Instruction to students: This is a group assignment.



Sustainability Bank Ltd

You are assigned to the audit team of your firm’s new client, Sustainability Bank Ltd (SBL) for the year ended 31 December, 2018. As part of your responsibilities you have been asked to assist in the planning process of SBL’s audit and are provided with the following information:

• SBL is a retail bank which services mainly households and small-to-medium businesses. It does not operate in the larger corporate banking area. It prides itself in providing a high
standard of personal service to its customers with a minimum of fees on personal  banking. The principal activities of SBL include residential and investment property lending, consumer lending, financial planning services, mortgage insurance cover, commercial lending and funds management.

• SBL operates through a network of 100 retail branches and agencies all over Australia and is particularly popular in the rural and country areas. It also provides payments services through an expanding network of automatic teller machines (ATM) and  electronic funds transfer at point of sale (‘EFTPOS’) terminals. It encourages internet banking and rewards customers by charging reduced bank fees on internet transactions.

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• Retail customer accounts – deposits of individual savers and investors – are SBL’s most
stable source of funds that support their retail lending activity.

• During the year, SBL continued its commitment towards reducing operating costs and
improving efficiency to better cater for customer service. It upgraded its computer processors and introduced a new operating system that has enhanced its operational capacity. It recruited 125 highly trained IT staff during the year. However, as a result of increased use of internet banking, ATM and EFTPOS, 300 bank tellers were made  redundant in March, 2018.

• SBL operates in a highly competitive banking and finance industry. The operating
environment for financial institutions has been difficult over the last two years. There have been constant reports of looming economic downturn in the media. With dropping consumer confidence, there have been suggestions in the media of impending slump in the housing market. An increasing inflation rate, especially due to soaring fuel, grocery prices and rising unemployment are stated as the main contributory factors.

• Since June 2017, Banks, in general, have been experiencing a decrease in applications for housing and other personal loans, and an increase in loan repayment defaults.

• In January, 2018 SBL launched a “Sustainable Living” program to maintain its market share in consumer lending as well its strong commitment to the environment. The program encourages customers to conserve water by installing water……………….

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a) Draft an audit planning memorandum highlighting:

i) the legal and other considerations that need to be considered by your firm as the new
auditor of SBL;

ii) the major risk areas to be addressed in the audit of the SBL Ltd for the year ended 31
December, 2018. Give reasons why the identified areas are considered to be high risk.
Support your answer by calculation of appropriate ratios and/or comparisons. The use
of Microsoft Excel to calculate ratios is encouraged.

b) Outline the six audit procedures for any six of the risk areas identified in (a).

c) Use the Active Data for Excel as a CAAT to analyse the transactions of XYZ on 28 February, 2018. Following documentation must be provided:

  • all Active Data sheets generated,
  •  A report summarizing the analyses and their implications for the audit.

Assignment submission

  • The assignment is to be submitted electronically by groups of three or four
    students as per self-allocation to a group.
  • The assignment must be submitted to Turnitin.
  • Each member of the team must complete, scan and submit the Assignment Cover
    Sheet along with the assignment.
  • Students are responsible to protect their work and save data by making necessary

Referencing and style

  • The presentation should be clear, concise and accompanied by expository text
    accessible to the reader
  •  The presentation of the entire assignment should be written in English of an
    appropriate academic register and a format and standard of presentation
    acceptable to business study
  •  Assignment should be double spaced with left and right margins of 2.5 cm and
    top and bottom margins of 2.5cm. It must be typed in Microsoft Word using
    Times New Roman, 12 font size.
  •  The assignment is required to use a Harvard referencing style

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