part from assessing those abilities, the assignment also aims to assess
students’ ability to present a written report in a professional manner by
taking into consideration the target audience and the formatting
requirements.
REQUIRED Assume that you are an audit senior who has been assigned to the audit of Australian
Pharmaceutical Industries Limited (ASX code API). Your audit team is responsible for
planning the Australian Pharmaceutical Industries Limited audit engagement for the year
ended 31 August 2017. You have been instructed by the engagement partner to gather the
relevant background information about the company as part of the procedures to obtain an
understanding of Australian Pharmaceutical Industries Limited and its environment as per
Auditing Standard ISA 315. Based on the information gathered and the understanding of the
client and its environment, you need to prepare a report for the Australian Pharmaceutical
Industries Limited audit committee. Your report must address the following issues:
1. You need to provide a detailed background description about Australian Pharmaceutical
Industries Limited. This must include the information about its business operations, nature of
revenue streams, product and services, market and competition, and regulatory environment.
For the regulatory environment, you must be specific as to the regulations that affect the
operation of Australian Pharmaceutical Industries Limited. The information presented must
be based on your in-depth understanding of company’s operation. Students who simply
provide a summary of information from the annual report will not receive good marks. 2. One of the commonly used approach to assist auditor in obtaining information about the
risks arising due to the nature of the entity’s and its environment is the PEST analysis. It is a
strategic analysis that divides the client’s business environment into the following four
domains of influence: Political (P) Economic (E) Social (S) Technological (T) You need to prepare a PEST analysis detailing the factors that may have a material impact on
the business of Australian Pharmaceutical Industries Limited. Two factors are expected for
each of the four domains. You need to clearly explain how each of the factors could influence
the client. 3. List and explain five key audit risks which would impact on the audit of Australian
Pharmaceutical Industries Limited. For each of the key audit risks identified, identify the
account and explain the main assertion at risk. The risks must be specific and relevant to the
context of the audit of Australian Pharmaceutical Industries Limited. Each of the risks needs
to be clearly elaborated. 4. Apart from the general formatting requirement described below, your report should be
presented professionally in a format as if it were to be presented to an audit committee
meeting. When appropriate, the use of tables, graphs and charts is highly encouraged.
However, the assignment must be largely based on the text in paragraphs. Students need to
demonstrate appropriate and accurate use of the Harvard style for references and
citations.