Question

In: Accounting

• read audit standard ASA315 focusing on audit responsibility with respect to client governance, • read...

• read audit standard ASA315 focusing on audit responsibility with respect to client governance, • read the web page on the ASIC report on the Commonwealth bank which details the governance issues raised by ASIC (http://www.apra.gov.au/MediaReleases/Pages/18_17.aspx), and

• prepare a report that: o summarises and justifies the auditor’s responsibility to review the governance of an audit client, and o includes a table for use in the audit which explains the impact of each of the ASIC identified Commonwealth Bank governance issues on audit risk. The table should further explain why each of the ASIC recommendations would reduce audit risk. The template below should be used.

Issue Impact on raising  audit risk Recommendation Reduction in audit risk because of the recommendation

  

Solutions

Expert Solution

Issue

Impact on raising  audit risk

Recommendation

Reduction in audit risk because of the recommendation

inadequate oversight and challenge by the Board and its committees of emerging non-financial risks

This shall raise the governance issues of having wrong culture and promote unethical ways of doing business which can be a basis for issuing qualified report

  • more rigorous Board and Executive Committee level governance of non-financial risks;

This shall help in improving the culture of the organisation thus helping in reducing the audit risk.

  • unclear accountabilities, starting with a lack of ownership of key risks at the Executive Committee level;

This shall prompt auditors to fix responsibilities of the actions on their own perception, citing the reason in the audit report and giving it a qualified opinion

  • exacting accountability standards reinforced by remuneration practices;

This shall pose accountability, thus making person responsible for his actions, leading to improvement and reducing audit risk


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