ACCT 3718 AUDITING AND ASSURANCE SERVICES ...ACCT 3718 – Auditing and Assurance Services (Honours)] Page- 6 B) Group Assignment: Preparation of response to IAASB Consultation Paper

[ACCT 3718 – Auditing and Assurance Services (Honours)] Page- 1

Australian School of Business School of Accounting

ACCT 3718

AUDITING AND ASSURANCE SERVICES (HONOURS)

COURSE OUTLINE SESSION 2, 2011


CONTENTS

1. COURSE STAFF 3

2. INFORMATION ABOUT THE COURSE 3

3. COURSE AIMS AND LEARNING OUTCOMES 3

4. LEARNING ASSESSMENT 5

5. ACADEMIC HONESTY AND PLAGIARISM 8

6. STUDENT RESPONSIBILITIES AND CONDUCT 9

7. STUDENT RESOURCES 10

8. SEMINAR SCHEDULE 11

9. READING OUTLINE AND TUTORIAL QUESTIONS 12


1. COURSE STAFF

Course Co-ordinator:

Associate Professor Wendy Green Quad 3111 9385 5805 [email protected]

2. INFORMATION ABOUT THE COURSE Teaching Times and Locations Seminars in this course will run for 2 hours every second week during Weeks 2-12 of the semester. The tutorial time and location is

Friday 12:00 – 2:00 pm Room MorvB 30

Units of Credit ACCT3718 has a total of 6 units of credit Relationship of This Course to Other Course Offerings The course is integrated with ACCT3708 Auditing and Assurance Services. Honours students must attend all lectures as well one tutorial in that course. The mark for the undergraduate component of auditing will be scaled to 80%. The calculation of the additional 20% for the honours component is outlined later in this course outline. 3. COURSE AIMS AND LEARNING OUTCOMES Course Aims undertaken in the auditing and assurance services areas. This should provide students with a greater range of analytical skills, and will expose students to the rigour with which current issues are being explored in this discipline.

Objectives

(a) To introduce students to the major research areas in current auditing and assurance services research.

(b) To critically examine research methods used in audit and assurance services research.

(c) To consider possible future developments in audit and assurance services theory and research.

(d) To examine possible relations between research and practice in auditing and assurance services.

For additional information regarding various university policies etc., please refer

to the detailed course outline for ACCT3708/3718.


Student Learning Outcomes

As this course covers all of ACCT3708 Auditing and Assurance Services, the student learning outcomes outlined for that course are relevant of ACCT3718 Auditing and Assurance (Hons). In addition, the following leaning outcomes are relevant for students undertaking the honours component:

Content-based learning outcomes.

(a) To develop a knowledge of the major research areas in current auditing and assurance services research.

(b) To examine possible relations between research and practice in auditing and assurance services.

Skills-based learning outcomes. (a) To develop the skills to critically examine research methods used in audit

and assurance services research. (b) To develop the capacity to identify possible future developments in audit

and assurance services theory and research.

Approach to Learning and Teaching At university, the focus is your self-directed search for knowledge. Seminars, textbooks, exams and other resources are all provided to help you learn. You are therefore required to attend all seminars and read all required readings in order to fully grasp and appreciate the concepts of Auditing and Assurance Services (Hons). It is up to you to choose how much work you do in each part of the course: preparing for classes; completing assignments; studying for exams; and seeking assistance or extra work to extend and clarify your understanding. You must choose an approach that best suits your learning style and goals in this course. Seminar questions as well as assessment tasks are provided to guide your learning process. Teaching Strategies Instruction in this course consists of a two hour seminar every second week where current research areas will be explored. The seminar will be presented by the instructor but will require you to prepare through the following: review the research assigned for that week; prepare answers to the discussion questions for each topic; submit written answers to discussion questions when required; and to participate in class discussions. It should be emphasised that attendance at classes is a necessary but not sufficient condition for passing this course. Note you are also required to attend a two hour lecture and a one hour tutorial each week for the course ACCT3708.


4. LEARNING ASSESSMENT The course is integrated with ACCT3708 Auditing and Assurance Services. Honours students must attend the two hour lecture as well one tutorial in that course. The mark for the undergraduate component of auditing will be scaled to 80%. The additional 20% will be determined in the following three assessment tasks:- A) Preparation of seminar answers and participation in class

discussion (2%) B) Group Assignment: Preparation of response to IAASB

Consultation Paper (8%) C) Research Proposal (10%) Guideline for Assessment Tasks A) Preparation of seminar answers and participation in class

discussion. (2%) Required:

You will be required to read the assigned reading and prepare written answers to seminar questions for discussion purposes for Weeks 4-10 of the course. Your answers should address the questions specified, and incorporate as much of your own knowledge and viewpoint as possible. Two students will be selected each week to lead the class discussion around these questions. All students will be expected to be able to participate in class discussion each week by contributing their own thoughts/ideas where appropriate.


B) Group Assignment: Preparation of response to IAASB Consultation Paper (8%)

Note: You will complete this assessment task in a group of 4. Groups will be allocated in week 2. Note: The IAASB Consultation Paper is included as required reading for week 6. Background:

The International Auditing and Assurance Standards Board (IAASB) has recently (May 2011) issued a consultation paper entitled: Enhancing the Value of Auditor Reporting: Exploring Options for Change. The consultation paper seeks to determine whether there are common views among users of audited financial statements and other stakeholders about the usefulness of auditor reporting. It describes issues with current financial reporting, including a perceived “information gap,” identified by some stakeholders. It then sets out possible options for change and seeks input as to whether such options might be effective in enhancing auditor reporting and the communicative value of the auditor’s report.

Required:

You are required to prepare a report in a format suitable for presentation to the IAASB outlining your responses to a selection of the questions they have raised. Your report should address questions 1-5; questions 14 and 15; and questions 16-19. In addition you should select one (1) additional set of questions from the following three options: Either:

(a) questions 6 and 7; or (b) questions 8-10; or (c) questions 11-13

Method of submission: Report submission must be made by email to [email protected]

Due Date: Submissions must be made before 5.00m on Monday of Week 7 (i.e. 29 August). Submissions made after this time will not be accepted.

Word Length: A maximum word length of 8 pages (1.5 spaced type, size 12 font) is imposed.


C) Research Proposal (10%)

Required: You are required to prepare a research proposal on the topic of Assurance of Greenhouse Gas Emissions. NOTE: Specific requirements for the proposal are outlined below. Due Date: On or before 5.00 pm Monday Week 10 (i.e. 26 September). Late Submissions: will incur a 2 mark penalty for each 24 hours late. Word Length: A maximum length of 6 pages, 1.5 spaced, size 12 font is strictly imposed (not including covering page or references).

Background: There is worldwide concern regarding greenhouse gas (GHG) emissions and their impact on the environment. Not surprisingly this has lead to an increasing demand for disclosures about GHG emissions around the world, and a desire to improve their credibility. In Australia legislation in the form of The National Greenhouse and Energy Reporting Act (NGER Act) established a national framework for reporting GHG emissions by corporations from 1 July 2008. While assurance is not mandatory under the Act, some organisations will be required to have their disclosures verified. In addition, around the world Governments have adopted/plan to adopt Emissions Trading Schemes (ETSs) as the preferred method to control GHG emissions. Many such schemes contain assurance provisions in order to enhance user confidence in this data. During their September 2009 meeting, the International Auditing and Assurance Board (IAASB) considered a draft assurance standard on GHG emissions. During that meeting the decision was made to open the draft standard to consultation and comment via submissions from interested parties prior to finalising the draft standard. The Consultation Paper Announcement is included at Appendix 1 to this course outline. The Full Consultation Paper (CP) may be found at: http://www.ifac.org/Guidance/EXD-Details.php?EDID=0132 Pages 4-20 of this CP provides a series of specific questions regarding the standard on assurance of GHG that the IAASB welcomes comment on. These questions are included as Appendix 2 to this course outline.


Specific Requirements for Research Proposal Assignment: You are required to select one question (or if relevant, a group of related questions) from the list of IAASB GHG Assurance Standard Consultation Paper Questions provided in Appendix 2, and prepare a research proposal outlining a research project to address the issue/question selected.

Note: The research proposal should include the following: (i) a description of the topic/aim of the research (ii) a brief description of the motivation for the topic (iii) a summary of the relevant research literature relating to this topic (iv) development of your hypotheses or research questions based on the

items included at (iii) above (v) a brief description of the method you consider appropriate to address

your research aim

Special Consideration and Supplementary Examinations Details on special consideration and supplementary exams are contained in the course outline ACCT3708.

In the ASB, requests for special consideration are determined by a Faculty wide panel which will advise the Lecturer in Charge of appropriate action. If the Faculty panel (see above) grants a special consideration request, this may entitle the student to sit a supplementary examination. In such cases the following procedures will apply:

Supplementary exams will be scheduled centrally and will be held approximately two weeks after the formal examination period. Actual date will be advised by mid-semester.

Where a student is granted a supplementary examination as a result of a

request for special consideration, the student’s original exam (if completed) will not be marked and only the mark achieved in the supplementary examination will count towards the final grade.

Further information concerning supplementary examinations is available on the ASB website.

5. ACADEMIC HONESTY AND PLAGIARISM

The University regards plagiarism as a form of academic misconduct, and has very strict rules regarding plagiarism. For full information regarding policies,


penalties and information to help you avoid plagiarism see: http://www.lc.unsw.edu.au/plagiarism/index.html

6. STUDENT RESPONSIBILITIES AND CONDUCT All students are expected to adhere to university policies in relation to class attendance and general conduct and behaviour. In addition, students are expected to understand their obligations in relation to workload and keeping informed. Information and policies on these topics can be found at: www.my.unsw.edu.au . Workload As outlined in the course outline for ACCT3708, it is expected that you will spend at least ten hours per week studying this course. This time should be made up of reading, research, working on exercises and problems, and attending classes. In periods where you need to complete assignments or prepare for examinations, the workload may be greater. In addition, preparation for the requirements noted for ACCT3718 are expected to take another five hours per week.

Over-commitment has been a cause of failure for many students. You should take the required workload into account when planning how to balance study with employment and other activities.

Attendance Your regular and punctual attendance seminars is expected in this course. University regulations indicate that if students attend less than eighty per cent of scheduled classes they may be refused final assessment. General Conduct and Behaviour You are expected to conduct yourself with consideration and respect for the needs of your fellow students and teaching staff. Conduct which unduly disrupts or interferes with a class, such as ringing or talking on mobile phones, is not acceptable and students may be asked to leave the class. More information on student conduct is available at: www.my.unsw.edu.au Keeping Informed You should take note of all announcements made in lectures, tutorials for ACCT3708 or on the course website on Blackboard. From time to time, the Lecturer-in-charge of ACCT3718, or the University, will send important announcements to your university e-mail address without providing you with a paper copy. You will be deemed to have received this information. It is also your responsibility to keep the University informed of all changes to your contact details.


7. STUDENT RESOURCES Course Material

Copies of research papers will be provided in Week 2. Other relevant material may occasionally be posted to the course website on Blackboard.

Other Resources, Support and Information

The University and the ASB provide a wide range of support services for students, Refer to the School of Accounting website for further details. www.accounting.unsw.edu.au. Blackboard eLearning support: To access the Blackboard online support site for students, follow the links from www.elearning.unsw.edu.au to UNSW Blackboard Support / Support for Students. Additional technical support: Email: [email protected]; Ph: 9385 1333 Continual course improvements

Each year feedback is sought from students and other stakeholders about the courses offered in the School and continual improvements are made based on this feedback. UNSW’s CATEI process is one of the ways in which student evaluative feedback is gathered. Significant changes to courses and programs within the School are communicated to subsequent cohorts of students.


8. SEMINAR SCHEDULE

Week Date Topic

2 29 July Introduction to Audit and Assurance Services Research and the development of an Honours research project in auditing and assurance

4 12 August Assurance service on carbon emissions disclosures

6

26 August Audit Quality Research

Monday 29 August

Assessment Due on/before 5pm: Report on Consultation Paper

Mid-session Break (3 – 11 Sept)

8

9

16 September

23 September

No Class: Rescheduled to Week 9

Audit reporting

10 Monday 26 September

Assessment Due on/before 5pm: Research Proposal

30 September Audit judgement studies

12 14 October Overview


9. Reading Outline and tutorial questions

Week 2: 29 July - Introduction to Auditing and Assurance Services Research; and the Development of an Honours Research Project in Auditing and Assurance Services

There are no prescribed readings for this week. Requirement: During this seminar you will be provided a general overview of auditing and assurance services research and methods of researching auditing issues. This overview will provide areas for future/continuing research. You will be provided with an overview of the development and supervision of an honours project, and expectations about 4th year honours. In addition, you will examine the following research paper which is an example of a fourth year research project that was recently completed and published: Green. W., S. Taylor, and J Wu (2010), Determinants of greenhouse gas assurance

provider choice: Evidence from organisations purchasing GHG assurance in Australia, ISAR Conference 2011

Using the research paper, we will draw on the knowledge acquired in the first half of the seminar to allow an understanding of how to summarise research papers under the following headings: aim; motivation; method; hypotheses/research questions and results for the paper (note that the results

should be discussed in terms of the authors’ expectations as noted in the research hypotheses/questions developed in the paper)

brief discussion of any limitations you identify with the paper; brief discussion of what you have learned from the research paper; and brief discussion of how you think the research findings may impact the practice of

auditing.


Week 4: 12 August - Assurance services on carbon emissions disclosures – demand for this type of assurance, and recent research in this area

Readings: Simnett, R, M Nugent and A Huggins (2009), “Developing an International Assurance

Standard on Greenhouse Gas Statements”, Accounting Horizons, 23(4), pp.347-363.

Green W., and Q. Li. 2010. “Evidence of an Expectation Gap for Greenhouse Gas

Emissions Assurance” Working Paper, UNSW. ISAE 3410, Assurance Engagements on Greenhouse Gas (proposed standard). Requirement:

(i) You are required to prepare a 1 page summary for each of the Simnett et al., (2009) and Green and Li (2010) papers.

(ii) With reference to ISAE 3410 Assurance Engagements and Greenhouse Gas, determine key issues associated with this assurance service that you believe are possible research issues in this area. For example, you may wish to explore why there is a demand for an assurance service of GHG emissions information.


Week 6: 26 August– Audit Quality Research

Reading: Carey, P. and R. Simnett. 2006. Audit partner tenure and audit quality Accounting

Review, Vol. 81, No. 3 2006, pp.653-676 Tse, A., M. Cheng, and K.T. Trotman. 2009. The Impact of the Existence and Timing of

Concessions in Multi-Period Auditor-Client Negotiations. Working Paper, UNSW The International Auditing and Assurance Standards Board (IAASB) (May 2011)

Consultation Paper: Enhancing the Value of Auditor Reporting: Exploring Options for Change.

Requirement: Note: The Tse et al., (2009) working paper is from Aileen Tse’s 2007 Honours Thesis.

(i) Prepare a 1 page summary of each of these research papers under the following headings:

1. Briefly summarise the key findings of this paper. 2. Explain how the findings of this paper may affect the practice of auditing. 3. Identify at least one limitation of this paper not identified by the authors. 4. Based on the findings of this study, do you think the requirement for audit

partners to be rotated each 5 years will impact on the auditor-client negotiation process? Justify your answer.

5. How does this research relate to audit quality research? How do think audit quality can be measured?

(ii) Your assignment on the Consultation paper is due next week. In preparation for

this class, as well as your assignment you should read this Consultation Paper and consider the questions set for your first assignment.


Week 8: 16 September – No Class: Rescheduled to Week 9

Week 9: 19 April - Audit Reporting

Reading: Trønnes P., E Carson and R Simnett, 2010, International Consistency in Audit

Reporting Behaviour: Evidence from Going Concern Modifications, American Accounting Association Auditing Section Mid Year Meeting San Diego January

Czernkowski R., W. Green and Y. Wang. 2009. The Value of Audit Qualifications in

China. Managerial Auditing Journal, Forthcoming 2010. Requirement:

(i) Re the Tronnes et al (2010) paper: NOTE. Per Tronnes was an Honours student in 2007 who went on to enrol in an MPhil, and thence converted to a PhD. Prepare a 1 page summary under the following headings:

1. Briefly summarise the key findings of this paper. 2. Explain how the findings of this paper may affect the practice of auditing. 3. Identify at least one limitation of this paper not identified by the authors. 4. Based on the findings of this study, identify potential research questions that

can be examined in the area of audit reporting. (ii) Re the Czernkowski et al (2010) paper: Prepare a 1 page summary of this

paper including:

1. aim; 2. motivation; 3. method 4. hypotheses and results for the paper (note results should be discussed in

terms of the authors’ expectations as noted in the research hypotheses); 5. brief discussion of any limitations you identify with the paper; 6. brief discussion of what you have learned from the research paper; and 7. brief discussion of how you think the research findings may impact the

practice of auditing.


Week 10: 30 Sept - Audit Judgement studies

Reading: Green, W. 2008. Are industry specialists more efficient and effective in performing

analytical procedures? A multi-stage analysis. International Journal of Auditing, Vol. 12, No. 3, pp. 243-260

Gary Pflugrath, Roebuck P., and Simnett R., Impact of assurance and assurer’s

professional affiliation on financial analysts’ assessment of credibility of corporate social responsibility information, (Forthcoming) Auditing: A Journal of Practice and Theory.

Requirement:

(i) Re Green (2008) paper:

Prepare a 1 page summary of this research paper under the following headings:

1. Briefly summarise the key findings of this paper. 2. Explain how the findings of this paper may affect the practice of auditing. 3. Identify at least one limitation of this paper not identified by the authors. 4. Based on the findings of this study, do you believe that industry specialist

knowledge is important? Justify your answer.

(ii) Re Pflugrath et al (2011)

Prepare a 1 page summary of this research paper under the following headings: 1. Briefly summarise the key findings of this paper. 2. Based on the findings, what explanation may assist in interpreting the

results for practice. 3. Describe how this research may be extended.

Week 12: 15 Oct - Overview

No prescribed readings for this tutorial. Students are to reflect on the objectives outlined at the commencement of the course and determine whether or not they have been met. Also, they should be prepared to discuss the area of research which has interested them and briefly outline a research project. (This may be the one chosen for the assignment, or for any other topic covered in the previous weeks).


APPENDIX 1 Press Release (via email) from the International Federation of Accountants (IFAC) on the draft GHG Assurance Standard From: IFAC Press_Release [mailto:[email protected]] Sent: Friday, 23 October 2009 4:13 AM Subject: IAASB Issues Consultation Paper to Enhance Reporting on Greenhouse Gases

FOR IMMEDIATE RELEASE

Contacts:

Sylvia Barrett +1-212-286-9563 [email protected]

Richard Sasanow +1-212-471-8737 [email protected]

IAASB ISSUES CONSULTATION PAPER TO ENHANCE REPORTING ON GREENHOUSE GASES (New York/October 22, 2009) – As the world turns its attention to the Copenhagen talks later

this year for a successor to the Kyoto Protocol on reining in carbon emissions and other

greenhouse gases (GHG), the International Auditing and Assurance Standards Board (IAASB)

is making significant progress to develop a new assurance standard on GHG statements.

Today, the IAASB released a Consultation Paper seeking views on key issues in developing

that standard.

“Having reliable information is key to global efforts to reduce emissions and stabilize the

level of carbon in the atmosphere,” emphasizes Arnold Schilder, IAASB Chairman. “We are

actively seeking to enhance the credibility of GHG information because of the importance to the

public interest of decisions being made on the basis of that information. Our consultation will

help inform the development of a robust standard in support of this goal.”

“A growing number of countries are developing, or have developed, carbon emissions

trading schemes under which public reporting of information about emissions inventories, and

assurance thereon, has economic, political, and social significance,” explains James Gunn,

IAASB Technical Director, adding, “The IAASB’s project seeks to enhance the consistency and

quality of performance by practitioners on assurance engagements to report on this information,

whether produced for regulators, legislators, investors, or other interested parties.”

Entitled Assurance on a Greenhouse Gas Statement, the Consultation Paper asks a

series of questions addressing such matters as: the form of assurance report that users would

find most useful; the nature and extent of requirements; how a standard should best integrate

with regulatory requirements; and technical aspects of applying the assurance process to GHG

emissions. The IAASB intends to use the feedback from the consultation to develop an

exposure draft of a proposed new assurance standard on GHG statements for release in 2010.


All stakeholders are encouraged to respond to the Consultation Paper, either in its

entirety or to select questions that are of special interest to them.

How to Comment

Comments on the Consultation Paper are requested by February 19, 2010. The Consultation

Paper may be viewed by going to www.ifac.org/Guidance/EXD-Outstanding.php. Respondents

are asked to send their comments electronically through the IFAC website, using the "Submit a

Comment" link on the Exposure Drafts and Consultation Papers page. Please note that first-

time users must register to use this new feature. Although IFAC prefers that comments be

submitted using the online submission system, e-mail may continue to be sent to

[email protected]. They can also be faxed to the attention of the IAASB Technical Director

at +1 (212) 856-9420 or mailed to IFAC, 545 Fifth Avenue, 14th Floor, New York, NY 10017,

USA. All comments will be considered a matter of public record and will ultimately be posted on

IFAC's website.

About the IAASB and IFAC

The IAASB (www.ifac.org/IAASB) develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance.

IFAC (www.ifac.org) is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry, and commerce.


APPENDIX 2 List of Specific Questions posed by the IAASB in the GHG Assurance Consultation Paper Questions 1. Would the requirements of paragraphs 12(a) and (b) of the working draft preclude any competent group that accepts the authority of the IAASB to set standards that apply to that group from adopting the standard? If so, which group would be precluded? Please provide suggestions of how the ISAE should deal with this. 2. Is the ISAE an appropriate place to provide benchmarks or further guidance regarding the skills, knowledge and experience an engagement partner should possess with respect to: (a) Assurance concepts and processes; or (b) GHG quantification and reporting? If so, please provide examples of suitable benchmarks or guidance. Questions 3. Given that engagements, in particular complex engagements, are ordinarily undertaken by a multidisciplinary team, does the working draft adequately reflect how multidisciplinary teams should operate? For example, does the working draft adequately address the collective competence and capabilities of the team? What further improvements could be made? 4. Is there a need for additional guidance regarding the measure of objectivity that should be applied with respect to external experts? 5. Should external experts be required to be independent? If so: (a) In what circumstances should an external expert be required to be independent? (b) What measure of independence should be applied (for example, which elements of the IFAC Code, which has been written for application to accountants and accounting firms only, should be applied to external experts)? (c) What would be the effect on practice (for example, the availability of experts) and the relevant cost and benefit considerations of requiring external experts to be independent? Questions 6. What would be the likely impact on the cost of a reasonable assurance GHG engagement if the ISAE included requirements of a similar number and nature as the working draft? Is this cost likely to be proportionate to the benefit to be derived? 7. In your judgment, are there any requirements that: (a) Have not been included in the working draft that should have been? If so, why? (b) Have been included in the working draft that should not have been? If so, why? Questions 8. Are there any additional matters the IAASB should take into account with respect to engagements conducted in accordance with local laws or regulations? 9. Should any aspects of the requirements written to apply only to voluntary reporting (see WD, paragraphs 15(b)(i)-(ii), 15(c), and 106(d)) also apply in other circumstances?


Question 10. Does the working draft appropriately reflect the specific characteristics of analytical procedures used in practice on GHG engagements? In particular, are paragraphs 59-60 appropriate, for example, with respect to the reliability of data on which analytical procedures are based? Question 11. Is the approach to internal control adopted in paragraphs 45-46 of the working draft appropriate? If not, please provide details and suggestions for elaboration or modification of the working draft. Questions 12. Is it appropriate to require practitioners to perform risk assessment procedures at the assertion level for GHG engagements? If not, why not? If so, do the assertions identified in paragraph A49 of the working draft provide an appropriate basis for the identification and assessment of the risks of material misstatement in a GHG statement? 13. As well as referring to the risks of material misstatement at the assertion level, paragraphs 39 and 47 of the working draft refer to risks at the GHG statement level. In your experience, what are commonly the most significant risks at the GHG statement level? Question 14. Do the requirements and guidance in the working draft with respect to materiality need modification or elaboration? If so, please provide details. For example: (a) The requirements and guidance refer to materiality in terms of intended users‘ ―economic decisions. Is it appropriate for materiality with respect to a GHG statement to be limited to economic decisions, or are there other forms of decision made by various users that should be taken into account? If so, how can those decisions best be categorized? Please provide examples. (b) In light of the fact that GHG statements often deal with different types of emissions, is the determination of materiality in the aggregate and for particular types of emissions in the way set out in paragraph 36 of the working draft appropriate? (c) Does paragraph A39 of the working draft provide the practitioner with an appropriate frame of reference when the applicable criteria do not discuss the concept of materiality? If not, which elements of paragraph A39 are inappropriate, and why; or which other elements should be added, and why? (d) Are the assumptions about intended users stated in paragraph A41 of the working draft appropriate? If not, which assumptions are inappropriate, and why; or which other assumptions should be added, and why? (e) When the engagement covers many but not all of the component elements of a GHG statement, should materiality be based on the total emissions or on assured emissions only (WD, paragraph A44)? (f) Is the guidance regarding quantitative and qualitative factors in paragraphs A42-A46 of the working draft appropriate? If not, which aspects of that guidance are inappropriate, and why; or which other aspects should be added, and why?


Questions 15. Is the manner in which the working draft has treated assurance with respect to estimates, for example, paragraphs 43(c), 62-63, 89(d), 106(d), and A52-A53 appropriate? If not, please provide details and suggestions for modification or elaboration of the working draft. 16. Should the role of disclosures in the GHG statement with respect to estimates be further emphasized in the working draft, particularly the disclosure of any uncertainty related to particular estimates, the factors that affect that uncertainty, and how those factors have been dealt with? Question 17. Are the definition of fraud, the requirements of paragraph 30 of the working draft, and the discussion of fraud throughout the application material sufficient and appropriate? If not, please provide details and suggestions for modification or elaboration of the working draft. Questions 18. Is the example report of a suitable length, and structured and worded appropriately, to meet the needs of users with respect to, for example: Restrictions on scope? The practitioner‘s independence, quality control and expertise? The relative responsibilities of the entity and the practitioner? The wording of the practitioner‘s opinion? Uncertainties in the quantification and reporting of emissions? 19. Should the ISAE include requirements with respect to Emphasis of Matter paragraphs and Other Matter paragraphs adapted from ISA 706,17 or are these concepts not particularly relevant to GHG engagements? If so, what are the circumstances in which it would be appropriate to include an Emphasis of Matter paragraph or an Other Matter paragraph in an assurance report on a GHG statement? 20. Should a distinction be made between long-form GHG assurance reports that are provided to certain groups of users (for example, regulators in some schemes) and short-form reports that are made publicly available? How would this impact on the content of the report? 21. The working draft actively discourages including recommendations in the assurance report (see WD, paragraph A89). Are there circumstances in which it is appropriate to include recommendations in the assurance report? If so, please provide details. Questions 22. Is it appropriate for the ISAE to be written primarily for compliance criteria? Is there a common understanding of what fair presentation with respect to GHG statements means (for example, in what circumstances might adherence to regulatory criteria not yield fair presentation)? Are the criteria used in jurisdictions with which you are familiar compliance criteria or fair presentation criteria? Please provide examples of such criteria. 23. Should the ISAE provide requirements and guidance for cases where special purpose criteria are used? If so, how would it differ from the working draft? Are criteria in jurisdictions with which you are familiar special purpose or general purpose criteria? Please provide examples of such criteria.


Questions 24. Is the manner in which the working draft has dealt with deductions appropriate? If not, please provide details and suggestions for modification or elaboration of the working draft. 25. Some purchased offset are accompanied by an assurance report. How, if at all, should this be reflected in the content of the ISAE; for example, to what extent and in what circumstances, if at all, would the practitioner who assures the GHG statement be able to rely on assured offsets and provide an opinion on the net of emissions less offsets? 26. Where the GHG statement contains emissions deductions, is the treatment required by paragraph 111(d) of the working draft appropriate? If so, where in the assurance report should the required wording be situated? Would wording along the lines of that in paragraph 52 above be appropriate? Questions 27. Is it appropriate for the ISAE to include cautionary language with respect to Scope 3 emissions (such as that in paragraphs A29-A31 of the working draft)? If not, please provide details and suggestions for modification or elaboration of the working draft. 28. What additions, if any, to the assurance report may be required when the GHG statement contains Scope 3 emissions? Would wording along the lines of that in paragraph 56 above be appropriate to include in the statement of uncertainties required by paragraph 111(k) of the working draft? If so, should such wording be included regardless of whether or not disclosed Scope 3 emissions are covered by the assurance engagement? Question 29. Are you aware of jurisdictions in which direct reporting engagements are common in practice, or are required by law or regulation? If so: (a) Please provide details, including example reports where available. (b) Are restrictions placed on the work allowed to be done by the practitioner with respect to quantifying the entity‘s emissions; or obligations placed on the entity with respect to, for example, having a reasonable basis for representations made to the practitioner? Question 30. How should a limited assurance engagement on a GHG statement be differentiated from a reasonable assurance engagement, for example:21

(a) How should the practitioner determine the procedures to be performed? (b) What is the role of risk assessment in a limited assurance engagement? (c) To what extent, if any, should the practitioner consider the effectiveness of control? (d) Should evidence be primarily obtained through inquiry and analytical review? (e) Which procedures that ordinarily are performed in a reasonable assurance engagement would you not expect to be performed in a limited assurance engagement?

Documents

ACCT 3718 AUDITING AND ASSURANCE SERVICES ...ACCT 3718 – Auditing and Assurance Services (Honours)] Page- 6 B) Group Assignment: Preparation of response to IAASB Consultation Paper