MAA303: Auditing - Aussie Airlines and the Global Pandemic - Accounting and Finance Assignment Help

Assignment Task:

Unit Learning Outcome (ULO)

ULO1: Use professional and ethical judgement in applying relevant legal and professional pronouncements to all stages of a given assurance engagement.

Case Study - Aussie Airlines and the Global Pandemic 

Your Role 

1. Your firm, DUA, has been the auditor of Aussie Airlines for the past three years. 

2. You are the audit team manager and you are about to commence the risk assessment phase, as well as the risk response work plan for the audit of AA’s financial statements for the year ending 30th June 2020. 

Context 

1. Aussie Airlines (AA) is a large listed Australian airline and has been operating for more than fifty years.

2. In recent years, under pressure to improve profitability as fuel costs rose, the airline successfully undertook a comprehensive cost cutting and business efficiency drive, which returned it to profit three years ago. According to the CEO and Chairperson, Andrew Norris, “the operations of AA are now as lean as they could be; we have squeezed the fruit dry.”

3. In March 2020, the World Health Organisation declared a pandemic, people and governments have responded, and the volume of global business-related and leisure-related air travel has fallen by 95%.

4. It is not known how long the pandemic will last, how long restrictions on air travel will last—most guesses range from two to twelve months, a small minority fear it will be worse—and the Australian government has not yet announced how it’s economic response to the pandemic will specifically help the airline industry. 

5. AA has ‘temporarily’ laid off 90% of its workforce, including cabin staff, pilots, and 95% of its airport ground crew. There are murmurs about a class action by employees if they do not receive adequate payments while they are laid off. Some fear the change may be permanent.

6. The company is not taking bookings from customers; the AA website says “for the foreseeable future”. 

7. The CEO has told the press that while the current situation represents “an existential crisis”, he is absolutely confident that AA will get through it and come out stronger the other side. 

8. The Chief Financial Officer, Clara Major, stopped you in the corridor to say hello and offered you these words: 

“Look, everything might seem dire but we have it in hand. We will be here this time next year, so keep that in mind.” 9. As expected, you have been offered access to any records and to people inside and outside the AA organisation that you feel will be necessary to complete your risk assessment and interim work. 10. You are also confident that AA’s internal controls remain very strong, although you do not know if or how they have been changed/enhanced to respond to the effects of the global pandemic on AA. 

Required: 

1. Discuss the factors that would affect the preliminary assessment of inherent risk for the audit of Aussie Airlines. 

2. Perform and document an analytical review comparing the AA financial statements for 2020 and 2019, using the financial information, context information and notes provided above. 

3. Based on the results of your analytical review above and with reference to the case study context and additional information: 

a. explain the factors that indicate the company may not be a going concern and; 

b. explain what matters you might investigate further (and the audit work required) to establish whether AA can mitigate these factors so that it can prepare its financial statements as a going concern. Make reasonable assumptions where necessary. ASA 570 is a good source to use for guidance.

4. Assuming that you have completed the work in requirement 3 and determined that AA is a going concern, select one material account from AA’s Balance Sheet and one material account from the Income Statement and prepare a brief plan for auditing each account. Give particular attention to the following: 

a. An assessment of the audit risk for the account, given the information in this case study and your assumptions.

b. The relevant/significant audit assertions for this account. 

c. Name two controls that you would expect management to implement for this account. How would you test these controls? 

d. Describe two substantive testing procedures that you would perform in relation to this account to address the relevant/significant assertions. 

This Accounting and Finance Assignment has been solved by our Accounting and Finance Experts at onlineassignmentbank. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our experts are well trained to follow all marking rubrics & referencing style.

Be it a used or new solution, the quality of the work submitted by our assignment experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.