INDIVIDUAL ASSESSMENT TASK

DUE DATE: 19 APRIL 2019 (WEEK 7)

Weighting/value: 15%
The individual assessment task consist of:
Part A: 10%
Part B: 5%

Both Parts A and B must be typed and submitted via Moodle and Turnitin for marking and
feedback. The marking rubrics are posted in Moodle in the assessment folder. You should have at
least five [5] to ten [10] academic references for this assessment. The assessment will be marked
on 100% and then converted to 10%.

PART A
MARKS ALLOCATED = 10%

Learning outcomes of the individual assessment

After completing this assessment, you should be able to

1. Identify the factors contributing to financial statement frauds.

2. Distinguish between financial statement frauds from errors
3. Understand the concept of audit risk and planning in the audit process.
4. Understand the fundamental principles of the professional code of ethics.
5. Evaluate and assess auditor independence.
6. Understand auditor’s legal liability to their clients and third parties.

The above learning outcomes (1) to (6) addresses the Unit’s learning outcomes (1), (2), (3) and
(4) as stated in your Unit Guide on pages 5-6.

Task details for Part A: You are required to take the following steps:

PART (1): Preparation for the individual assessment: Workshop Activties in Tutorial
Week 3 and 4
The purpose of this preparation is to enable you to commence writing up your assessment that is
due in Week 7.

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Activity description
Pre-tutorial workshop activity:
Step (A): Before tutorial Week 3, as a pre-assessment reading to understand the background to the
Satyam case, read the article titled, ‘Corporate governance and international best practices: the
case of Satyam,’ posted in Moodle.

In-class tutorial workshop activity:

Step (B): In tutorial Week 3, during the workshop, students are required to form groups of 6-8
for this activity. This grouping is different from that of your group presentation during tutorials.
Your discussion of the article will be carried out as an outside class activity within your groups for
preparation of Step (C).

Step (C): (10 minutes) task for each group: With your discussion in Step (B) create a Concept map
on the article mentioned in Step (A).

A concept map is explained as a visualization of knowledge that is organized by the relationships

between the topics. At its core, it is made of concepts that are connected by lines (or arrows) that
are labeled with the relationship between the ideas. The concepts are usually found in circles or
boxes (Tomaswick and Marcinkiewic, 2018). An example of a concept map is given below:

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In-class tutorial workshop activity:
Step (D): In tutorial Week 4, one member in each group will act as a facilitator to summarize the
concept map to encourage deeper questions or reasoning (2 mins) from the other groups during
the workshop. If all the presentations are not completed in Week 4, it will be continued into Week
5.
PART (2): Writing the individual assessment:
Once Part 1 steps (A) to (D) have been completed, students should then individually proceed with
doing their individual assessment:
 Read the article below
 Answer the two ASSESSMENT QUESTIONS after the article below

PWC HIT WITH TWO YEAR AUDIT BAN AFTER DECADE LONG FRAUD BATTLE
WITH INDIAN CAPITAL MARKETS REGULATOR

The Securities Exchange Board of India (SEBI) has barred all PwC members and entities from
issuing audit certificates to any listed company in India for two years. The ban is in relation to the
Satyam Computer services scam from nine years ago where directors and employees had
collaborated in overstating and falsifying account books and financial statements. The ban will not
impact audit assignments for the financial year 2017 – 2018.

Price Waterhouse Bangalore and two former partners S Gopalakrishnan and Srinivas Talluri have
been ordered to pay a disgorgement of Rs130.9m (USA $2.05m) for wrongful gains. The
disgorgement included interest calculated at 12% per year from 7 January 2009 and must be paid
within 45 days.

Further, Gopalakrishnan and Talluri have been banned for three years from directly or indirectly
issuing any certificate of audit of listed companies, compliance of obligations of listed companies
and intermediaries registered with SEBI.

Previously, PwC had failed on two attempts in 2010 and 2017 to stop the SEBI investigation, firstly
arguing that SEBI did not have the same jurisdiction as the Institute of Chartered Accountants of
India (ICAI) but as ICAI supported SEBI’s authority the Bombay High Court ruled against PwC.
The second attempt was a consent plea to settle the investigations but the Supreme Court gave
SEBI extensions to their investigations.

PwC stated that they were disappointed with the findings and the adjudication order. “We played
no part and had no knowledge of the fraud that took place nearly a decade ago. As we have said
since 2009, there has been no intentional wrong doing by our firms, nor have we seen any material
evidence to the contrary. We believe that the order is also not in line with the directions of the
Hon’ble Bombay High Court order of 2010 and so we are confident of getting a stay before this
order becomes effective.”

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The 108-page order stated that the entire brand name had to be banned in order to effectively protect
the securities market from fraudulent accounting practices perpetrated by an international firm.

The PwC statement concluded: “We have however learnt the lessons of Satyam and invested
heavily over the last nine years in building a robust and high quality audit practice, as also
confirmed in 2015 by an independent monitor appointed by the US SEC and PCAOB.”

Source: Wix, S. (2018) ‘PWC hit with two year audit ban after decade long fraud battle with Indian
capital markets regulator.’ The International Accounting Bulletin, 11 January.
Available at: http://www.theaccountant-
online.com/search?q%5B%5D=PWC+hit+with+two+year+audit+ban+after+decade+long+fraud
+battle+with+Indian++++++++capital+markets+regulator.

(Assessed 25 February 2019)

ASSESSMENT QUESTIONS

[a] Drawing from your reading in Part 1 Step (A), your research (academic references) and from
your concept map, identify the main factors contributing to the fraud in Satyam Computer
Services.
The maximum word limit is 1000 words.
[50 marks]

[b] Auditing failures and scandals have become an issue of vital importance in the public arena at
national as well as international levels created by the financial irregularities of companies such
as Satyam and 1MDB. Do you think that in the future the reputation and independence of
auditors will reduce audit failures and scandals?
Your discussion should draw on the accounting standards (both IFRS and FASB), auditing and
regulatory frameworks, Code of ethics for Professional Accountants and ISA 200. You may
provide examples where regulations etc. may have mitigated audit failures and scandals.
The maximum word limit is 1000 words.

[50 marks]

The total marks obtained for parts [a], and [b] above will then be converted to 10%. See the
marking rubrics in Moodle posted under the heading ‘assessment folder.’

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PART B

MARKS ALLOCATED = 5%

Reflection on the challenges of undertaking this individual assessment.

This part should be written in single-spaced and within one page.

Task details for Part B:

Write your reflection on the challenges and difficulties encountered in steps for the Preparation
for the individual assessment activities. Describe what happened including your feelings when
the various tasks were allocated within your group members. Did this experience challenge, affirm
or change your understanding? How will the theories and ideas from this unit apply to real-life
situations? What do you think of the future implications of your experience to be?
You can refer to the unit guide on pages 5-6 for the learning outcomes of this unit. A conclusion
based on your summary of your ideas, learning outcomes, your views and a final comment.
In addition, your reflection should also include any ethical issues, etc. that may concern the audit
profession including addressing the appropriate PRiME Sustainable Development Goals. Please
refer to the following links for more information on Monash University Malaysia PRiME
initiatives:

https://www.monash.edu/msdi/sustainable-development/17-sdg-goals

https://view.joomag.com/prme-annual-report-2017/0133302001536312629?short

http://www.unprme.org/participation/view-participants.php?partid=4256