completed assignments in the appropriate assignments box that is located outside the School of Accountancy reception in SST1.19 by 4pm on the due date.

Auckland students
Auckland students must place completed assignments in the appropriate assignment box that is located adjacent to the School Secretarys office by 4.00pm on the due date

Wellington students
Wellington students should check the procedure for the submission of assignments with the Campus coordinator.

Faxing Assignments
Extramural students may fax assignments to 06 350 5625. Use a regular extramural assignment cover sheet to allow NSATS properly process the assignment. Include your fax number so you can be notified of any problems in receiving your assignment. Faxing assignments carries a higher risk than other delivery methods. The system tends to get overloaded at certain times, and you may have to queue for some time before being able to transmit your assignment. In other cases, there may be some doubt as to whether the whole assignment was, in fact, received. Students must carefully consider these potential problems, as difficulties in faxing an assignment are not acceptable reasons for the assignment being late. Do not fax assignments to other Massey fax numbers. Our experience suggests that use of these numbers often results in the assignment being lost. Do not post the original to NSATS after faxing an assignment as this confuses the records system.

Emailing Assignments
Do not email assignments unless you have made specific arrangements to do so with the appropriate Campus Coordinator beforehand. NSATS will only accept emailed assignments submitted by extramural students based overseas. Emailing assignments is risky. Experience has shown these are likely to get lost, or not be received at all. If you choose to email your assignment (overseas students only) the email address that you should use is: assign@massey.ac.nz. Assignments submitted by email must be attached to the email as a Word document. Assignments submitted by email must be in rich text (RTF) format. If you chose to email an assignment to NSATS, the onus is on you to confirm that it has been received, in full, by the due date.
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If faxing or emailing assignments, confirm the address to which these must be sent with NSATS before you submit the assignment.

Due Dates, Extensions and Penalties

Pay particular attention to the assignment due dates, and plan your work accordingly. Late assignments may be rejected or attract a penalty of up to 10% per week (or part thereof), i.e., students can lose up to 10% per week of any marks available for a late answer. In order not to run the risk of incurring a penalty, assignments must be received by NSATS on, or before the due date. As a general rule, no extension of time for the submission of assignments will be allowed. If you believe that your assignment may be late, do not contact either the Paper/Offering Coordinators or tutors for an extension of time, as none will be granted. If the assignment is late, submit it as soon as you can, with an explanation and appropriate supporting evidence. Each case will be considered on its merits. Pressure of work is not considered a reasonable excuse. The due dates of all submitted work are known well in advance. Plan ahead and make allowances for possible delays. Any assessed work submitted on (or after) the date on which suggested answers for that piece of work were released will not be accepted under any circumstances.

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> Academic Ethics, Dishonesty and Plagiarism

As you will learn, the penalties for failing to behave ethically in the professional world can be severe. This is so too for the academic world. If, in respect of any assessed work, a student is found to have acted unethically, there may be serious consequences the Universitys policies and regulations regarding dishonesty and plagiarism are outlined in the University Calendar. These include suspension, exclusion and the possibility that work may be penalised or a nil mark awarded. If you use the words or ideas of another author without citing the source, that is plagiarism. Plagiarism is not acceptable in any academic submission, under any circumstances. All copied material submitted for assessment must be clearly referenced as having been copied. That means that all in-text (that is, in your assignment answer) copied material must note the original author, publication date, and page number from which the material was copied. Full details of referenced work must appear in your bibliography at the end of the assignment answer. Note that you cannot escape this obligation by merely altering a few key words. It is acceptable (and often helpful) to discuss the issues raised in assignments with other students. To this end you may freely discuss, ask and answer questions that promote learning. However it is not acceptable to: Divide the work required to complete an assignment between a number of classmates, so that each person does only part of the whole. Copy another students work, or an answer obtained from another source (including suggested answers from prior years). Allow another student to copy your work or provide fellow students with copies of your assignments.

In this regard, please note that your assignment may be scanned and submitted to scrutiny by a proprietary software package designed to detect plagiarism. Where the work of one student is submitted as the work of another, the original author and the copier will both be penalised. Note that if the assignment calls for an essay, report, a discussion, an outline, or an explanation the weight of the marks given for any answer will be apportioned to that part of the answer that represents the students own, original work. Quotes should not form the bulk of such work and assignments that are unduly dependent upon quoted material will attract poor marks even where adequately referenced. For guidelines on referencing, please refer to the section on Referencing in this guide (under the section dealing with the library). We draw your attention once again to the Honesty Declaration on the School of Accountancy cover page that you are required to sign and submit with all assignments (see pg 12). The purpose of this declaration is to make sure you are aware of the University requirements regarding academic ethics, dishonest and plagiarism and to emphasise the importance attached to these requirements.

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Assignment 1
Due Friday 21st August 2009
This assignment must be submitted for marking by all Internal and Extramural students

You are required to consider the attached audit report and then answer the questions which follow. As a guide, answers should not exceed 30 words per mark ie. 150 words per 5 marks. NB: This is a maximum not a target, if you can address the question properly in fewer words, that is acceptable. Ensure you explain your answers in your own words. Question 1: Type of Audit Report State whether this is a qualified, a modified, or an unqualified audit report and give reasons explaining your answer. (5 marks) Question 2: Demand for Audits Briefly explain what the implications of this audit report are in terms of satisfying the demand for an audit of Dominion Finance Holdings Ltd. Your answer should consider the demand for an audit as explained by the following theories (use these as headings in structuring your answer): a) Agency Theory, b) The Information Hypothesis, c) The Insurance Hypothesis (10 marks) Question 3: The Audit Process The audit report is the main end product of the audit process. Provide a brief overview/ explanation of the audit process. Illustrate your understanding of the phases/steps in the audit process with brief references to the Dominion Finance Holdings Ltd circumstances and how these might impact on the audit process. (15 marks)

Assignment 1 continued over next two pages

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Assignment 2
Due Wednesday 30th September 2009

This assignment must be submitted by Extramural students only

You are required to answer all four questions below. Each answer should not exceed 200 words. NB: This is a maximum not a target, if you can address the question in less than 200 words that is acceptable. Ensure you explain your answers in your own words. Question 1: Pronouncements & Statute governing Auditing Briefly explain the key pronouncements and statutes which govern the audit of external financial statements in New Zealand (5 marks) Question 2: Negligence Briefly explain the concept of negligence as it applies to auditors. Ensure you explain what must be proven for an auditors work to be held negligent. (10 marks) Question 3: Independence Briefly explain the role of independence in auditing. Ensure you explain what can compromise the independence of an auditor. (10 marks) Question 4: Client Acceptance Briefly explain why it is important for an auditor to carefully assess any potential audit client before accepting them as a client. (5 marks)

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Postings, Courses, Contacts

> Posting of Materials
In this posting you will receive: Administration Guide Study Guide

> Contact
Please make an appointment to meet with a campus coordinator, or you can phone, fax, or email us your queries to us if you prefer. 1 The 110.279 staff do not monitor the WebCT chatroom, and will not respond directly to issues raised in that forum. If you have a specific query or need, please contact the appropriate coordinator for your campus/mode by email, normal post, telephone or, if on campus, make an appointment for a personal meeting. If you telephone, but are unable to contact the required member of the 110.279 teaching team, leave a message on voice-mail or with one of our secretaries: Auckland 09 414 0800 ext. 9220 or ext. 9589 Palmerston North (06) 356 9099 ext. 2199 or (06) 356 9099 ext. 2196; Wellington 04 801 5799 ext. 6877 If your enquiry cannot be dealt with immediately, be sure to provide a contact number so that we can get back to you. It is also helpful if you provide a broad indication of the nature of your query so that we do not have to waste your time when we first respond. If you elect to write to us, if possible, please include a telephone (or fax, email) number at which you may be contacted. Teaching staff on the various campuses intend to use the following means to communicate with students outside of formal classes:

See the section entitled Paper and Campus Co-ordinators for contact details concerning and preferred times for contacting staff members on individual campuses.
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Albany Students. Additional information concerning paper 110.279 will be posted on Albanys WebCT site and on the notice board adjacent to QA 3.48. Students are expected to regularly check both resources for 110.279 related information. Extramural Students. Extramural students will be informed of any significant changes to the course by post and by Web CT. Palmerston North internal students. Additional information concerning the 110.279 paper that is relevant to internal students , e.g. administrative changes and assignment marks etc. will be posted on the 110.279 notice board located outside room 1.03 in the Social Science Tower and on WebCT. Make a habit of regularly checking this board for 110.279 related information. Wellington Students should consult the notice board on F floor in Block 5. Students are expected to regularly check this board for 110.279 related information. All students should also carefully examine returned assignments and test scripts for additional information which may be attached.

> Extramural Students Contact Course

Supplementary tuition for extramural students is by way of a Contact Course that is to be held on 25th of August, 2009, starting at 9.00am. Attendance is highly recommended. This course is dependant on student numbers. In cases where interest in a contact course is very low, NSATS reserves the right to cancel the course altogether. The date might also change. Accordingly, students should contract NSATS to confirm the on-campus course date before making any travel arrangements to attend the scheduled on-campus course. Moreover, if you plan to attend the Contact Course, you should ensure that you register your intention with NSATS at least three weeks prior to the courses commencement. NSATS will advise extramural students (who have registered for the contact course) of venues, classrooms and times. If you are in any doubt as to the arrangements for the Contact Course please telephone 0800 MASSEY (0800 627 739) in the first instance or the Contact Course Administration Office (ext.: 7984). Teaching staff are usually not involved in, or aware of, these administrative arrangements. If all else fails, do contact one of the teaching team for advice. At this stage we do not plan to distribute any additional study material at the Contact Course. However, if any such material is distributed at the Contact Course it will also be placed on WebCT. This includes copies of lectures given at the Contact Course. Note that contact between staff and extramural students is not limited to the Contact Course. Students may contact the appropriate on-campus staff during office hours at any time during the semester in order to resolve queries relating to the course material. Extramural students who may be on campus for any reason are welcome to attend internal lectures.

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> General Contacts

Problem I have changed my address Contact Phone Massey Contact 0800 MASSEY (627739) or write to the Enrolment Office (copy to Paper Coordinator) Phone Massey Contact 0800 MASSEY (627739) Phone Massey Contact 0800 MASSEY (627739) Phone the Extramural coordinator, Extn 2157 Phone your Campus Coordinator (see pg 2 for contact details for each campus and for Extramural) Phone your Campus Coordinator (see pg 2 for contact details for each campus and for Extramural) Phone your Campus Coordinator before proceeding (see pg 2 for contact details for each campus and for Extramural). Phone Massey Contact 0800 MASSEY (627739) or write to the Enrolment Office (copy to Paper Coordinator) (If you have the Reg Workbook use the Application For Change of Papers or Programme form) I am having trouble/help!! Phone your Campus Coordinator (see pg 2 for contact details for each campus and for Extramural)

Did you get my assignment? I think Ive missed a posting Im not sure about the Contact Course I dont understand the assignment I think my grade is incorrect I think I should withdraw

I am going to withdraw

For general Massey University enquiries, phone 0800 MASSEY (0800 627739) or email contact@massey.ac.nz as your first point of call. Note that the 0800 numbers are only valid for New Zealand based callers. Overseas students should call +64 63505701.

> Complaints
If you have any concerns or complaints about this paper, you should contact the Paper Coordinator in the first instance. If the Paper Coordinator is unable to resolve the matter or if you feel uncomfortable bringing this matter to the Paper Coordinator, you should contact the Head of School.

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Internet Resources
> WebCT
Your online learning environment
This paper makes use of the internet to help create an "online learning environment. At Massey University we use WebCT (Web Course Tools) as the preferred online learning environment. The facilities in WebCT are comprehensive and allow for on-line discussions, real-time chat, course information, participant homepages, schedules, and links to other sites and resources on the internet. In addition, it enables material that supplements the set text and study guide to be disseminated, for example: lecture notes, issues for consideration and discussion, and supplementary worked examples. This paper is Web-Enhanced which means that you are expected to access the additional online materials and resources. Access is recommended, as online participation is likely to make a significant contribution to your study.

> Discussion Forums

While the 110.279 teaching staff monitor discussion forums, they do not normally respond or get directly involved in web discussions. The reason is that this forum is intended as a forum for student discussion. Students who have specific queries should contact their Campus Coordinator directly (see pg 2 for contact details for your Campus Co-ordinator).

> Internet Links

From time to time, important information (e.g., employment opportunities, School of Accountancy Handbooks, etc.) will be placed on the School of Accountancy home page for general dissemination http://www-accountancy.massey.ac.nz/ . This site will also provide notice of any technical problems that the WebCT site might be experiencing. The following School of Accountancy Handbooks can be downloaded from the Schools website. Each contains detailed paper descriptions and contact information for Paper Coordinators. Undergraduate Handbook Postgraduate Handbook
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Two other useful links are those of the two main professional accounting bodies in New Zealand: The New Zealand Institute of Chartered Accountants: http://www.nzica.com/AM/Template.cfm?Section=Home1 CPA Australia: http://www.cpaaustralia.com.au/cps/rde/xchg/SID-3F57FECB558BB8CB/cpa/hs.xsl/Index.html

> Accessing the Online Resources

In your web browser enter the following web address exactly as shown: http://webct.massey.ac.nz

Click on here for WebCT LOGIN

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Your WebCT username will generally be in the form of your: Student ID Number and password will be the 4 digit pin, issued to you on conformation of enrolment. It will be the same for all papers you are enrolled in.

Enter you WebCT Student ID Number and your WebCT password (4 digit pin). If you have previously changed your password, your new password will need to be entered. This will take you to your myWebCT page, which will list all the WebCT courses you are enrolled in. To enter the WebCT site, click on the paper name. You will then be greeted with the home page. Any queries: Phone 0800 MASSEY (627 739) Email: contact@massey.ac.nz Contact hours of operation are 8.30am to 5.00pm Mondays Fridays

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Library and Referencing

> Library Service
Using Massey Libraries in person Youre welcome at any of the Massey Campus Libraries (in Auckland, Napier, Palmerston North, and Wellington). Many services are available from these Libraries, including: access to the Librarys electronic resources, help desks for providing solutions to individual problems, and research consultations for postgraduate students. The Library Web Site You can use the Library Web Site (http://library.massey.ac.nz/ ) to find useful resources by: searching KEA (the Library catalogue) to find and request books held, using subject guides to identify relevant electronic resources, and searching databases to find journal articles on your topic. The Librarys Delivery Service The Distance Library Service delivers course related Library materials to the homes of eligible students (usually students studying predominantly extramural or block mode courses). The Library produces a booklet each year that gives key information about using the Distance Library Service. If you are uncertain about your eligibility, and/or you need a copy of the booklet, please contact the Distance Library Service. Contacting the Library Full contact information and Library hours are available on the Library Web site: http://library.massey.ac.nz , or contact us at: Distance Library Service Ph (06) 350-5670 ext. 2550 Email: LibExtm@massey.ac.nz Albany Campus Library Temporary Library Building, Gate 1 State Highway 17 Albany, Auckland. Ph (09) 443-9797 Hokowhitu Campus Library Centennial Drive, Palmerston North. Ph (06) 351-3330 Ruawharo Campus Library 120 Tamatea Drive, Napier. Ph (06) 834-4586 Turitea Campus Library Tennent Drive, Palmerston North. Ph (06) 350-5670

Wellington Campus Library Block 5, 63 Wallace Street, Wellington. Ph (04) 801-2794 ext. 6460

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> Citing References

The reference system used should enable you to indicate the source of facts and opinions without interrupting the flow of your argument, and it must enable a reader to check and pursue these citations quickly and economically. These guidelines are based on the APA (American Psychological Association) referencing system. APA (2001). Publication manual (5th ed.). Washington, DC: American Psychological Association. When a reference is made in the body of the assignment it is sufficient to mention the name of the author, the year of publication, and the page number, e.g.: ..it has been urged (Kotler, 1986, p.9) that , or ..it has been urged by Kotler (1986, p.9) that Cite electronic sources as for other texts. Where page numbers are not provided, use the paragraph number, if available, preceded by the paragraph symbol or the abbreviation para. If neither paragraph nor page numbers are visible, cite the heading and the number of the paragraph following it to direct the reader to the location of the material. .. Myers (2000, 5) believes.., or .. (Beutler, 2000, Conclusion section, para. 1)..

Reference List
All references cited in the text must be reported in full standard bibliographical form under a heading References at the end of the assignment. The references should be arranged alphabetically by authors surname. When listing references, all lines except the first should be indented five spaces (typically one tab stop). Note the use of italics (or underlining), capitalisation, punctuation and order of elements. For a book, italics should be used for the title. For journal articles, the title of the journal, and the volume number, should be italicised. If your word processor or printer cannot do italics, underline these elements. The preferred format for different types of publications is as follows:

Books
Sligo, F. (1991). Organisational behaviour: Case studies and commentaries. Palmerston North, New Zealand: Dunmore Press. Strunk, W., & White, E.B. (1979). The elements of style (3rd ed.). New York: Macmillan. Stephenson, J. (Ed.). (2001). Teaching and learning online: New pedagogies for new technologies. London: Kogan Page. Ramsden, P. (1997). The context of learning in academic departments. In F. Martin, D. Hounsell, & N. Entwistle (Eds.), The experience of learning (2nd ed.) (pp. 198-216). Edinburgh, Great Britain: Scottish Academic Press.

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Periodicals
Becker, L.J., & Seligman, C. (1981). Welcome to the energy crisis. Journal of Science Issues, 37(2), 1-7. Ferguson, I.S. (1973). Forecasting the future for timber. The Australian Journal of Agricultural Economics, 18, 562-578. Emerson, A-M. (1991, December 10-17). Bald is beautiful. The Listener, p.16. Battling the stress monster. (1996, June/July). Safeguard, 17-22. N.B. use this style when no author is identified or use (n.a.) where authors name would usually be, date then title.

Occasional publications
Irons, B. (1996, April). Quality study guides. Paper presented at the DEANZ Conference, Queenstown. Wifley, D. E. (1989). Interpersonal analysis of bulimia: Normal-weight and obese. Unpublished doctoral dissertation. University of Missouri, USA.

Electronic Periodicals
Stiles, P. (2001). The impact of the board on strategy: An empirical examination [Electronic version]. Journal of Management Studies, 38(5), 627-650. Campbell, I. (2003). The obesity epidemic: Can we turn the tide? Heart, 89(Suppl. 2), ii22ii24; discussion ii35-ii37. Abstract retrieved May 21, 2003, from MEDLINE database.

Internet
All references begin with the same information that would be provided for a printed source (or as much of that information as possible). The web information is then placed at the end of the reference. It is important to use Retrieved from and the date because documents on the web may change in content, move, or be removed from a site altogether. Jacobson, J.W., Mulick, J.A., & Schwartz, A.A. (1995). A history of facilitated communication: Science, pseudoscience, and antiscience: Science working group on facilitated communication. American Psychologist, 50, 750-765. Retrieved January 25, 1996, from: http://www.apa.org/journals/jacobson.html Health of older people in New Zealand. (n.d.). Retrieved May 21, 2003 from http://www.moh.govt.nz/olderpeople N.B. (n.d.) = no date Court Reporter. (2002, November 21). Alcohol-fuelled driving appals judge. Manawatu Evening Standard. Retrieved May 21, 2003, from http://www.stuff.co.nz/stuff/eveningstandard/0,2106,2489959a6502,00.html Stephens, D. (2003, April 24). Why do some people have such a need for control? [Msg 430]. Message posted to http://groups.yahoo.com/group/abuse-survivors-with-ptsd/message/430
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Final Examination
> Final Examination Important Details & Regulations
1. 2. 3. Please consult the official Massey examinations timetable (published and distributed by the University later in the semester) to confirm the date, time and venue of the final examination. The final examination will be three hours long. To achieve a pass in paper 110.279 you must obtain at least a 40% sub-minimum in the final examination - if you do not get at least 40 out of a possible 100 marks in the final examination, you will not pass the paper! As the non-examination assessments for this paper are worth only 30%, an Aegrotat pass is not available if you fail to attend the final examination. If your performance in the examination is seriously impaired by illness, injury, bereavement or other critical circumstances, you may, after the examination, seek an Impaired Performance consideration. For the Universitys rules in this respect, please see http://calendar.massey.ac.nz/ The following University regulations apply to aegrotat consideration where a student is unable to attend the final examination: Although AEG passes will not be awarded in cases where less than 40% of the total assessment for the paper has been completed by the student; students who make satisfactory Aegrotat applications in such papers may receive a Not Finalised status for the paper in question, and be permitted to sit the examination (or other fixed time/place assessment) at the next offering of the paper at their campus of study. (Assessment and Course Work, Regulation 4(a), Massey University Calendar 2009). Note that after 2008 students will not be able to carry-forward course work.

4.

5.

> The 2009 Examination and Past Examination Papers

As noted in the Introduction to this Guide, some significant changes have been made to this paper for 2009, including changes in the nature of questions used in tutorials, tests and the final examination. These questions will emphasise your understanding of important concepts rather than your ability to recall information, as has been the case in past years. Because the 2009 final examination will differ fairly significantly from final examinations of previous years, we have included a Sample Examination paper in this Administration Guide, rather than past examination papers. This and the tutorial questions set for each weeks work are intended to give an indication of the types of questions that may be expected in the final examination. If you do wish to look at past examination papers, these can be accessed from the library website.

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> Sample Examination Paper

MASSEY UNIVERSITY
SAMPLE EXAMINATION FOR 110.279 AUDITING Semester Two October/November 2009
_____________________________________________________ Time Allowed: THREE (3) hours Reading Time: TEN (10) minutes

THIS EXAMINATION IS WORTH 100 MARKS IN TOTAL NO REFERENCE MATERIAL IS ALLOWED FOR THIS EXAM NON-PROGRAMMABLE CALCULATORS ARE PERMITTED

This exam comprises 10 questions. Answer all questions in the blue answer book. SCHEDULE OF QUESTIONS Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q 10 Auditing, Assurance and the Profession Legal Environment Professional Ethics and Conduct Client Evaluation and Planning Business and Audit risk Assessment Materiality and Evidence Tests of controls Designing Substantive Procedures Governance and Assurance Services Overview of the Audit and Audit Report TOTALS: Marks 10 15 10 10 8 10 10 7 12 8 100 Suggested Time 18 minutes 27 minutes 18 minutes 18 minutes 14 minutes 18 minutes 18 minutes 13 minutes 22 minutes 14 minutes 180 minutes

Unless otherwise stated, audit or auditor refer to external financial statement audits.

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Question 1:

Auditing, Assurance and the Profession

The roles of internal and external auditor have some similarities and some differences. Required Compare and contrast these two roles in a tabular format under the headings of independence, nature of work, quality standards, legislation, and professional status. (Leung, 2009) Q1: 10 marks

Question 2:

Legal Environment

There are two statutes in New Zealand, which are accepted as governing the audit requirements for most of the publicly accountable entities in New Zealand. These statutes include several requirements which seek to promote and safeguard the independence of auditors.

Required: i. ii. Identify the two main statutes referred to above. 1 mark Explain briefly which entities are required, by these two statutes, to have their financial statements audited 4 marks Identify and explain five different ways in which the two statutes referred to above seek to promote and safeguard auditor independence. 10 marks Q2: 15 marks

Iii

Question 3:

Professional Ethics and Conduct

You have been asked to consider the following scenarios concerning ABC (an audit firm) and Company Ltd (its client): 1. ABC firm is the auditor of Company Ltd and has been for 10 years. During this time, the audit partner responsible has always been John. The other partner in the firm, Robert, has been the review auditor for this assurance engagement. Robert has not been the lead audit partner as his wifes father is the CEO of Company Ltd. 3 marks 2. Every year Company Ltd celebrates the end of the audit by throwing an all expenses paid weekend away for their staff that worked on the audit and for the audit firm. This has led to a good relationship between the auditors and the company that makes the audit less formal. Staff all know each other well and the company believes it is money well spent. 1 marks
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3. Recently John was approached by the board of Company Ltd with an offer of employment as a director starting in two years time. The only condition was that the audit fees have to be reduced for the current and next years audit. 1 marks 4. ABC is promoting a new issue of shares from Company Ltd. 1 marks 5. The audit must cover Company Ltds inventory valuation system which was implemented by ABC after last years audit. 2 marks Required: Identify any threats to compliance with professional ethical requirements and explain briefly why the scenarios constitute threats. (Leung, 2009 - Adapted) Q3: 10 marks.

Question 4:

Client Evaluation and Planning

Your client is Gateshead Ltd, a large family-owned company which imports and sells computer hardware products. You are planning the 30 June 2009 audit and, from your enquiries of management, have obtained the information below: 1. In January 2009, Gateshead applied for and was granted a new loan. The submission made to the bank stated: 2. the current ratio was 0.90 gross profit was up by 25% compared with that at the same time last year the debt-to-equity ratio was 0.40.

The bank agreed to the new loan but did enter into a loan covenant with Gateshead. The covenant required that the company should not breach certain ratios and placed certain restrictions on dividends.

From audits you have conducted in previous years, you are suspicious about the validity of the ratios discussed in the submission. You hear from one of the Gatesheads accounting staff that the figures had been gently massaged to obtain the required ratios.

Required: Discuss (referring to specific areas of the audit) the implications of this information on your planning of the audit. (Leung, 2009)

Q4:

10 marks
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Question 5:

Business and Audit risk Assessment

Control activities are detailed policies and procedures that management establishes to help ensure that its directives are carried out. Required: Briefly explain the four different categories of control activities and give an example of each. (Leung, 2009) Q5: 8 marks.

Question 6:
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Materiality and Evidence

Specific auditing procedures for obtaining audit evidence are listed below: Send debtors confirmation letters to a number of the clients customers. Recalculate depreciation charges. Calculate gross profit ratios for the current year and preceding year. Discuss the potential obsolescence of inventory with the management. Examine registration certificates for motor vehicles purchased during the year. Use the computer to scan a file to determine that all documents in a numbered series have been accounted for. Learn about a possible lawsuit in conversation with the financial controller. Obtain a valuation of land held by the company. Observe the year-end inventory count. Select a sample of repairs and maintenance expenses and check whether any should have been capitalised.

Required: Indicate: a) b) the type of evidence obtained by each procedure, and the assertion or assertions to which it pertains. Q6: 10 marks

(Leung, 2009)

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Question 7:

Tests of controls

Your firm has been engaged to audit the financial statements of Haven Ltd. In obtaining an understanding of internal control relating to credit sales, the following questionnaire is used: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Does the company evaluate the customers credit history, and is the amount of available credit checked before a sale is authorised? Is there adequate segregation of duties between authorising sales, shipping goods, and recording sales? Does management compare all shipments with recorded sales to ensure that all sales are recorded? Is every recorded sale checked against shipping records for appropriateness of revenue recognition? Are there adequate controls over the accuracy of the sales invoice? Are there adequate controls to ensure that the sales invoices are recorded in the correct time period? Are there adequate controls to ensure that the proper customer is invoiced for shipments? Does management review all sales that are recorded on a weekly basis? Do adequate controls exist to review company accounting policies regarding revenue recognition? Do adequate controls exist to review the consistency of the estimation of the allowance for doubtful debts?

Required: Identify a possible test of control procedure, assuming a Yes answer to each question above. (Leung, 2009) Q7: 10 marks

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Question 8:

Designing Substantive Procedures

Victor Salin is an audit senior carrying out the planning of the audit of GrowWell Ltd, an importer of hydroponic equipment for the market garden industry. The owners of GrowWell complained to the partner on the audit engagement that the audit fee was too high. The audit partner, Kelly Yeo, was concerned about losing this client so she decided to cut 10% off the fee for the audit an amount of $2,000. Kelly decides that the amount of work performed on the client would have to be reduced to cover this discount, but she felt this was reasonable because the inherent risk and control risk had always been good. Kelly calls Victor into her office and says that she wants to avoid performing debtors and creditors circularisations as they have done in previous years. Her reason is that following up non-responses is an expensive and time-consuming task and that it would be more efficient to use alternative audit procedures. She also tells Victor that the sample size for selecting debtors and creditors balances for testing should be reduced, given that they have had few problems in those parts of the audit in previous years. Required: a) b) List what factors Kelly should have considered in changing the nature and extent of the substantive audit testing. Discuss any special considerations in relation to the audit procedures that should be performed in auditing debtors and creditors. Q8: 7 marks

(Leung, 2009)

Question 9:

Governance and Assurance Services

Since the spate of corporate collapses around the turn of the century, there have been numerous reforms, including an increased emphasis on the importance of good governance. Required: i. Briefly explain the concept of Enterprise Governance and how governance differs from management. 5 marks ii. Briefly explain any four principles for corporate governance best practice relating to audit committees and relationships with auditors that have been set out in the New Zealand Stock Exchanges Corporate Governance Best Practice Code. 4 marks iii. Briefly describe any three assurance services other than audits of financial statements, which may be used by governing bodies to assist in promoting good corporate governance 3 marks

Q9:

12 marks
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Question 10:

Overview of the Audit and Audit Report

The Audit Report on the page which follows this question (Appendix 1), was extracted from http://www.caci.co.nz on 1 August 2006. Answer the following questions relating to the extract: i. ii. Comment on the significance of an Unqualified Opinion. 2 marks Each element of the audit report has significance and is there for a specific purpose. Comment on the significance/purpose of the following statements: (a) The introductory paragraph (i.e. We have audited the financial statements on pages . accounting policies set out on pages 10 and 11.), 2 marks Statements of responsibility (i.e. directors responsibilities and auditors responsibilities), 1 mark (c) The date the audit was completed and the opinion expressed (i.e., . 12 July 2006 .) 3 marks

(b)

Q10:

8 Marks

[Total

for this examination; 100 marks]

++++++++

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Appendix 1 CACI Group, extract from 2006 annual report Auditors Report

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