MAA303 代写 XYZ Chartered Accountants MCC Ltd

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  • Introduction
    In September 2014, Michelle Jackson, an audit partner at XYZ Chartered Accountants (XYZ)— a second-tier auditing firm based in Melbourne—evaluatedand recommended accepting a new audit client, MCC Ltd (MCC). MCC is a medium sized unlisted retail trading company operating in several parts of Victoria. Michelleevaluated the client and assessed XYZ’s independence as well as competence to properly complete the audit. XYZ issued an engagement letter and started the audit MCC’s audit for the year 2014. Alex Jones was assigned as an audit manager in charge of planning and supervising the conduct of the MCC audit.
    MCC’s background
    MCC is a retailer of skincare products. It operates with seven warehouses all over Victoria. The company was established as a small family business in 1989 and has since grown in size.MCC has a large amount of long-term loan from SouthEastBank. The loan agreement puts certain restrictions on further borrowing possibilities of MCC. It also requires MCC to submit its audited financial statements to SouthEast Bank by January 31 of every year until the loan is fully paid.
    MCC has a board of directors comprising five members. Two of the members of the board of directors were newly assigned to replace two former directors who resigned during the current financial year. The company does not have an audit committee. MCC’s internal audit director reports to the board of directors. MCC has a clear and detailed organizational structure for its size and all major transaction classes, i.e., sales, purchases, payroll, etc. are supported by of-the-shelf software packages that have been sufficiently tested in the market. MCC employees receive necessary training on the computer systems before being assigned to duty.
    MCC markets its products by emphasizing that it is a socially responsible organisationand highlighting its moral commitment to sell only products not tested on animals. This policy was introduced largely because a major shareholder with a controlling vote has advocated for it. This shareholder also contributes major input on all policy decisions of MCC.
    MCC has two major product lines: (a) makeup, which includes a range of cosmetics and (b) gifts, including handmade soaps, shampoos and a range of other handmade products produced in developing countries from recycled materials. MCC sells its products through mail-order catalogue, retail stores, personal selling and online via its website. In recent years,MCC experienced a trend of decreasing sales through mail-order and personal selling whereas online sales has been on the rise.
    MCC pays higher prices for some of its products for which alternative products with better value-for-money could be found in the market. MCC pursues this strategy in order to maintain its commitment with its suppliers who also depend on MCC. With this spirit, the company also pays to its suppliers in advance of placing purchase orders. This business practice has resulted in a large amount of advance payments to increasing number of suppliers worldwide.
     
    Financials
    Alex and his team of three staff auditors formulated the audit plan during the first half of November 2014. This task involved conducting risk assessment, determination of the overall audit strategy, setting a materiality threshold and identification of key areas of audit attention. The audit team updated the audit plan as additional information was obtained during the audit. Exhibits 1 and 2 below present information extracted from the working paper for MCC audit.
     
     
     
     
     
     
     
     
     
     
    Exhibit 1. Comparative financial statement information
    MCC Ltd  
    Statement of financial position      
    At 31 December 2014      
          2014 $'000 2013 $'000 2012 $'000
    Current Assets        
    Cash     1600 1240 1546
    Inventory   14912 11230 8230
    Prepayments   2857 1983 1568
    Trade Receivables   3170 2352 1420
    Total current assets 22539 16805 12764
               
    Non-current assets      
    Property, plant and equipment 14506 4120 3470
    Long-term receivable 3420 4569 5450
    Total non-current assets 17926 8689 8920
    Total assets   40465 25494 21684
               
    Current Liabilities      
    Trade Payables   6555 5465 4554
    Provisions   7521.2 6269.3 4500
    Total current liabilities 14076 11734 9054
               
    Non-current liabilities      
    Long-term loan payable 15689 5085 4084
    Total liabilities   29765 16819 13138
    Net assets   10700 8675 8546
               
    Shareholder's equity      
    Share capital   2500 2500 2500
    Retained earnings   8200 6175 6046
    Total Shareholders' equity 10700 8675 8546

     
     
    MCC Ltd
    Income Statement
    For the Year ended 31 December 2014
     
    Income Statement 2014 $'000 2013 $'000 2012 $'000  
    Net sales 29,366 25,605 20,073  
    Cost of sales   23,321 21,919 15,930  
    Gross profit   6,045 3,686 4,143  
                 
    Depreciation   2,422 1,521 1,209  
    Inventory obsolescence 484 531 166  
    Marketing expense   25 80 35  
    Administrative expense 1,434 1,136 1,334  
    Interest expense   565 220 150  
    Total expense   4,930 3,488 2,894  
                 
    Profit before tax   1,115 198 1,249  
    Tax expense   390 69 437  
    Profit after tax   725 129 812  

     
    Exhibit 2:  Key ratios identified by the audit team
     
    MCC's Key financial ratios*   Industry Averages
      2014 2013 2012 2014 2013 2012
    Current ratio (Note 1)       2.01 2.03 2.11
    Quick ratio (Note 2)       1.15 1.01 1.1
    Debt-to-equity ratio (Note 3)       0.65 0.52 0.49
    Times interest earned (Note 4)       4.00 5.00 6
    Ave. Coll. period (days) (Note 5)       32.00 31.00 30
    Ave. pay. period (days) (Note 6)       30.00 22.00 22
    Days to sell inventory (Note 7)       50.00 48.00 46
    Gross profit Margin (Note 8)       24.00 25.00 30
    Net profit Margin (Note 9)       6 7.5 9.2
                   
    * MCC’s ratios are intentionally omitted. You are expected to calculate and interpret them as necessary.
     
    Notes:
                       
    1. Current ratio = (Total current assets/Total current liabilities )        
    2. Quick ratio = (Cash + trade receivable)/(total current liabilities)        
    3. Debt to equity ratio = (Total liabilities)/total shareholders' equity        
    4. Times interest earned = (profit before interest and tax)/ interest expense      
    5. Ave. Collection period (days) = 365/[(Net sales)/(Trade receivables balance)]      
    6. Ave. payment period (days) = 365/[(Cost of Goods sold)/(Trade payables balance)]    
    7. Days to sell inventory = 365/[(Cost of Goods sold)/(inventory balance)]      
    8. Gross profit Margin = (Gross profit)/Net Sales          
    9. Net profit Margin = (profit after tax)/Net sales          
                                                 
                                                             
    Required:Assuming that you were in the position of Alex Jones, prepare an audit planning memo addressed to Michelle Jackson. Your memo should include:
    1. A discussion of risk factors present in this audit engagement;
    (If sufficient information is notprovided in the case study, indicate possible sources of information you would use.)
    1. Your overall assessment of the RMM (risk of material misstatement), i.e., combined assessment of inherent risk and control risk, according to the relevant auditing standard;
    2. Identification of key areas that merit special audit attention;
    3. Your recommended overall audit strategy appropriate for this engagement (with justification); and
    4. Your preliminary quantitative materiality threshold(at the financial statement level), and explanation of how your calculated materiality level informs your audit planning.
     
     
    Part B - Evidencing Critical Thinking and Problem Solving (10%)
     

    Objective

     
    The objective of Part B of this assessment is to consider, justify and then evidence your development of Critical Thinking and Problem Solving Skills in relation to Auditing, based on what you have done to address complete Part A of the assessment task.
     

    Task

     
    Youarerequiredtoconsider and provide evidence of how the work you completed through the case study analysis in Part A demonstrates your Critical Thinking and Problem Solving skills.Complete this task as a narrative.
     
    Consider you are applying for a Graduate Auditor position and you would like to demonstrate your Critical Thinking and Problem Solving skills by citing as evidence what you have done in completing Part A of this assessment.
     
    Critical Thinking:is defined in the Oxford Dictionary as an objective analysis and evaluation of an issue in order to form a judgment.  This involves distinguishing between fact and opinion and evaluating the validity of information, theory and sources of information.
     
    Within the Accounting Profession, Critical Thinking is defined as exercising judgment to solve problems using social, ethical, economic, regulatory and global perspectives (altc, 2010).
    Resources - https://www.youtube.com/watch?v=6OLPL5p0fMg#t=139
     
    Problem Solving:is defined in the Oxford Dictionary as the process of finding solutions to difficult or complex issues.  It is the process of working through the details of a problem, in order to reach a solution, in a systematic way.  To read more, access http://www.businessdictionary.com/definition/problem-solving.html#ixzz3CsrSNims
     
    Identify parts of your case study responses that provide evidence you have developed skills in Critical Thinking and Problem Solving.
     
    Provide a brief background to the excerpt selected so your audience understands the situation.
    Justify why you have selected these examples as evidence of your Critical Thinking and Problem Solving learning.  How do you think that these excerpts showcase your Critical Thinking and Problem Solving skills?
     
    Oftenstudents can findreflectivewriting challenging and areunsure of how todothis andwhy it is important. Beforeattempting this sectionit is recommended that youreview theresource available at:
    http://www.powtoon.com/show/dN8w6Vy9RAS/critical-thinkng/#/
     

    Submissionrequirements

     
    Eachstudentwill needtosubmitboth Part A and Part B in one document, via thesubmissiondropboxby the duedate(Monday 12January 2015, 11.59pm). This will beavailableintheAssessmentareaofCloudDeakin
     
    Reference
     
    Hancock, P, Freeman, M and Associates 2010, Learning and Teaching Academic Standards Project Business, Management and Economics. Learning and Teaching Academic Standards Statement for ACCOUNTING, Australian Learning and Teaching Council, Australia, <http://www.olt.gov.au/resource-accounting-ltas-statement-altc-2010>.
     
    Marking Criteria and Rubric
     
    The following will be used in making this assessment:
    Criterion* Weight (%)
    Evaluation of information (Part A) 30
    Use of Existing Knowledge (Part A) 30
    Analysis (Part A) 30
    Reflection (Part B) 10
    Overall 100
    * Also refer to the detailed marking rubric below.
     
     
     
     
     
     
     
     

    Marking Rubric
      Needs further development Satisfactory Well done Exceeds expectations Exceedingly high standard
    Evaluation of Information (Part A)
    (30 %)
    Often conflates or confuses relevant with marginal information provided in the case study. Information is used with some interpretation/evaluation, but not enough to develop a coherent analysis or synthesis. Analyses and evaluates information to complete a limited range of activities. Analysis and evaluation reflect little expert judgment, intellectual independence, rigour and adaptability.
     
    (0-14.5 marks)
    Selects relevant information to address the issues in the case. Identifies logical flaws in the information provided in the case. Analysis and evaluation reflect acceptable level of intellectual independence, rigour, authoritative judgment and adaptability.
     
    (15-17.5 marks)
    Selects relevant information to address the issues in the case. Identifies and rectifies logical flaws in the information provided in the case. Information is often selected with interpretation/evaluation to develop a comprehensive critical analysis or synthesis. Evaluates available information, identifies missing information. Analysis and evaluation reflect good intellectual independence, rigour, authoritative judgment and adaptability.
     
    (18-20.5 marks)



    Systematically selects relevant information to address the issues in the case. Identifies and rectifies logical flaws in the information provided in the case. Information is often selected with a high level of interpretation/evaluation to develop a comprehensive critical analysis or synthesis. Thoroughly evaluates available information, identifies missing information and makes reasonable assumptions to fill gaps in evidence. Analysis and evaluation reflect a high level of intellectual independence, rigour, authoritative judgment and adaptability.
    (21-23.5 marks)
    Systematically selects relevant information to address the issues in the case. Identifies and rectifies logical flaws in the information provided in the case. Information is selected with a high level of interpretation/evaluation to develop a comprehensive critical analysis and/or synthesis. Very thoroughly evaluates available information, identifies missing information and makes reasonable assumptions to fill gaps in information needed to address issues in the case.  Analysis and evaluation reflect a consistently very high level of intellectual independence, rigour, authoritative judgment and adaptability.
    (24-30 marks)
    Use of Existing Knowledge (Part A)
     
    (30%)
    Often employs knowledge not relevant to the issues in the case, or representing limited points of view/ approaches. Does not synthesise information and/or demonstrate an integrated understanding of auditing. Limited ability to demonstrate satisfactory understanding of theoretical auditing knowledge and professional practice.
    (0-14.5marks)
    Presents information and knowledge from relevant sources representing various points of view or approaches, demonstrating satisfactory understanding of theoretical auditing knowledge and professional practice.
    (15-17.5 marks)
    Synthesises complex information and knowledge from relevant sources representing various points of view or approaches, demonstrating good understanding of theoretical auditing knowledge and professional practice.
    (18-20.5marks)
    Synthesises complex information and knowledge from a range of relevant sources representing various points of view or approaches, demonstrating mastery of theoretical auditing knowledge and understanding of professional practice.
    (21-23.5marks)
    Synthesises complex information and knowledge from a broad range of relevant sources representing various points of view or approaches, demonstrating a high level of mastery of theoretical auditing knowledge and expert understanding of professional practice.
    (24-30marks)
    Analysis(Part A)
     
    (30%)
    Rarely demonstrates the ability to organise and synthesise complex information to develop ideas. Often lacks reflection on conclusions and professional decisions
     
    (0-14.5 marks)
    Organises and synthesises evidence to develop acceptable ideas. Attempts to reflect on advanced concepts and professional auditing practices. Demonstrates attempt of critical analysis and conceptualisation of information provided in the case study. Major conclusions and professional decisions are interprets and justified.
    (15-17.5 marks)
    Organises and synthesises complex information to develop good ideas. Reflects on advanced concepts and professional auditing practices. Critically analyses and conceptualises information provided in the case study. Interprets and justifies conclusions and professional decisions.
     
    (18-20.5 marks)
    Organises and synthesises complex information to develop insightful ideas. Reflects deeply on advanced concepts and professional auditing practices. Critically analyses and conceptualises information provided in the case study. Interprets and justifies conclusions and professional decisions.
     
    (21-23.5 marks)
    Organises and synthesises complex information to develop highly insightful ideas.  Reflects very deeply on advanced concepts and professional auditing practices. Critically analyses and conceptualises information provided in the case study. Authoritatively and succinctly interprets and justifies conclusions and professional decisions.
     
    (24-30 marks)
    Reflection (Part B) (10%) Demonstrates little evidence of reflectionon critical thinking and problem solving.
     
    (0-4.5 marks)
    Demonstrates evidence of emerging ability to reflect on critical thinking and problem solving.
     
    (5 marks)
    Demonstrates good reflection skills with good evidence on both critical thinking and problem solving.
     
    (6-6.5marks)
    Demonstrates very good reflection skills with very good evidence on both critical thinking and problem solving.
     
    (7-7.5 marks)
    Demonstrates excellent reflection skills with very good evidence on both critical thinking and problem solving.
     
    (8-10marks)
    Overall Score Fail (N)Less than 50 Pass (P)50 or more Credit (C)60 or more Distinction (D)70 or more High Distinction (HD)80 or more