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Dialogue: 0,0:00:01.12,0:00:03.44,Default,,0000,0000,0000,,Awesome. Alright. So welcome, everybody,
Dialogue: 0,0:00:03.44,0:00:05.40,Default,,0000,0000,0000,,to Lecture 1. Who's excited to be here
Dialogue: 0,0:00:05.40,0:00:06.92,Default,,0000,0000,0000,,for auditing?
Dialogue: 0,0:00:06.92,0:00:09.44,Default,,0000,0000,0000,,Hey, those people down the front.
Dialogue: 0,0:00:09.44,0:00:11.48,Default,,0000,0000,0000,,Woo hoo. And everyone else is like, "I'm
Dialogue: 0,0:00:11.48,0:00:13.12,Default,,0000,0000,0000,,here because I have to be. It's in the
Dialogue: 0,0:00:13.12,0:00:17.44,Default,,0000,0000,0000,,major." So hopefully, over the semester,
Dialogue: 0,0:00:17.44,0:00:18.88,Default,,0000,0000,0000,,you'll get to learn a little bit about
Dialogue: 0,0:00:18.88,0:00:21.28,Default,,0000,0000,0000,,what auditing is all about. Even if you
Dialogue: 0,0:00:21.28,0:00:23.00,Default,,0000,0000,0000,,don't want to be an auditor, if you want
Dialogue: 0,0:00:23.00,0:00:24.56,Default,,0000,0000,0000,,to work in business or you want to work
Dialogue: 0,0:00:24.56,0:00:27.16,Default,,0000,0000,0000,,in marketing or human resources, then
Dialogue: 0,0:00:27.16,0:00:28.72,Default,,0000,0000,0000,,we're going to look at some key concepts
Dialogue: 0,0:00:28.72,0:00:30.40,Default,,0000,0000,0000,,that going to help you no matter what
Dialogue: 0,0:00:30.40,0:00:32.16,Default,,0000,0000,0000,,sort of business career you're
Dialogue: 0,0:00:32.16,0:00:34.20,Default,,0000,0000,0000,,after. And the other thing that we do
Dialogue: 0,0:00:34.20,0:00:35.84,Default,,0000,0000,0000,,here as well is that we also have our
Dialogue: 0,0:00:35.84,0:00:38.12,Default,,0000,0000,0000,,annotated lecture slides. So you'll also
Dialogue: 0,0:00:38.12,0:00:39.96,Default,,0000,0000,0000,,see me writing and that sort of thing on
Dialogue: 0,0:00:39.96,0:00:42.64,Default,,0000,0000,0000,,them. This is all captured on the video.
Dialogue: 0,0:00:42.64,0:00:45.40,Default,,0000,0000,0000,,The video will go on to UTS online and
Dialogue: 0,0:00:45.40,0:00:48.56,Default,,0000,0000,0000,,also gets uploaded to YouTube. Okay. So,
Dialogue: 0,0:00:48.56,0:00:53.52,Default,,0000,0000,0000,,you'll get files and access both ways.
Dialogue: 0,0:00:53.52,0:00:55.24,Default,,0000,0000,0000,,So we're going to cover a lot in
Dialogue: 0,0:00:55.24,0:00:56.28,Default,,0000,0000,0000,,the first week. You already know about
Dialogue: 0,0:00:56.28,0:01:00.08,Default,,0000,0000,0000,,the subject from the prep week stuff. You
Dialogue: 0,0:01:00.08,0:01:01.64,Default,,0000,0000,0000,,know about learning analytics from
Dialogue: 0,0:01:01.64,0:01:03.40,Default,,0000,0000,0000,,looking online and our assessment, so I'm
Dialogue: 0,0:01:03.40,0:01:07.32,Default,,0000,0000,0000,,not going to go through those. Alright.
Dialogue: 0,0:01:07.32,0:01:09.24,Default,,0000,0000,0000,,So we're going to cover two chapters out
Dialogue: 0,0:01:09.24,0:01:10.88,Default,,0000,0000,0000,,of the textbook today. We're going to
Dialogue: 0,0:01:10.88,0:01:12.72,Default,,0000,0000,0000,,cover, well, why the hell do we have an audit
Dialogue: 0,0:01:12.72,0:01:14.64,Default,,0000,0000,0000,,in the first place? And then we're also
Dialogue: 0,0:01:14.64,0:01:17.68,Default,,0000,0000,0000,,going to cover the idea of what is
Dialogue: 0,0:01:17.68,0:01:22.24,Default,,0000,0000,0000,,the output or the final product of
Dialogue: 0,0:01:22.24,0:01:24.12,Default,,0000,0000,0000,,our audit. So we're going to look at a
Dialogue: 0,0:01:24.12,0:01:26.72,Default,,0000,0000,0000,,whole range of
Dialogue: 0,0:01:26.72,0:01:29.16,Default,,0000,0000,0000,,different objectives. Let me just put my
Dialogue: 0,0:01:29.16,0:01:32.36,Default,,0000,0000,0000,,highlighter on here. Okay. Is my
Dialogue: 0,0:01:32.36,0:01:34.12,Default,,0000,0000,0000,,highlighter the right size? No, I want
Dialogue: 0,0:01:34.12,0:01:35.56,Default,,0000,0000,0000,,this
Dialogue: 0,0:01:35.56,0:01:37.60,Default,,0000,0000,0000,,one. Alright. So we're going to look at
Dialogue: 0,0:01:37.60,0:01:40.60,Default,,0000,0000,0000,,some basic stuff about describing what
Dialogue: 0,0:01:40.60,0:01:43.28,Default,,0000,0000,0000,,assurance is all about. Why audit is
Dialogue: 0,0:01:43.28,0:01:45.88,Default,,0000,0000,0000,,important in regards to reducing the
Dialogue: 0,0:01:45.88,0:01:47.68,Default,,0000,0000,0000,,risk of shareholders, the idea of
Dialogue: 0,0:01:47.68,0:01:49.64,Default,,0000,0000,0000,,information risk. We're going to look
Dialogue: 0,0:01:49.64,0:01:51.48,Default,,0000,0000,0000,,at describing auditing, which is one
Dialogue: 0,0:01:51.48,0:01:53.64,Default,,0000,0000,0000,,small subset of assurance. We're going to
Dialogue: 0,0:01:53.64,0:01:55.60,Default,,0000,0000,0000,,look at the difference between auditing
Dialogue: 0,0:01:55.60,0:01:57.72,Default,,0000,0000,0000,,and accounting. We're going to look at
Dialogue: 0,0:01:57.72,0:01:59.44,Default,,0000,0000,0000,,some types of audits and some different
Dialogue: 0,0:01:59.44,0:02:01.52,Default,,0000,0000,0000,,types of audit firms that provide them,
Dialogue: 0,0:02:01.52,0:02:03.00,Default,,0000,0000,0000,,and the big four
Dialogue: 0,0:02:03.00,0:02:05.08,Default,,0000,0000,0000,,firms. We're going to look at what the
Dialogue: 0,0:02:05.08,0:02:08.04,Default,,0000,0000,0000,,professional bodies do, so CA and CPA.
Dialogue: 0,0:02:08.04,0:02:09.52,Default,,0000,0000,0000,,We're going to look at the auditing
Dialogue: 0,0:02:09.52,0:02:11.08,Default,,0000,0000,0000,,standards and why they're important to
Dialogue: 0,0:02:11.08,0:02:12.92,Default,,0000,0000,0000,,us. We're going to look a little bit
Dialogue: 0,0:02:12.92,0:02:15.00,Default,,0000,0000,0000,,at quality control, not too much, and then
Dialogue: 0,0:02:15.00,0:02:16.84,Default,,0000,0000,0000,,also the basics of the Corporations Act.
Dialogue: 0,0:02:16.84,0:02:18.16,Default,,0000,0000,0000,,So it sounds like a lot, but there's
Dialogue: 0,0:02:18.16,0:02:21.36,Default,,0000,0000,0000,,actually just a few basic key concepts.
Dialogue: 0,0:02:21.36,0:02:24.36,Default,,0000,0000,0000,,Now, in the lectures and in the lecture
Dialogue: 0,0:02:24.36,0:02:26.92,Default,,0000,0000,0000,,notes, I pull out the most important
Dialogue: 0,0:02:26.92,0:02:28.20,Default,,0000,0000,0000,,things that I want you to learn from the
Dialogue: 0,0:02:28.20,0:02:30.12,Default,,0000,0000,0000,,textbook. Now, there are still going to be
Dialogue: 0,0:02:30.12,0:02:31.44,Default,,0000,0000,0000,,some things in the textbook that I would
Dialogue: 0,0:02:31.44,0:02:33.40,Default,,0000,0000,0000,,like you to read, but the things I think
Dialogue: 0,0:02:33.40,0:02:35.04,Default,,0000,0000,0000,,are most important are the things that
Dialogue: 0,0:02:35.04,0:02:36.44,Default,,0000,0000,0000,,are going to be in the lecture notes and
Dialogue: 0,0:02:36.44,0:02:39.16,Default,,0000,0000,0000,,the things I'm going to discuss. And then
Dialogue: 0,0:02:39.16,0:02:41.40,Default,,0000,0000,0000,,out of those, the things that I think are
Dialogue: 0,0:02:41.40,0:02:43.28,Default,,0000,0000,0000,,key or most important are going to be
Dialogue: 0,0:02:43.28,0:02:46.24,Default,,0000,0000,0000,,the things that will come up in the
Dialogue: 0,0:02:46.24,0:02:49.76,Default,,0000,0000,0000,,quizzes each week. Alright? So that'll
Dialogue: 0,0:02:49.76,0:02:51.72,Default,,0000,0000,0000,,give you a guide as to what I think is
Dialogue: 0,0:02:51.72,0:02:54.92,Default,,0000,0000,0000,,most important when it comes to exam
Dialogue: 0,0:02:54.92,0:02:58.08,Default,,0000,0000,0000,,prep. So if there's you know a whole
Dialogue: 0,0:02:58.08,0:03:00.24,Default,,0000,0000,0000,,section in the textbook that I don't
Dialogue: 0,0:03:00.24,0:03:01.76,Default,,0000,0000,0000,,really touch on, you might want to have a
Dialogue: 0,0:03:01.76,0:03:04.00,Default,,0000,0000,0000,,read of it just for background but not
Dialogue: 0,0:03:04.00,0:03:05.64,Default,,0000,0000,0000,,go too in-depth.
Dialogue: 0,0:03:05.64,0:03:07.56,Default,,0000,0000,0000,,Alright. So what's our first
Dialogue: 0,0:03:07.56,0:03:11.00,Default,,0000,0000,0000,,objective? What the hell is assurance? So
Dialogue: 0,0:03:11.00,0:03:13.76,Default,,0000,0000,0000,,assurance is about having someone
Dialogue: 0,0:03:13.76,0:03:17.00,Default,,0000,0000,0000,,independent, and that's us, the auditor, being
Dialogue: 0,0:03:17.00,0:03:20.48,Default,,0000,0000,0000,,objective, trying to improve the quality
Dialogue: 0,0:03:20.48,0:03:22.36,Default,,0000,0000,0000,,of information for decision
Dialogue: 0,0:03:22.36,0:03:25.44,Default,,0000,0000,0000,,makers. Alright? We want decision makers
Dialogue: 0,0:03:25.44,0:03:28.96,Default,,0000,0000,0000,,to have accurate, reliable information so
Dialogue: 0,0:03:28.96,0:03:31.76,Default,,0000,0000,0000,,that they can make the best decisions
Dialogue: 0,0:03:31.76,0:03:33.64,Default,,0000,0000,0000,,for themselves. And they could be
Dialogue: 0,0:03:33.64,0:03:36.48,Default,,0000,0000,0000,,shareholders. They could be regulators. It
Dialogue: 0,0:03:36.48,0:03:38.36,Default,,0000,0000,0000,,could be managers within the company. So
Dialogue: 0,0:03:38.36,0:03:41.04,Default,,0000,0000,0000,,no matter who you are, you make decisions
Dialogue: 0,0:03:41.04,0:03:43.12,Default,,0000,0000,0000,,based on information. Very rarely in
Dialogue: 0,0:03:43.12,0:03:45.00,Default,,0000,0000,0000,,business do we make decisions just based
Dialogue: 0,0:03:45.00,0:03:47.84,Default,,0000,0000,0000,,on flipping a coin or our gut. We're
Dialogue: 0,0:03:47.84,0:03:50.16,Default,,0000,0000,0000,,going to need to use information. And so
Dialogue: 0,0:03:50.16,0:03:51.84,Default,,0000,0000,0000,,the process of assurance is about
Dialogue: 0,0:03:51.84,0:03:56.40,Default,,0000,0000,0000,,providing quality and then also the idea
Dialogue: 0,0:03:56.40,0:04:00.40,Default,,0000,0000,0000,,of reliability
Dialogue: 0,0:04:00.96,0:04:02.61,Default,,0000,0000,0000,,to that information.
Dialogue: 0,0:04:03.33,0:04:05.88,Default,,0000,0000,0000,,Oops, -ilty.
Dialogue: 0,0:04:06.56,0:04:07.77,Default,,0000,0000,0000,,Alright. So right down
Dialogue: 0,0:04:07.77,0:04:08.75,Default,,0000,0000,0000,,here.
Dialogue: 0,0:04:10.09,0:04:11.60,Default,,0000,0000,0000,,Oh, that's really bright. Can we
Dialogue: 0,0:04:11.60,0:04:14.28,Default,,0000,0000,0000,,still see the slides if I leave the
Dialogue: 0,0:04:14.28,0:04:16.64,Default,,0000,0000,0000,,curtains open? Yep. We've been in a
Dialogue: 0,0:04:16.64,0:04:18.24,Default,,0000,0000,0000,,basement room this morning. I think just
Dialogue: 0,0:04:18.24,0:04:20.16,Default,,0000,0000,0000,,having some natural light will help me
Dialogue: 0,0:04:20.16,0:04:21.72,Default,,0000,0000,0000,,realize it's
Dialogue: 0,0:04:21.72,0:04:24.36,Default,,0000,0000,0000,,daytime. So who can perform an audit? Our
Dialogue: 0,0:04:24.36,0:04:25.96,Default,,0000,0000,0000,,public accounting firms, plus we're going
Dialogue: 0,0:04:25.96,0:04:27.44,Default,,0000,0000,0000,,to look at some government auditors as
Dialogue: 0,0:04:27.44,0:04:29.16,Default,,0000,0000,0000,,well. There's different levels of
Dialogue: 0,0:04:29.16,0:04:30.36,Default,,0000,0000,0000,,assurance, which we'll talk about
Dialogue: 0,0:04:30.36,0:04:33.80,Default,,0000,0000,0000,,in a future weeks.
Dialogue: 0,0:04:33.80,0:04:36.76,Default,,0000,0000,0000,,Mostly, our assurance is provided on
Dialogue: 0,0:04:36.76,0:04:39.92,Default,,0000,0000,0000,,historic information. So historic things
Dialogue: 0,0:04:39.92,0:04:42.52,Default,,0000,0000,0000,,like the financial statements. We do see
Dialogue: 0,0:04:42.52,0:04:45.96,Default,,0000,0000,0000,,some growth towards looking at forward-
Dialogue: 0,0:04:45.96,0:04:47.68,Default,,0000,0000,0000,,looking information, but it's hard to
Dialogue: 0,0:04:47.68,0:04:50.20,Default,,0000,0000,0000,,provide reliability on information about
Dialogue: 0,0:04:50.20,0:04:52.44,Default,,0000,0000,0000,,the future. It's easy to prove that
Dialogue: 0,0:04:52.44,0:04:54.12,Default,,0000,0000,0000,,information about the past, about
Dialogue: 0,0:04:54.12,0:04:56.56,Default,,0000,0000,0000,,transactions that have already happened,
Dialogue: 0,0:04:56.56,0:04:59.16,Default,,0000,0000,0000,,is reliable. It's a lot easier for us to
Dialogue: 0,0:04:59.16,0:05:00.03,Default,,0000,0000,0000,,do.
Dialogue: 0,0:05:01.64,0:05:03.04,Default,,0000,0000,0000,,So in terms of what we're going to be
Dialogue: 0,0:05:03.04,0:05:06.72,Default,,0000,0000,0000,,studying this semester, our audit issues
Dialogue: 0,0:05:06.72,0:05:08.60,Default,,0000,0000,0000,,are written communication. So we're going
Dialogue: 0,0:05:08.60,0:05:10.76,Default,,0000,0000,0000,,to look at the audit report that
Dialogue: 0,0:05:10.76,0:05:13.88,Default,,0000,0000,0000,,provides a conclusion about the
Dialogue: 0,0:05:13.88,0:05:16.76,Default,,0000,0000,0000,,reliability of written assertions or
Dialogue: 0,0:05:16.76,0:05:18.92,Default,,0000,0000,0000,,statements of another party. So let's
Dialogue: 0,0:05:18.92,0:05:20.40,Default,,0000,0000,0000,,break that
Dialogue: 0,0:05:20.40,0:05:22.48,Default,,0000,0000,0000,,down. We've got our audit of our
Dialogue: 0,0:05:22.48,0:05:25.40,Default,,0000,0000,0000,,financial statements. Now, this one--oh, I almost
Dialogue: 0,0:05:25.40,0:05:27.36,Default,,0000,0000,0000,,dropped my pen. This is what we're going
Dialogue: 0,0:05:27.36,0:05:30.04,Default,,0000,0000,0000,,to spend our entire semester looking at.
Dialogue: 0,0:05:30.04,0:05:31.68,Default,,0000,0000,0000,,Alright. Audits must be done under the
Dialogue: 0,0:05:31.68,0:05:34.20,Default,,0000,0000,0000,,Corporations Act for every company
Dialogue: 0,0:05:34.20,0:05:36.36,Default,,0000,0000,0000,,that's listed, and that requires an
Dialogue: 0,0:05:36.36,0:05:38.52,Default,,0000,0000,0000,,audit where we give an opinion about
Dialogue: 0,0:05:38.52,0:05:40.04,Default,,0000,0000,0000,,whether the financial statements are
Dialogue: 0,0:05:40.04,0:05:43.32,Default,,0000,0000,0000,,true and fair, are a true representation
Dialogue: 0,0:05:43.32,0:05:45.72,Default,,0000,0000,0000,,of the underlying economic transactions
Dialogue: 0,0:05:45.72,0:05:47.12,Default,,0000,0000,0000,,and events that have occurred within
Dialogue: 0,0:05:47.12,0:05:47.84,Default,,0000,0000,0000,,that
Dialogue: 0,0:05:47.84,0:05:51.92,Default,,0000,0000,0000,,firm. The review is a slightly
Dialogue: 0,0:05:51.92,0:05:54.48,Default,,0000,0000,0000,,lesser amount of assurance. So we're
Dialogue: 0,0:05:54.48,0:05:56.96,Default,,0000,0000,0000,,giving very high levels of assurance in
Dialogue: 0,0:05:56.96,0:05:59.68,Default,,0000,0000,0000,,the audit. We're giving less levels in
Dialogue: 0,0:05:59.68,0:06:01.68,Default,,0000,0000,0000,,the review. And then there are other
Dialogue: 0,0:06:01.68,0:06:02.96,Default,,0000,0000,0000,,services which we're not really going to
Dialogue: 0,0:06:02.96,0:06:05.60,Default,,0000,0000,0000,,get into too much detail
Dialogue: 0,0:06:05.60,0:06:07.56,Default,,0000,0000,0000,,on.
Dialogue: 0,0:06:07.56,0:06:10.96,Default,,0000,0000,0000,,So, we can also have assurance over IT.
Dialogue: 0,0:06:10.96,0:06:13.60,Default,,0000,0000,0000,,So if you go onto PayPal or eBay, they
Dialogue: 0,0:06:13.60,0:06:15.84,Default,,0000,0000,0000,,have assurance that the information you
Dialogue: 0,0:06:15.84,0:06:18.72,Default,,0000,0000,0000,,send to them or you store with them is
Dialogue: 0,0:06:18.72,0:06:21.88,Default,,0000,0000,0000,,securely kept, isn't passed on to
Dialogue: 0,0:06:21.88,0:06:23.76,Default,,0000,0000,0000,,other people. So we can provide assurance
Dialogue: 0,0:06:23.76,0:06:27.04,Default,,0000,0000,0000,,on anything. Alright. There's actually an
Dialogue: 0,0:06:27.04,0:06:30.40,Default,,0000,0000,0000,,assurance service that exists over lotto.
Dialogue: 0,0:06:30.40,0:06:33.00,Default,,0000,0000,0000,,So we have the lotto balls that go into
Dialogue: 0,0:06:33.00,0:06:35.24,Default,,0000,0000,0000,,Powerball, etc. There are actually
Dialogue: 0,0:06:35.24,0:06:37.36,Default,,0000,0000,0000,,auditors whose job it is to make sure
Dialogue: 0,0:06:37.36,0:06:39.68,Default,,0000,0000,0000,,that every single Powerball or lotto
Dialogue: 0,0:06:39.68,0:06:43.40,Default,,0000,0000,0000,,ball is exactly the same size, is exactly
Dialogue: 0,0:06:43.40,0:06:46.44,Default,,0000,0000,0000,,the same weight, and is exactly round. And
Dialogue: 0,0:06:46.44,0:06:48.40,Default,,0000,0000,0000,,that security processes over those mean
Dialogue: 0,0:06:48.40,0:06:50.12,Default,,0000,0000,0000,,that you can't manipulate the lotto
Dialogue: 0,0:06:50.12,0:06:51.72,Default,,0000,0000,0000,,balls in any way to get a particular
Dialogue: 0,0:06:51.72,0:06:54.28,Default,,0000,0000,0000,,outcome. So we could provide assurance
Dialogue: 0,0:06:54.28,0:06:56.08,Default,,0000,0000,0000,,over anything. And it's the New South Wales
Dialogue: 0,0:06:56.08,0:06:58.08,Default,,0000,0000,0000,,state government that provides assurance
Dialogue: 0,0:06:58.08,0:07:00.28,Default,,0000,0000,0000,,over the lotteries,
Dialogue: 0,0:07:00.28,0:07:02.24,Default,,0000,0000,0000,,but you could have assurance over a
Dialogue: 0,0:07:02.24,0:07:04.76,Default,,0000,0000,0000,,range of different processes and
Dialogue: 0,0:07:04.76,0:07:07.32,Default,,0000,0000,0000,,information as well. So if you jump onto
Dialogue: 0,0:07:07.32,0:07:09.56,Default,,0000,0000,0000,,PolitiFact, which is a political
Dialogue: 0,0:07:09.56,0:07:12.00,Default,,0000,0000,0000,,fact-checking website, you'll discover
Dialogue: 0,0:07:12.00,0:07:15.56,Default,,0000,0000,0000,,that I think less than 3% of all Donald
Dialogue: 0,0:07:15.56,0:07:19.16,Default,,0000,0000,0000,,Trump's statements can actually be assured
Dialogue: 0,0:07:19.16,0:07:22.36,Default,,0000,0000,0000,,or be reliable. So he says 97% of stuff
Dialogue: 0,0:07:22.36,0:07:24.60,Default,,0000,0000,0000,,that's not reliable. But you can
Dialogue: 0,0:07:24.60,0:07:26.04,Default,,0000,0000,0000,,provide assurance on
Dialogue: 0,0:07:26.04,0:07:29.32,Default,,0000,0000,0000,,anything. So what we're looking at is
Dialogue: 0,0:07:29.32,0:07:32.52,Default,,0000,0000,0000,,this very small bit here. Alright?
Dialogue: 0,0:07:32.52,0:07:34.16,Default,,0000,0000,0000,,So there's assurance of all sorts of
Dialogue: 0,0:07:34.16,0:07:36.00,Default,,0000,0000,0000,,different areas. We've got consulting and
Dialogue: 0,0:07:36.00,0:07:38.40,Default,,0000,0000,0000,,non-assurance services. I can provide
Dialogue: 0,0:07:38.40,0:07:41.68,Default,,0000,0000,0000,,assurance over all sorts of IT
Dialogue: 0,0:07:41.68,0:07:43.92,Default,,0000,0000,0000,,systems, but we're going to be looking
Dialogue: 0,0:07:43.92,0:07:46.28,Default,,0000,0000,0000,,at just this little bit here, the audit
Dialogue: 0,0:07:46.28,0:07:49.12,Default,,0000,0000,0000,,of the financial statements. And that is
Dialogue: 0,0:07:49.12,0:07:51.56,Default,,0000,0000,0000,,what drives most of our big four firms.
Dialogue: 0,0:07:51.56,0:07:55.08,Default,,0000,0000,0000,,Big revenues, and large proportions of
Dialogue: 0,0:07:55.08,0:07:58.12,Default,,0000,0000,0000,,staff just involved in this little
Dialogue: 0,0:07:58.12,0:08:01.04,Default,,0000,0000,0000,,component. So what is the idea about
Dialogue: 0,0:08:01.04,0:08:04.20,Default,,0000,0000,0000,,information risk? Right? The risk that the
Dialogue: 0,0:08:04.20,0:08:06.84,Default,,0000,0000,0000,,information I have might not be suitable
Dialogue: 0,0:08:06.84,0:08:09.56,Default,,0000,0000,0000,,for my decision-making purposes. And that
Dialogue: 0,0:08:09.56,0:08:12.56,Default,,0000,0000,0000,,risk comes about, well, the possibility
Dialogue: 0,0:08:12.56,0:08:15.64,Default,,0000,0000,0000,,that information was made on a
Dialogue: 0,0:08:15.64,0:08:17.20,Default,,0000,0000,0000,,decision that was made on information that
Dialogue: 0,0:08:17.20,0:08:19.80,Default,,0000,0000,0000,,was inaccurate. I'll give you an example
Dialogue: 0,0:08:19.80,0:08:21.36,Default,,0000,0000,0000,,of information
Dialogue: 0,0:08:21.36,0:08:25.04,Default,,0000,0000,0000,,risk. You'll meet my son on some of
Dialogue: 0,0:08:25.04,0:08:27.56,Default,,0000,0000,0000,,our audit slides. We affectionately
Dialogue: 0,0:08:27.56,0:08:30.44,Default,,0000,0000,0000,,call him Audit Junior. And he's
Dialogue: 0,0:08:30.44,0:08:32.08,Default,,0000,0000,0000,,come to every single open day since he
Dialogue: 0,0:08:32.08,0:08:34.36,Default,,0000,0000,0000,,was born. And I'm starting to get
Dialogue: 0,0:08:34.36,0:08:35.92,Default,,0000,0000,0000,,him to the point where we're going to
Dialogue: 0,0:08:35.92,0:08:37.28,Default,,0000,0000,0000,,start training him up to talk in our
Dialogue: 0,0:08:37.28,0:08:40.72,Default,,0000,0000,0000,,audit videos. But when he was one, I sent
Dialogue: 0,0:08:40.72,0:08:43.28,Default,,0000,0000,0000,,out invitations for his first birthday,
Dialogue: 0,0:08:43.28,0:08:45.08,Default,,0000,0000,0000,,and I put two numbers on there for
Dialogue: 0,0:08:45.08,0:08:47.60,Default,,0000,0000,0000,,people to RSVP. I left my mobile number,
Dialogue: 0,0:08:47.60,0:08:49.68,Default,,0000,0000,0000,,and I left my husband's mobile
Dialogue: 0,0:08:49.68,0:08:51.96,Default,,0000,0000,0000,,number. And I
Dialogue: 0,0:08:51.96,0:08:54.64,Default,,0000,0000,0000,,assumed that if my people had called my
Dialogue: 0,0:08:54.64,0:08:57.32,Default,,0000,0000,0000,,husband and said we're coming, I assumed
Dialogue: 0,0:08:57.32,0:08:58.60,Default,,0000,0000,0000,,that he was going to pass that
Dialogue: 0,0:08:58.60,0:09:00.32,Default,,0000,0000,0000,,information on to me.
Dialogue: 0,0:09:00.32,0:09:02.32,Default,,0000,0000,0000,,So I made all these plans for how many
Dialogue: 0,0:09:02.32,0:09:04.28,Default,,0000,0000,0000,,people and how much catering and how
Dialogue: 0,0:09:04.28,0:09:06.64,Default,,0000,0000,0000,,many party bags and all the rest of it
Dialogue: 0,0:09:06.64,0:09:09.92,Default,,0000,0000,0000,,based on the people that had RSVP'd to me
Dialogue: 0,0:09:09.92,0:09:12.76,Default,,0000,0000,0000,,and the assumption that he was going to
Dialogue: 0,0:09:12.76,0:09:15.16,Default,,0000,0000,0000,,tell me if anyone had contacted him and
Dialogue: 0,0:09:15.16,0:09:16.56,Default,,0000,0000,0000,,said that they were going to
Dialogue: 0,0:09:16.56,0:09:19.92,Default,,0000,0000,0000,,go. Bad assumption. So I made all these
Dialogue: 0,0:09:19.92,0:09:22.12,Default,,0000,0000,0000,,decisions. And then two days before the
Dialogue: 0,0:09:22.12,0:09:23.88,Default,,0000,0000,0000,,party, I said to him, "Oh, look, I'm really
Dialogue: 0,0:09:23.88,0:09:26.36,Default,,0000,0000,0000,,surprised that so and so is not coming."
Dialogue: 0,0:09:26.36,0:09:28.20,Default,,0000,0000,0000,,And he said, "Oh, no. They sent me a text
Dialogue: 0,0:09:28.20,0:09:30.92,Default,,0000,0000,0000,,message. They're coming." And I said, "Well, why
Dialogue: 0,0:09:30.92,0:09:33.40,Default,,0000,0000,0000,,didn't you tell me?" He goes, "I thought you
Dialogue: 0,0:09:33.40,0:09:35.08,Default,,0000,0000,0000,,would have
Dialogue: 0,0:09:35.08,0:09:38.04,Default,,0000,0000,0000,,asked." So two days before, suddenly I have
Dialogue: 0,0:09:38.04,0:09:40.44,Default,,0000,0000,0000,,like 20 more people coming to this party,
Dialogue: 0,0:09:40.44,0:09:42.80,Default,,0000,0000,0000,,but I'd made a decision based on
Dialogue: 0,0:09:42.80,0:09:45.04,Default,,0000,0000,0000,,information that was inaccurate. Now all
Dialogue: 0,0:09:45.04,0:09:46.32,Default,,0000,0000,0000,,it meant was that I had to go out and
Dialogue: 0,0:09:46.32,0:09:48.32,Default,,0000,0000,0000,,buy more food, and I was severely
Dialogue: 0,0:09:48.32,0:09:49.76,Default,,0000,0000,0000,,stressed out, and I made him decorate
Dialogue: 0,0:09:49.76,0:09:53.32,Default,,0000,0000,0000,,like hundreds of cupcakes for the extra
Dialogue: 0,0:09:53.32,0:09:55.68,Default,,0000,0000,0000,,people. And that wasn't life-threatening
Dialogue: 0,0:09:55.68,0:09:57.64,Default,,0000,0000,0000,,or it wasn't going to bankrupt a
Dialogue: 0,0:09:57.64,0:10:00.48,Default,,0000,0000,0000,,business, but I made a decision based on
Dialogue: 0,0:10:00.48,0:10:02.64,Default,,0000,0000,0000,,bad information. It wasn't complete. It
Dialogue: 0,0:10:02.64,0:10:04.40,Default,,0000,0000,0000,,didn't have everything that I was
Dialogue: 0,0:10:04.40,0:10:06.96,Default,,0000,0000,0000,,looking for. So if I'm doing this in a
Dialogue: 0,0:10:06.96,0:10:09.68,Default,,0000,0000,0000,,business, I might make decisions
Dialogue: 0,0:10:09.68,0:10:12.28,Default,,0000,0000,0000,,about a whole range of different things.
Dialogue: 0,0:10:12.28,0:10:16.84,Default,,0000,0000,0000,,What raw materials to buy? What prices
Dialogue: 0,0:10:16.84,0:10:18.96,Default,,0000,0000,0000,,I'm going to set for my products?
Dialogue: 0,0:10:18.96,0:10:22.16,Default,,0000,0000,0000,,Alright. Am I going to offer any
Dialogue: 0,0:10:22.16,0:10:25.84,Default,,0000,0000,0000,,discounts? I might make changes based
Dialogue: 0,0:10:25.84,0:10:30.72,Default,,0000,0000,0000,,on manufacturing or marketing.
Dialogue: 0,0:10:30.72,0:10:32.96,Default,,0000,0000,0000,,And if I make those decisions based on
Dialogue: 0,0:10:32.96,0:10:34.96,Default,,0000,0000,0000,,the wrong information, that could have
Dialogue: 0,0:10:34.96,0:10:38.00,Default,,0000,0000,0000,,serious consequences for my company. Now,
Dialogue: 0,0:10:38.00,0:10:39.80,Default,,0000,0000,0000,,if I'm a
Dialogue: 0,0:10:39.80,0:10:42.28,Default,,0000,0000,0000,,shareholder, then what are my decisions
Dialogue: 0,0:10:42.28,0:10:44.52,Default,,0000,0000,0000,,about? My decisions are about whether to--
Dialogue: 0,0:10:44.52,0:10:46.12,Default,,0000,0000,0000,,whoops.
Dialogue: 0,0:10:46.12,0:10:47.72,Default,,0000,0000,0000,,Undo.
Dialogue: 0,0:10:47.72,0:10:49.14,Default,,0000,0000,0000,,Buy,
Dialogue: 0,0:10:49.14,0:10:53.08,Default,,0000,0000,0000,,sell, or hold my
Dialogue: 0,0:10:53.08,0:10:55.76,Default,,0000,0000,0000,,investment. Right? and if I don't have
Dialogue: 0,0:10:55.76,0:10:58.80,Default,,0000,0000,0000,,accurate information as a shareholder,
Dialogue: 0,0:10:58.80,0:11:02.44,Default,,0000,0000,0000,,then I might make the wrong choice when
Dialogue: 0,0:11:02.44,0:11:04.36,Default,,0000,0000,0000,,it comes to doing that decision. So
Dialogue: 0,0:11:04.36,0:11:06.72,Default,,0000,0000,0000,,there's risk that our information might
Dialogue: 0,0:11:06.72,0:11:09.84,Default,,0000,0000,0000,,not be appropriate. So the reasons that we have
Dialogue: 0,0:11:09.84,0:11:12.64,Default,,0000,0000,0000,,risk of information: remoteness
Dialogue: 0,0:11:12.64,0:11:15.52,Default,,0000,0000,0000,,between the
Dialogue: 0,0:11:16.00,0:11:19.64,Default,,0000,0000,0000,,user and management. I own shares in Woolworths.
Dialogue: 0,0:11:19.64,0:11:21.24,Default,,0000,0000,0000,,I can't really go up to Woolworths
Dialogue: 0,0:11:21.24,0:11:23.72,Default,,0000,0000,0000,,and say, "Hey, tell me how to cash flow is
Dialogue: 0,0:11:23.72,0:11:26.24,Default,,0000,0000,0000,,going. How many issues of a going concern?
Dialogue: 0,0:11:26.24,0:11:27.88,Default,,0000,0000,0000,,Which of the stores are not performing
Dialogue: 0,0:11:27.88,0:11:30.24,Default,,0000,0000,0000,,well?" So I don't really know what's going
Dialogue: 0,0:11:30.24,0:11:33.00,Default,,0000,0000,0000,,on inside the business. The provider of
Dialogue: 0,0:11:33.00,0:11:34.76,Default,,0000,0000,0000,,the information is usually
Dialogue: 0,0:11:34.76,0:11:37.08,Default,,0000,0000,0000,,management. And agency theory tells us
Dialogue: 0,0:11:37.08,0:11:39.00,Default,,0000,0000,0000,,that they're biased. No manager wants to
Dialogue: 0,0:11:39.00,0:11:41.52,Default,,0000,0000,0000,,say, "Hey, I did a sucky job this year, but
Dialogue: 0,0:11:41.52,0:11:43.56,Default,,0000,0000,0000,,you should still pay me a bonus." They
Dialogue: 0,0:11:43.56,0:11:45.20,Default,,0000,0000,0000,,want to make themselves look fantastic.
Dialogue: 0,0:11:45.20,0:11:46.84,Default,,0000,0000,0000,,So there's always the bias that they're
Dialogue: 0,0:11:46.84,0:11:49.00,Default,,0000,0000,0000,,going to present information in a way
Dialogue: 0,0:11:49.00,0:11:52.32,Default,,0000,0000,0000,,that maximizes their own wealth under
Dialogue: 0,0:11:52.32,0:11:54.84,Default,,0000,0000,0000,,agency
Dialogue: 0,0:11:57.32,0:11:59.72,Default,,0000,0000,0000,,theory. Alright. There's lots
Dialogue: 0,0:11:59.72,0:12:02.48,Default,,0000,0000,0000,,and lots and lots of data. Hundreds or
Dialogue: 0,0:12:02.48,0:12:05.12,Default,,0000,0000,0000,,thousands or millions of transactions.
Dialogue: 0,0:12:05.12,0:12:06.40,Default,,0000,0000,0000,,How do we know which ones are correct and
Dialogue: 0,0:12:06.40,0:12:08.68,Default,,0000,0000,0000,,which ones are not correct? And then
Dialogue: 0,0:12:08.68,0:12:12.16,Default,,0000,0000,0000,,there's complex transactions between
Dialogue: 0,0:12:12.16,0:12:14.16,Default,,0000,0000,0000,,different companies within the same
Dialogue: 0,0:12:14.16,0:12:16.60,Default,,0000,0000,0000,,company, across different borders, in
Dialogue: 0,0:12:16.60,0:12:19.76,Default,,0000,0000,0000,,different jurisdictions, joint ventures,
Dialogue: 0,0:12:19.76,0:12:22.36,Default,,0000,0000,0000,,partial subsidiaries. It can get really
Dialogue: 0,0:12:22.36,0:12:26.08,Default,,0000,0000,0000,,complicated. Right? My parents have a
Dialogue: 0,0:12:26.08,0:12:28.48,Default,,0000,0000,0000,,whole lot of shares. They're retired. And
Dialogue: 0,0:12:28.48,0:12:29.96,Default,,0000,0000,0000,,my mom's a science
Dialogue: 0,0:12:29.96,0:12:31.72,Default,,0000,0000,0000,,teacher. And I said, "Well, you know, what
Dialogue: 0,0:12:31.72,0:12:33.04,Default,,0000,0000,0000,,are you looking for in the financial
Dialogue: 0,0:12:33.04,0:12:34.60,Default,,0000,0000,0000,,statements? You know, what do you look at
Dialogue: 0,0:12:34.60,0:12:35.72,Default,,0000,0000,0000,,when you look at the numbers?" And she
Dialogue: 0,0:12:35.72,0:12:38.16,Default,,0000,0000,0000,,said, "I don't know." Right? I'm looking for
Dialogue: 0,0:12:38.16,0:12:40.16,Default,,0000,0000,0000,,positive numbers, not negative numbers, in
Dialogue: 0,0:12:40.16,0:12:42.28,Default,,0000,0000,0000,,the profit. I'm looking for numbers that
Dialogue: 0,0:12:42.28,0:12:44.56,Default,,0000,0000,0000,,go up. But she doesn't understand
Dialogue: 0,0:12:44.56,0:12:46.56,Default,,0000,0000,0000,,anywhere near the complexity of
Dialogue: 0,0:12:46.56,0:12:49.80,Default,,0000,0000,0000,,accounting that I do as a CA to be able
Dialogue: 0,0:12:49.80,0:12:51.48,Default,,0000,0000,0000,,to interpret that information and know
Dialogue: 0,0:12:51.48,0:12:53.64,Default,,0000,0000,0000,,whether it seems appropriate or not. So
Dialogue: 0,0:12:53.64,0:12:56.08,Default,,0000,0000,0000,,the audit is there to minimize this
Dialogue: 0,0:12:56.08,0:13:00.08,Default,,0000,0000,0000,,information risk, to act as the
Dialogue: 0,0:13:00.08,0:13:01.64,Default,,0000,0000,0000,,advocate of shareholders to say, "Well,
Dialogue: 0,0:13:01.64,0:13:03.32,Default,,0000,0000,0000,,really, we want information that is absolutely
Dialogue: 0,0:13:03.32,0:13:05.33,Default,,0000,0000,0000,,true for decision-making.
Dialogue: 0,0:13:05.33,0:13:07.08,Default,,0000,0000,0000,,So how could we reduce
Dialogue: 0,0:13:07.08,0:13:09.40,Default,,0000,0000,0000,,information risk? We could get users to
Dialogue: 0,0:13:09.40,0:13:11.40,Default,,0000,0000,0000,,try and verify information. That would be
Dialogue: 0,0:13:11.40,0:13:13.08,Default,,0000,0000,0000,,really tough, especially at Woolies with
Dialogue: 0,0:13:13.08,0:13:15.36,Default,,0000,0000,0000,,all of their shareholders. Not really
Dialogue: 0,0:13:15.36,0:13:18.20,Default,,0000,0000,0000,,reliable. The user does share some risk
Dialogue: 0,0:13:18.20,0:13:20.36,Default,,0000,0000,0000,,with management because they make a risk
Dialogue: 0,0:13:20.36,0:13:23.84,Default,,0000,0000,0000,,when it comes to investing, but the
Dialogue: 0,0:13:23.84,0:13:28.52,Default,,0000,0000,0000,,audit is the thing that we use to reduce
Dialogue: 0,0:13:28.52,0:13:33.00,Default,,0000,0000,0000,,agency cost. Alright. So to
Dialogue: 0,0:13:33.00,0:13:36.28,Default,,0000,0000,0000,,reduce the risk of
Dialogue: 0,0:13:36.28,0:13:39.04,Default,,0000,0000,0000,,agency, we have an audit. We have the
Dialogue: 0,0:13:39.04,0:13:41.48,Default,,0000,0000,0000,,auditors independently check
Dialogue: 0,0:13:41.48,0:13:43.72,Default,,0000,0000,0000,,management's work to make sure that they
Dialogue: 0,0:13:43.72,0:13:45.88,Default,,0000,0000,0000,,are telling the truth when it comes to
Dialogue: 0,0:13:45.88,0:13:47.72,Default,,0000,0000,0000,,what they present to
Dialogue: 0,0:13:47.72,0:13:50.04,Default,,0000,0000,0000,,shareholders. So here's my son. You can
Dialogue: 0,0:13:50.04,0:13:52.00,Default,,0000,0000,0000,,see him there. He's pretty
Dialogue: 0,0:13:52.00,0:13:55.28,Default,,0000,0000,0000,,cute. And for those people who are
Dialogue: 0,0:13:55.28,0:13:57.00,Default,,0000,0000,0000,,wondering, I'm not just getting fat. I
Dialogue: 0,0:13:57.00,0:13:59.36,Default,,0000,0000,0000,,am going to having a baby at the
Dialogue: 0,0:13:59.36,0:14:01.04,Default,,0000,0000,0000,,beginning of next year. So we call him
Dialogue: 0,0:14:01.04,0:14:04.56,Default,,0000,0000,0000,,Audit Junior, and we just recently
Dialogue: 0,0:14:04.56,0:14:05.96,Default,,0000,0000,0000,,announced--well, I announced on my
Dialogue: 0,0:14:05.96,0:14:08.00,Default,,0000,0000,0000,,Facebook page, for all the students
Dialogue: 0,0:14:08.00,0:14:09.60,Default,,0000,0000,0000,,who are friends with me--that he's
Dialogue: 0,0:14:09.60,0:14:12.04,Default,,0000,0000,0000,,getting a promotion to Audit Senior. So
Dialogue: 0,0:14:12.04,0:14:13.60,Default,,0000,0000,0000,,we'll have a new Audit Junior coming
Dialogue: 0,0:14:13.60,0:14:15.84,Default,,0000,0000,0000,,along. But when it comes to describing
Dialogue: 0,0:14:15.84,0:14:18.44,Default,,0000,0000,0000,,auditing, I always use this picture. This
Dialogue: 0,0:14:18.44,0:14:21.24,Default,,0000,0000,0000,,was only taken a few months ago. And I
Dialogue: 0,0:14:21.24,0:14:25.36,Default,,0000,0000,0000,,say, "Is this the world's cutest kid?" Right?
Dialogue: 0,0:14:25.36,0:14:27.88,Default,,0000,0000,0000,,Because every parent thinks that their
Dialogue: 0,0:14:27.88,0:14:30.64,Default,,0000,0000,0000,,child is the cutest kid ever. Nobody--
Dialogue: 0,0:14:30.64,0:14:32.04,Default,,0000,0000,0000,,I haven't met a new parent that says,
Dialogue: 0,0:14:32.04,0:14:33.36,Default,,0000,0000,0000,,"Well, look, actually my son or daughter
Dialogue: 0,0:14:33.36,0:14:34.20,Default,,0000,0000,0000,,is a bit
Dialogue: 0,0:14:34.20,0:14:37.08,Default,,0000,0000,0000,,ugly." Right? Oh, everybody's like, "Oh, how
Dialogue: 0,0:14:37.08,0:14:39.04,Default,,0000,0000,0000,,adorable. How
Dialogue: 0,0:14:39.04,0:14:41.36,Default,,0000,0000,0000,,cute." And the same with managers. Right?
Dialogue: 0,0:14:41.36,0:14:42.84,Default,,0000,0000,0000,,Managers are going to say, "We are the
Dialogue: 0,0:14:42.84,0:14:45.36,Default,,0000,0000,0000,,best ever." And when I meet your parents
Dialogue: 0,0:14:45.36,0:14:47.60,Default,,0000,0000,0000,,at graduation, your parents are going to
Dialogue: 0,0:14:47.60,0:14:51.96,Default,,0000,0000,0000,,say, "Look, wasn't my son just the best
Dialogue: 0,0:14:51.96,0:14:54.24,Default,,0000,0000,0000,,student?" Sometimes, Iook. And to be
Dialogue: 0,0:14:54.24,0:14:57.04,Default,,0000,0000,0000,,honest with you, I lie sometimes. So, you
Dialogue: 0,0:14:57.04,0:14:58.76,Default,,0000,0000,0000,,know, students who were really great--I
Dialogue: 0,0:14:58.76,0:14:59.56,Default,,0000,0000,0000,,say, "Yeah,
Dialogue: 0,0:14:59.56,0:15:02.44,Default,,0000,0000,0000,,absolutely." And sometimes if, you know,
Dialogue: 0,0:15:02.44,0:15:05.40,Default,,0000,0000,0000,,perhaps you weren't the most diligent,
Dialogue: 0,0:15:05.40,0:15:08.08,Default,,0000,0000,0000,,dedicated student, I will say something
Dialogue: 0,0:15:08.08,0:15:10.72,Default,,0000,0000,0000,,like, "Oh, you know, they really put in some
Dialogue: 0,0:15:10.72,0:15:13.60,Default,,0000,0000,0000,,good effort." That's my sort of, you know,
Dialogue: 0,0:15:13.60,0:15:15.84,Default,,0000,0000,0000,,safety statement
Dialogue: 0,0:15:15.84,0:15:19.44,Default,,0000,0000,0000,,there. But how would we determine who is
Dialogue: 0,0:15:19.44,0:15:21.24,Default,,0000,0000,0000,,the world's cutest
Dialogue: 0,0:15:21.24,0:15:24.16,Default,,0000,0000,0000,,kid? How would we figure that out? That's
Dialogue: 0,0:15:24.16,0:15:27.40,Default,,0000,0000,0000,,a claim I'm making. We would need to have
Dialogue: 0,0:15:27.40,0:15:29.80,Default,,0000,0000,0000,,somebody independent come up with some set
Dialogue: 0,0:15:29.80,0:15:32.76,Default,,0000,0000,0000,,of standards on child
Dialogue: 0,0:15:32.76,0:15:35.20,Default,,0000,0000,0000,,cuteness to figure out whether he really
Dialogue: 0,0:15:35.20,0:15:37.76,Default,,0000,0000,0000,,is the cutest kid or not. Now, when it
Dialogue: 0,0:15:37.76,0:15:40.36,Default,,0000,0000,0000,,comes to financial statements, that's
Dialogue: 0,0:15:40.36,0:15:42.12,Default,,0000,0000,0000,,really easy because we have our
Dialogue: 0,0:15:42.12,0:15:44.84,Default,,0000,0000,0000,,accounting standards that tell us this
Dialogue: 0,0:15:44.84,0:15:48.12,Default,,0000,0000,0000,,is what accounting should look like. And
Dialogue: 0,0:15:48.12,0:15:49.56,Default,,0000,0000,0000,,so when we're trying to figure out, "Well,
Dialogue: 0,0:15:49.56,0:15:51.32,Default,,0000,0000,0000,,are management telling the truth? Is this
Dialogue: 0,0:15:51.32,0:15:53.80,Default,,0000,0000,0000,,the right set of financial statements? Is
Dialogue: 0,0:15:53.80,0:15:55.04,Default,,0000,0000,0000,,this what we should be presenting to
Dialogue: 0,0:15:55.04,0:15:57.52,Default,,0000,0000,0000,,shareholders?" then we use our double AASBs
Dialogue: 0,0:15:57.52,0:16:00.44,Default,,0000,0000,0000,,to do that. Rodri will be back to tell
Dialogue: 0,0:16:00.44,0:16:02.16,Default,,0000,0000,0000,,you all sorts of other hints and tips as
Dialogue: 0,0:16:02.16,0:16:03.52,Default,,0000,0000,0000,,well about
Dialogue: 0,0:16:03.52,0:16:05.36,Default,,0000,0000,0000,,auditing. So
Dialogue: 0,0:16:05.36,0:16:09.64,Default,,0000,0000,0000,,auditing is the accumulation of evidence.
Dialogue: 0,0:16:09.64,0:16:11.36,Default,,0000,0000,0000,,all right so evidence is really critical
Dialogue: 0,0:16:11.36,0:16:14.04,Default,,0000,0000,0000,,because I shouldn't make a decision
Dialogue: 0,0:16:14.04,0:16:16.00,Default,,0000,0000,0000,,without having some
Dialogue: 0,0:16:16.00,0:16:20.08,Default,,0000,0000,0000,,evidence if you're sick or uh something
Dialogue: 0,0:16:20.08,0:16:22.52,Default,,0000,0000,0000,,happens to you on the way to UNI then I
Dialogue: 0,0:16:22.52,0:16:24.36,Default,,0000,0000,0000,,want evidence if you say look I miss the
Dialogue: 0,0:16:24.36,0:16:26.12,Default,,0000,0000,0000,,quiz because I fell down a flight of
Dialogue: 0,0:16:26.12,0:16:28.64,Default,,0000,0000,0000,,stairs and broke my leg I'm going to
Dialogue: 0,0:16:28.64,0:16:31.08,Default,,0000,0000,0000,,have to see your broken leg and I'd want
Dialogue: 0,0:16:31.08,0:16:33.12,Default,,0000,0000,0000,,some evidence that that was really the
Dialogue: 0,0:16:33.12,0:16:36.88,Default,,0000,0000,0000,,case right so I'm technically a doctor
Dialogue: 0,0:16:36.88,0:16:38.40,Default,,0000,0000,0000,,and um friends always ask me look could
Dialogue: 0,0:16:38.40,0:16:40.32,Default,,0000,0000,0000,,you write me a doctor's note which I
Dialogue: 0,0:16:40.32,0:16:43.92,Default,,0000,0000,0000,,can't do as a PhD sort of doctor but if
Dialogue: 0,0:16:43.92,0:16:46.04,Default,,0000,0000,0000,,you apply for something you oh look you
Dialogue: 0,0:16:46.04,0:16:47.84,Default,,0000,0000,0000,,know this is what's been going on I want
Dialogue: 0,0:16:47.84,0:16:49.44,Default,,0000,0000,0000,,to see actual evidence to know that
Dialogue: 0,0:16:49.44,0:16:51.40,Default,,0000,0000,0000,,that's the truth so just like on cop
Dialogue: 0,0:16:51.40,0:16:53.12,Default,,0000,0000,0000,,shows before they charge somebody with
Dialogue: 0,0:16:53.12,0:16:55.92,Default,,0000,0000,0000,,the crime they need evidence well we
Dialogue: 0,0:16:55.92,0:16:58.20,Default,,0000,0000,0000,,need evidence as well to be able to make
Dialogue: 0,0:16:58.20,0:16:59.84,Default,,0000,0000,0000,,our opinion
Dialogue: 0,0:16:59.84,0:17:02.88,Default,,0000,0000,0000,,and determine the degree of
Dialogue: 0,0:17:02.88,0:17:05.72,Default,,0000,0000,0000,,Correspondence between information which
Dialogue: 0,0:17:05.72,0:17:07.88,Default,,0000,0000,0000,,for us is going to be our financial
Dialogue: 0,0:17:07.88,0:17:09.60,Default,,0000,0000,0000,,statements let me put that in
Dialogue: 0,0:17:09.60,0:17:12.04,Default,,0000,0000,0000,,red financial
Dialogue: 0,0:17:12.04,0:17:15.68,Default,,0000,0000,0000,,statements and our established
Dialogue: 0,0:17:15.68,0:17:18.28,Default,,0000,0000,0000,,criteria and our established
Dialogue: 0,0:17:18.28,0:17:21.32,Default,,0000,0000,0000,,criteria are our
Dialogue: 0,0:17:21.32,0:17:24.24,Default,,0000,0000,0000,,asbs all right so we're looking at
Dialogue: 0,0:17:24.24,0:17:26.12,Default,,0000,0000,0000,,Management's information and what the
Dialogue: 0,0:17:26.12,0:17:29.68,Default,,0000,0000,0000,,double asbs say it should be and um I
Dialogue: 0,0:17:29.68,0:17:31.44,Default,,0000,0000,0000,,know would you guys have had Helen I
Dialogue: 0,0:17:31.44,0:17:33.08,Default,,0000,0000,0000,,think last semester for accounting
Dialogue: 0,0:17:33.08,0:17:35.12,Default,,0000,0000,0000,,standards so Helen would have taught you
Dialogue: 0,0:17:35.12,0:17:37.64,Default,,0000,0000,0000,,how everything needs to be laid out how
Dialogue: 0,0:17:37.64,0:17:40.00,Default,,0000,0000,0000,,all the calculations need to work so we
Dialogue: 0,0:17:40.00,0:17:41.48,Default,,0000,0000,0000,,need to check that that's part of the
Dialogue: 0,0:17:41.48,0:17:45.08,Default,,0000,0000,0000,,auditor's role so key things about the
Dialogue: 0,0:17:45.08,0:17:47.76,Default,,0000,0000,0000,,audit we need to be competent we need to
Dialogue: 0,0:17:47.76,0:17:49.56,Default,,0000,0000,0000,,have the right skills which is part of
Dialogue: 0,0:17:49.56,0:17:52.04,Default,,0000,0000,0000,,what we're doing here at Uni and we need
Dialogue: 0,0:17:52.04,0:17:56.04,Default,,0000,0000,0000,,to be independent as well all right so
Dialogue: 0,0:17:56.04,0:17:57.84,Default,,0000,0000,0000,,competency is about having the right
Dialogue: 0,0:17:57.84,0:18:00.40,Default,,0000,0000,0000,,skills and and then being independent is
Dialogue: 0,0:18:00.40,0:18:03.16,Default,,0000,0000,0000,,about being
Dialogue: 0,0:18:03.16,0:18:05.00,Default,,0000,0000,0000,,objective um and I'll give you an
Dialogue: 0,0:18:05.00,0:18:08.68,Default,,0000,0000,0000,,example so many many many years ago um
Dialogue: 0,0:18:08.68,0:18:10.44,Default,,0000,0000,0000,,my husband and I both met at an audit
Dialogue: 0,0:18:10.44,0:18:12.52,Default,,0000,0000,0000,,firm so it was an audit firm
Dialogue: 0,0:18:12.52,0:18:14.32,Default,,0000,0000,0000,,romance
Dialogue: 0,0:18:14.32,0:18:16.68,Default,,0000,0000,0000,,and we were both working on different
Dialogue: 0,0:18:16.68,0:18:18.96,Default,,0000,0000,0000,,audit clients um and one of my big
Dialogue: 0,0:18:18.96,0:18:21.12,Default,,0000,0000,0000,,clients was QBE Insurance which we've
Dialogue: 0,0:18:21.12,0:18:23.20,Default,,0000,0000,0000,,all would have seen on TV and they
Dialogue: 0,0:18:23.20,0:18:27.08,Default,,0000,0000,0000,,sponsor some sporting teams Etc but he
Dialogue: 0,0:18:27.08,0:18:31.48,Default,,0000,0000,0000,,left PWC and took a job at
Dialogue: 0,0:18:31.48,0:18:34.52,Default,,0000,0000,0000,,QBE at that point I could no longer do
Dialogue: 0,0:18:34.52,0:18:36.88,Default,,0000,0000,0000,,the audit because I was no longer
Dialogue: 0,0:18:36.88,0:18:38.52,Default,,0000,0000,0000,,independent because I knew somebody that
Dialogue: 0,0:18:38.52,0:18:41.44,Default,,0000,0000,0000,,worked there and part of his job was
Dialogue: 0,0:18:41.44,0:18:43.32,Default,,0000,0000,0000,,consolidation of all of their
Dialogue: 0,0:18:43.32,0:18:47.20,Default,,0000,0000,0000,,subsidiaries so if I discovered that he
Dialogue: 0,0:18:47.20,0:18:49.36,Default,,0000,0000,0000,,had you know somehow stolen $10 million
Dialogue: 0,0:18:49.36,0:18:51.52,Default,,0000,0000,0000,,from the company I probably wouldn't
Dialogue: 0,0:18:51.52,0:18:54.12,Default,,0000,0000,0000,,have told anybody we would have you know
Dialogue: 0,0:18:54.12,0:18:56.80,Default,,0000,0000,0000,,very quietly resigned from our jobs sold
Dialogue: 0,0:18:56.80,0:18:58.92,Default,,0000,0000,0000,,our house and skipped out a
Dialogue: 0,0:18:58.92,0:19:02.68,Default,,0000,0000,0000,,non-extradition country so we need to
Dialogue: 0,0:19:02.68,0:19:05.48,Default,,0000,0000,0000,,have Auditors who are objective and
Dialogue: 0,0:19:05.48,0:19:09.08,Default,,0000,0000,0000,,independent right to say that when some
Dialogue: 0,0:19:09.08,0:19:11.36,Default,,0000,0000,0000,,we see something that's not quite right
Dialogue: 0,0:19:11.36,0:19:13.64,Default,,0000,0000,0000,,we feel independent enough to put our
Dialogue: 0,0:19:13.64,0:19:15.80,Default,,0000,0000,0000,,hands up and say oh I don't think this
Dialogue: 0,0:19:15.80,0:19:17.84,Default,,0000,0000,0000,,should be happening or you know
Dialogue: 0,0:19:17.84,0:19:19.60,Default,,0000,0000,0000,,management are not doing the right thing
Dialogue: 0,0:19:19.60,0:19:20.56,Default,,0000,0000,0000,,so
Dialogue: 0,0:19:20.56,0:19:22.56,Default,,0000,0000,0000,,Independence is the Cornerstone of
Dialogue: 0,0:19:22.56,0:19:25.32,Default,,0000,0000,0000,,auditing you open any audit textbook and
Dialogue: 0,0:19:25.32,0:19:27.36,Default,,0000,0000,0000,,I'm a bit of an audit nerd so I have
Dialogue: 0,0:19:27.36,0:19:29.64,Default,,0000,0000,0000,,audit textbooks from the
Dialogue: 0,0:19:29.64,0:19:31.40,Default,,0000,0000,0000,,1940s and
Dialogue: 0,0:19:31.40,0:19:33.60,Default,,0000,0000,0000,,earlier um and there's no pictures no
Dialogue: 0,0:19:33.60,0:19:35.08,Default,,0000,0000,0000,,diagrams it's all in color it's all
Dialogue: 0,0:19:35.08,0:19:37.16,Default,,0000,0000,0000,,black and white just type text but they
Dialogue: 0,0:19:37.16,0:19:39.32,Default,,0000,0000,0000,,all start with this idea that audit is
Dialogue: 0,0:19:39.32,0:19:41.60,Default,,0000,0000,0000,,the Cornerstone sorry Independence is
Dialogue: 0,0:19:41.60,0:19:43.92,Default,,0000,0000,0000,,the Cornerstone of being able to do that
Dialogue: 0,0:19:43.92,0:19:46.56,Default,,0000,0000,0000,,audit to be independent just like when I
Dialogue: 0,0:19:46.56,0:19:49.76,Default,,0000,0000,0000,,say my kid has got to be the cutest kid
Dialogue: 0,0:19:49.76,0:19:52.32,Default,,0000,0000,0000,,I'm not independent so we would have to
Dialogue: 0,0:19:52.32,0:19:55.88,Default,,0000,0000,0000,,find somebody who is an independent
Dialogue: 0,0:19:55.88,0:19:58.80,Default,,0000,0000,0000,,expert in the Judgment of kid cuteness
Dialogue: 0,0:19:58.80,0:20:01.56,Default,,0000,0000,0000,,to be able to make that
Dialogue: 0,0:20:01.56,0:20:03.72,Default,,0000,0000,0000,,opinion all right so what do we need to
Dialogue: 0,0:20:03.72,0:20:05.68,Default,,0000,0000,0000,,be able to do our audit we need to have
Dialogue: 0,0:20:05.68,0:20:07.60,Default,,0000,0000,0000,,the information the financial statements
Dialogue: 0,0:20:07.60,0:20:09.32,Default,,0000,0000,0000,,and our criteria which is our double
Dialogue: 0,0:20:09.32,0:20:12.12,Default,,0000,0000,0000,,asbs that we talked about all right so
Dialogue: 0,0:20:12.12,0:20:15.76,Default,,0000,0000,0000,,our financial statements and our double
Dialogue: 0,0:20:15.76,0:20:18.72,Default,,0000,0000,0000,,asbs we need to be able to accumulate
Dialogue: 0,0:20:18.72,0:20:19.96,Default,,0000,0000,0000,,evidence and we're actually going to
Dialogue: 0,0:20:19.96,0:20:22.68,Default,,0000,0000,0000,,practice doing that designing ways to
Dialogue: 0,0:20:22.68,0:20:25.24,Default,,0000,0000,0000,,collect evidence so just like on CSI
Dialogue: 0,0:20:25.24,0:20:26.36,Default,,0000,0000,0000,,there's all these techniques for
Dialogue: 0,0:20:26.36,0:20:29.28,Default,,0000,0000,0000,,collecting fingerprints and running DN
Dialogue: 0,0:20:29.28,0:20:31.56,Default,,0000,0000,0000,,and taking a tire Triad and running it
Dialogue: 0,0:20:31.56,0:20:34.88,Default,,0000,0000,0000,,through a database we also
Dialogue: 0,0:20:34.88,0:20:37.84,Default,,0000,0000,0000,,have less cool procedures to collect
Dialogue: 0,0:20:37.84,0:20:39.76,Default,,0000,0000,0000,,evidence so there's no like you know
Dialogue: 0,0:20:39.76,0:20:41.96,Default,,0000,0000,0000,,Dart rooms with spotlights and
Dialogue: 0,0:20:41.96,0:20:44.04,Default,,0000,0000,0000,,microscopes unfortunately Auditors
Dialogue: 0,0:20:44.04,0:20:46.56,Default,,0000,0000,0000,,mostly just use our brains might use a
Dialogue: 0,0:20:46.56,0:20:49.88,Default,,0000,0000,0000,,computer pen and some paper but we're
Dialogue: 0,0:20:49.88,0:20:51.84,Default,,0000,0000,0000,,going to look at specific methods that
Dialogue: 0,0:20:51.84,0:20:54.28,Default,,0000,0000,0000,,we've developed over time to collect
Dialogue: 0,0:20:54.28,0:20:56.24,Default,,0000,0000,0000,,evidence we've talked about being
Dialogue: 0,0:20:56.24,0:20:57.88,Default,,0000,0000,0000,,competent having the right skills and
Dialogue: 0,0:20:57.88,0:20:59.36,Default,,0000,0000,0000,,being independent
Dialogue: 0,0:20:59.36,0:21:02.56,Default,,0000,0000,0000,,and then providing a report so under the
Dialogue: 0,0:21:02.56,0:21:03.88,Default,,0000,0000,0000,,corporations
Dialogue: 0,0:21:03.88,0:21:06.88,Default,,0000,0000,0000,,act
Dialogue: 0,0:21:06.92,0:21:09.12,Default,,0000,0000,0000,,oops I actually have to provide a
Dialogue: 0,0:21:09.12,0:21:10.12,Default,,0000,0000,0000,,written
Dialogue: 0,0:21:10.12,0:21:12.04,Default,,0000,0000,0000,,report that
Dialogue: 0,0:21:12.04,0:21:15.44,Default,,0000,0000,0000,,says here is the outcome of the audit
Dialogue: 0,0:21:15.44,0:21:18.44,Default,,0000,0000,0000,,yes management are telling the truth or
Dialogue: 0,0:21:18.44,0:21:20.88,Default,,0000,0000,0000,,no they're not quite being truthful
Dialogue: 0,0:21:20.88,0:21:22.28,Default,,0000,0000,0000,,about everything and here are the things
Dialogue: 0,0:21:22.28,0:21:25.00,Default,,0000,0000,0000,,that they not being honest
Dialogue: 0,0:21:25.00,0:21:27.08,Default,,0000,0000,0000,,about so what's the difference between
Dialogue: 0,0:21:27.08,0:21:29.36,Default,,0000,0000,0000,,auditing and accounting the accounting
Dialogue: 0,0:21:29.36,0:21:33.08,Default,,0000,0000,0000,,is the recording part of uh the business
Dialogue: 0,0:21:33.08,0:21:35.96,Default,,0000,0000,0000,,process so they record summarize all the
Dialogue: 0,0:21:35.96,0:21:38.24,Default,,0000,0000,0000,,debits and credits within the system and
Dialogue: 0,0:21:38.24,0:21:40.48,Default,,0000,0000,0000,,then the Auditors are actually the ones
Dialogue: 0,0:21:40.48,0:21:42.64,Default,,0000,0000,0000,,checking the accounting work so we're
Dialogue: 0,0:21:42.64,0:21:43.76,Default,,0000,0000,0000,,going to go back and we're going to look
Dialogue: 0,0:21:43.76,0:21:45.96,Default,,0000,0000,0000,,at the work of the accounts and say are
Dialogue: 0,0:21:45.96,0:21:48.24,Default,,0000,0000,0000,,they doing the right
Dialogue: 0,0:21:48.24,0:21:50.40,Default,,0000,0000,0000,,thing just going to move this over here
Dialogue: 0,0:21:50.40,0:21:52.92,Default,,0000,0000,0000,,for a second all right so we have three
Dialogue: 0,0:21:52.92,0:21:55.36,Default,,0000,0000,0000,,main types of audits uh the financial
Dialogue: 0,0:21:55.36,0:21:56.68,Default,,0000,0000,0000,,statement the performance and the
Dialogue: 0,0:21:56.68,0:21:58.60,Default,,0000,0000,0000,,compliance as I mentioned before
Dialogue: 0,0:21:58.60,0:21:59.68,Default,,0000,0000,0000,,financial statement is the one that
Dialogue: 0,0:21:59.68,0:22:01.44,Default,,0000,0000,0000,,we're going to be spending the most of
Dialogue: 0,0:22:01.44,0:22:04.08,Default,,0000,0000,0000,,our time on the performance is about are
Dialogue: 0,0:22:04.08,0:22:05.72,Default,,0000,0000,0000,,we doing things efficiently and
Dialogue: 0,0:22:05.72,0:22:09.00,Default,,0000,0000,0000,,effectively within our business so uh we
Dialogue: 0,0:22:09.00,0:22:11.88,Default,,0000,0000,0000,,might have a sales process or a complex
Dialogue: 0,0:22:11.88,0:22:13.52,Default,,0000,0000,0000,,consolidation process and we can get an
Dialogue: 0,0:22:13.52,0:22:15.56,Default,,0000,0000,0000,,auditor in to say is this the best way
Dialogue: 0,0:22:15.56,0:22:17.56,Default,,0000,0000,0000,,to do this do we need to re-engineer our
Dialogue: 0,0:22:17.56,0:22:20.04,Default,,0000,0000,0000,,business process and then the compliance
Dialogue: 0,0:22:20.04,0:22:22.36,Default,,0000,0000,0000,,audit which is about following laws and
Dialogue: 0,0:22:22.36,0:22:24.84,Default,,0000,0000,0000,,regulations um so is a company reporting
Dialogue: 0,0:22:24.84,0:22:27.44,Default,,0000,0000,0000,,GST appropriately are they following
Dialogue: 0,0:22:27.44,0:22:30.32,Default,,0000,0000,0000,,occupational health and safety um are
Dialogue: 0,0:22:30.32,0:22:32.36,Default,,0000,0000,0000,,they doing anything else that requires a
Dialogue: 0,0:22:32.36,0:22:34.48,Default,,0000,0000,0000,,specific law or regulation but we're
Dialogue: 0,0:22:34.48,0:22:37.00,Default,,0000,0000,0000,,going to focus on that one up
Dialogue: 0,0:22:37.00,0:22:40.08,Default,,0000,0000,0000,,there so there's some examples okay
Dialogue: 0,0:22:40.08,0:22:41.80,Default,,0000,0000,0000,,different types of Auditors the public
Dialogue: 0,0:22:41.80,0:22:43.36,Default,,0000,0000,0000,,accounting firms are the big four and
Dialogue: 0,0:22:43.36,0:22:45.88,Default,,0000,0000,0000,,the second tier they do most of the
Dialogue: 0,0:22:45.88,0:22:48.76,Default,,0000,0000,0000,,publicly listed companies um the auditor
Dialogue: 0,0:22:48.76,0:22:50.88,Default,,0000,0000,0000,,general are the government
Dialogue: 0,0:22:50.88,0:22:52.96,Default,,0000,0000,0000,,Auditors all right so the New South
Dialogue: 0,0:22:52.96,0:22:55.16,Default,,0000,0000,0000,,Wales audit office and the auditor
Dialogue: 0,0:22:55.16,0:22:57.76,Default,,0000,0000,0000,,general of Australia based in Cambra um
Dialogue: 0,0:22:57.76,0:22:59.36,Default,,0000,0000,0000,,New South Wales auditor general will
Dialogue: 0,0:22:59.36,0:23:02.32,Default,,0000,0000,0000,,audit state government
Dialogue: 0,0:23:02.32,0:23:04.96,Default,,0000,0000,0000,,organizations um and the auditor general
Dialogue: 0,0:23:04.96,0:23:07.56,Default,,0000,0000,0000,,will handle the audit for everything
Dialogue: 0,0:23:07.56,0:23:09.04,Default,,0000,0000,0000,,else that's
Dialogue: 0,0:23:09.04,0:23:11.88,Default,,0000,0000,0000,,Federal um so the auditor general audits
Dialogue: 0,0:23:11.88,0:23:14.48,Default,,0000,0000,0000,,the Defense Force uh they're in charge
Dialogue: 0,0:23:14.48,0:23:16.56,Default,,0000,0000,0000,,of the overall audit for
Dialogue: 0,0:23:16.56,0:23:20.28,Default,,0000,0000,0000,,Telstra um center link um other big
Dialogue: 0,0:23:20.28,0:23:21.92,Default,,0000,0000,0000,,government
Dialogue: 0,0:23:21.92,0:23:24.56,Default,,0000,0000,0000,,departments we have Auditors for tax
Dialogue: 0,0:23:24.56,0:23:27.04,Default,,0000,0000,0000,,that work specifically for the ATO um
Dialogue: 0,0:23:27.04,0:23:29.44,Default,,0000,0000,0000,,but they're more likely to be lawyers
Dialogue: 0,0:23:29.44,0:23:31.72,Default,,0000,0000,0000,,um and accountants uh not just
Dialogue: 0,0:23:31.72,0:23:34.48,Default,,0000,0000,0000,,accountants and then internal Auditors
Dialogue: 0,0:23:34.48,0:23:36.60,Default,,0000,0000,0000,,which focus on doing that compliance in
Dialogue: 0,0:23:36.60,0:23:39.72,Default,,0000,0000,0000,,the performance audit so most big top
Dialogue: 0,0:23:39.72,0:23:41.40,Default,,0000,0000,0000,,100 companies will have their own audit
Dialogue: 0,0:23:41.40,0:23:45.08,Default,,0000,0000,0000,,internal audit team um so quantis the
Dialogue: 0,0:23:45.08,0:23:47.84,Default,,0000,0000,0000,,Commonwealth Bank Coca-Cola will'll all
Dialogue: 0,0:23:47.84,0:23:50.68,Default,,0000,0000,0000,,have teams who look at internal
Dialogue: 0,0:23:50.68,0:23:52.08,Default,,0000,0000,0000,,improvements and making sure that
Dialogue: 0,0:23:52.08,0:23:54.00,Default,,0000,0000,0000,,they're following the rules and
Dialogue: 0,0:23:54.00,0:23:55.84,Default,,0000,0000,0000,,regulations and this is important
Dialogue: 0,0:23:55.84,0:23:57.40,Default,,0000,0000,0000,,because they want to try and minimize
Dialogue: 0,0:23:57.40,0:24:00.40,Default,,0000,0000,0000,,fines
Dialogue: 0,0:24:01.32,0:24:02.84,Default,,0000,0000,0000,,all right because you could get a
Dialogue: 0,0:24:02.84,0:24:04.80,Default,,0000,0000,0000,,government fine for not following a law
Dialogue: 0,0:24:04.80,0:24:07.08,Default,,0000,0000,0000,,or a regulation appropriately you could
Dialogue: 0,0:24:07.08,0:24:11.56,Default,,0000,0000,0000,,be sued it could create all sorts of
Dialogue: 0,0:24:13.48,0:24:16.60,Default,,0000,0000,0000,,issues all right so let's look the big
Dialogue: 0,0:24:16.60,0:24:19.88,Default,,0000,0000,0000,,firms um I worked for this one actually
Dialogue: 0,0:24:19.88,0:24:21.68,Default,,0000,0000,0000,,well the predecessor for this one which
Dialogue: 0,0:24:21.68,0:24:23.64,Default,,0000,0000,0000,,was Cooper and Li brand and then
Dialogue: 0,0:24:23.64,0:24:27.96,Default,,0000,0000,0000,,PWC um so the big four audit probably I
Dialogue: 0,0:24:27.96,0:24:30.92,Default,,0000,0000,0000,,think about 60% of the Australian stock
Dialogue: 0,0:24:30.92,0:24:34.28,Default,,0000,0000,0000,,exchange and then these guys here pretty
Dialogue: 0,0:24:34.28,0:24:38.12,Default,,0000,0000,0000,,much AIT the rest all right um so for
Dialogue: 0,0:24:38.12,0:24:40.56,Default,,0000,0000,0000,,those people who are going to a later
Dialogue: 0,0:24:40.56,0:24:43.00,Default,,0000,0000,0000,,afternoon toot and you'll have Kate or
Dialogue: 0,0:24:43.00,0:24:45.16,Default,,0000,0000,0000,,you'll have Nicole um we actually have
Dialogue: 0,0:24:45.16,0:24:47.16,Default,,0000,0000,0000,,an agreement with Grant thoron where
Dialogue: 0,0:24:47.16,0:24:49.80,Default,,0000,0000,0000,,they actually send real life Auditors in
Dialogue: 0,0:24:49.80,0:24:51.80,Default,,0000,0000,0000,,to teach tutorial so you'll get to hear
Dialogue: 0,0:24:51.80,0:24:54.40,Default,,0000,0000,0000,,lots of stories from them uh the people
Dialogue: 0,0:24:54.40,0:24:57.88,Default,,0000,0000,0000,,who are going to um who will have Ben
Dialogue: 0,0:24:57.88,0:25:01.24,Default,,0000,0000,0000,,this after afternoon um in the 12:00 CH
Dialogue: 0,0:25:01.24,0:25:04.04,Default,,0000,0000,0000,,and I think also the 1:31 uh Ben works
Dialogue: 0,0:25:04.04,0:25:07.20,Default,,0000,0000,0000,,at a small local firm in terms of
Dialogue: 0,0:25:07.20,0:25:09.84,Default,,0000,0000,0000,,auditing so he's got lots of experience
Dialogue: 0,0:25:09.84,0:25:12.28,Default,,0000,0000,0000,,in doing much smaller audits which are
Dialogue: 0,0:25:12.28,0:25:14.92,Default,,0000,0000,0000,,required under the corporations act um
Dialogue: 0,0:25:14.92,0:25:17.48,Default,,0000,0000,0000,,so you've got a range of Staff with a
Dialogue: 0,0:25:17.48,0:25:19.44,Default,,0000,0000,0000,,range of experience and this means that
Dialogue: 0,0:25:19.44,0:25:21.52,Default,,0000,0000,0000,,Auditors exist at all sorts of different
Dialogue: 0,0:25:21.52,0:25:24.28,Default,,0000,0000,0000,,levels so I recently did the audit for
Dialogue: 0,0:25:24.28,0:25:26.32,Default,,0000,0000,0000,,ISC which is one of the University
Dialogue: 0,0:25:26.32,0:25:29.12,Default,,0000,0000,0000,,student groups um AUD s happen for the
Dialogue: 0,0:25:29.12,0:25:31.96,Default,,0000,0000,0000,,big ASX listed companies they happen for
Dialogue: 0,0:25:31.96,0:25:35.08,Default,,0000,0000,0000,,large privately listed sorry for large
Dialogue: 0,0:25:35.08,0:25:37.28,Default,,0000,0000,0000,,private companies and they also happen
Dialogue: 0,0:25:37.28,0:25:39.36,Default,,0000,0000,0000,,for small companies that are required to
Dialogue: 0,0:25:39.36,0:25:42.60,Default,,0000,0000,0000,,have audits under the corporations act
Dialogue: 0,0:25:42.60,0:25:44.80,Default,,0000,0000,0000,,or maybe as part of Charity
Dialogue: 0,0:25:44.80,0:25:48.24,Default,,0000,0000,0000,,regulations firms do audits um but just
Dialogue: 0,0:25:48.24,0:25:49.72,Default,,0000,0000,0000,,of different sizes and of different
Dialogue: 0,0:25:49.72,0:25:53.64,Default,,0000,0000,0000,,scales so the big four are so large and
Dialogue: 0,0:25:53.64,0:25:56.20,Default,,0000,0000,0000,,so specialized that people specialize by
Dialogue: 0,0:25:56.20,0:25:59.40,Default,,0000,0000,0000,,industry so you audit mining firms or
Dialogue: 0,0:25:59.40,0:26:01.32,Default,,0000,0000,0000,,government firms or telecommunications
Dialogue: 0,0:26:01.32,0:26:03.56,Default,,0000,0000,0000,,or financial services um my
Dialogue: 0,0:26:03.56,0:26:05.96,Default,,0000,0000,0000,,specialization was financial services so
Dialogue: 0,0:26:05.96,0:26:08.28,Default,,0000,0000,0000,,I didn't get to see much I always envied
Dialogue: 0,0:26:08.28,0:26:09.44,Default,,0000,0000,0000,,the people that got to audit
Dialogue: 0,0:26:09.44,0:26:11.24,Default,,0000,0000,0000,,manufacturing firms or mining firms
Dialogue: 0,0:26:11.24,0:26:12.96,Default,,0000,0000,0000,,because you could go places and see real
Dialogue: 0,0:26:12.96,0:26:15.40,Default,,0000,0000,0000,,things happening until one time I did
Dialogue: 0,0:26:15.40,0:26:17.60,Default,,0000,0000,0000,,get put on the audit of Dairy Farmers
Dialogue: 0,0:26:17.60,0:26:19.72,Default,,0000,0000,0000,,and that's not So Glamorous like milk
Dialogue: 0,0:26:19.72,0:26:22.88,Default,,0000,0000,0000,,processing plants really don't smell
Dialogue: 0,0:26:22.88,0:26:25.28,Default,,0000,0000,0000,,great um we did get to drink you know
Dialogue: 0,0:26:25.28,0:26:26.80,Default,,0000,0000,0000,,you had access to the corporate fridge
Dialogue: 0,0:26:26.80,0:26:28.32,Default,,0000,0000,0000,,so I could drink all the milk that I
Dialogue: 0,0:26:28.32,0:26:30.32,Default,,0000,0000,0000,,could take though I'm Asian so I'm
Dialogue: 0,0:26:30.32,0:26:31.92,Default,,0000,0000,0000,,partly lactose intolerance that doesn't
Dialogue: 0,0:26:31.92,0:26:34.76,Default,,0000,0000,0000,,go down so well um but Dairy Farmers
Dialogue: 0,0:26:34.76,0:26:36.28,Default,,0000,0000,0000,,made yogurt again it couldn't eat too
Dialogue: 0,0:26:36.28,0:26:38.32,Default,,0000,0000,0000,,much of that uh but fruit juice I could
Dialogue: 0,0:26:38.32,0:26:39.64,Default,,0000,0000,0000,,drink the fruit juice all day so that
Dialogue: 0,0:26:39.64,0:26:42.00,Default,,0000,0000,0000,,was a good thing so the public
Dialogue: 0,0:26:42.00,0:26:44.92,Default,,0000,0000,0000,,accounting firms big ones and small ones
Dialogue: 0,0:26:44.92,0:26:47.60,Default,,0000,0000,0000,,provide audit services so that's a big
Dialogue: 0,0:26:47.60,0:26:49.60,Default,,0000,0000,0000,,part of their bread and butter audit
Dialogue: 0,0:26:49.60,0:26:50.76,Default,,0000,0000,0000,,Services
Dialogue: 0,0:26:50.76,0:26:54.24,Default,,0000,0000,0000,,though are high
Dialogue: 0,0:26:54.24,0:26:58.72,Default,,0000,0000,0000,,volume and low margin
Dialogue: 0,0:26:59.32,0:27:01.08,Default,,0000,0000,0000,,that means you don't make a lot of money
Dialogue: 0,0:27:01.08,0:27:02.24,Default,,0000,0000,0000,,off an
Dialogue: 0,0:27:02.24,0:27:04.80,Default,,0000,0000,0000,,audit right it's it's not a really
Dialogue: 0,0:27:04.80,0:27:07.44,Default,,0000,0000,0000,,profitable item to do but the reason
Dialogue: 0,0:27:07.44,0:27:09.64,Default,,0000,0000,0000,,that you do an audit is so that you can
Dialogue: 0,0:27:09.64,0:27:13.12,Default,,0000,0000,0000,,convince your client to hire you to do
Dialogue: 0,0:27:13.12,0:27:15.80,Default,,0000,0000,0000,,other things like tax which can be a
Dialogue: 0,0:27:15.80,0:27:18.04,Default,,0000,0000,0000,,little bit more lucrative and consulting
Dialogue: 0,0:27:18.04,0:27:20.36,Default,,0000,0000,0000,,services that could be helping them
Dialogue: 0,0:27:20.36,0:27:23.20,Default,,0000,0000,0000,,expand into a new market um choosing a
Dialogue: 0,0:27:23.20,0:27:25.76,Default,,0000,0000,0000,,new information system um you get
Dialogue: 0,0:27:25.76,0:27:28.68,Default,,0000,0000,0000,,different departments within your umm
Dialogue: 0,0:27:28.68,0:27:30.92,Default,,0000,0000,0000,,within your audit firm to do that but
Dialogue: 0,0:27:30.92,0:27:32.28,Default,,0000,0000,0000,,it's all about sort of growing the
Dialogue: 0,0:27:32.28,0:27:35.52,Default,,0000,0000,0000,,bigger uh audit firm share so something
Dialogue: 0,0:27:35.52,0:27:37.44,Default,,0000,0000,0000,,like management consulting services is
Dialogue: 0,0:27:37.44,0:27:40.04,Default,,0000,0000,0000,,really high
Dialogue: 0,0:27:40.36,0:27:42.64,Default,,0000,0000,0000,,margin and towards my the end of my
Dialogue: 0,0:27:42.64,0:27:44.08,Default,,0000,0000,0000,,career I did a lot more management
Dialogue: 0,0:27:44.08,0:27:47.68,Default,,0000,0000,0000,,consulting um and I remember back in
Dialogue: 0,0:27:47.68,0:27:50.48,Default,,0000,0000,0000,,19 oh I think it was
Dialogue: 0,0:27:50.48,0:27:54.76,Default,,0000,0000,0000,,99 we had a $20 million consulting job
Dialogue: 0,0:27:54.76,0:27:56.04,Default,,0000,0000,0000,,with the Australian Broadcasting
Dialogue: 0,0:27:56.04,0:27:58.28,Default,,0000,0000,0000,,Corporation just down the road
Dialogue: 0,0:27:58.28,0:28:00.28,Default,,0000,0000,0000,,implementing new software and that was a
Dialogue: 0,0:28:00.28,0:28:02.16,Default,,0000,0000,0000,,six-month project for $20
Dialogue: 0,0:28:02.16,0:28:04.28,Default,,0000,0000,0000,,million so and you wouldn't earn
Dialogue: 0,0:28:04.28,0:28:06.00,Default,,0000,0000,0000,,anywhere near that much on an audit
Dialogue: 0,0:28:06.00,0:28:07.56,Default,,0000,0000,0000,,you'd probably earn a few million
Dialogue: 0,0:28:07.56,0:28:09.16,Default,,0000,0000,0000,,dollars on an audit for about six to 8
Dialogue: 0,0:28:09.16,0:28:12.36,Default,,0000,0000,0000,,weeks work um so there's definitely lots
Dialogue: 0,0:28:12.36,0:28:14.00,Default,,0000,0000,0000,,of margin Aid
Dialogue: 0,0:28:14.00,0:28:17.24,Default,,0000,0000,0000,,there now you find very few firms that
Dialogue: 0,0:28:17.24,0:28:19.48,Default,,0000,0000,0000,,are in the sole proprietorship or the
Dialogue: 0,0:28:19.48,0:28:22.24,Default,,0000,0000,0000,,partnership model that's because of the
Dialogue: 0,0:28:22.24,0:28:24.72,Default,,0000,0000,0000,,idea of joint and several liability and
Dialogue: 0,0:28:24.72,0:28:26.72,Default,,0000,0000,0000,,that would mean that if the partner of
Dialogue: 0,0:28:26.72,0:28:28.00,Default,,0000,0000,0000,,the firm did something wrong and then
Dialogue: 0,0:28:28.00,0:28:30.08,Default,,0000,0000,0000,,they they skipped out of town I would be
Dialogue: 0,0:28:30.08,0:28:32.80,Default,,0000,0000,0000,,liable as one of the partners left over
Dialogue: 0,0:28:32.80,0:28:36.20,Default,,0000,0000,0000,,the big four firms these days and most
Dialogue: 0,0:28:36.20,0:28:37.76,Default,,0000,0000,0000,,of our second tier are almost all
Dialogue: 0,0:28:37.76,0:28:39.52,Default,,0000,0000,0000,,Incorporated companies so while you have
Dialogue: 0,0:28:39.52,0:28:41.68,Default,,0000,0000,0000,,Partners who are shareholders in The
Dialogue: 0,0:28:41.68,0:28:43.96,Default,,0000,0000,0000,,Firm they're not Partners in the typical
Dialogue: 0,0:28:43.96,0:28:46.36,Default,,0000,0000,0000,,sense of a a
Dialogue: 0,0:28:46.36,0:28:48.28,Default,,0000,0000,0000,,partnership now in terms of the
Dialogue: 0,0:28:48.28,0:28:50.40,Default,,0000,0000,0000,,hierarchy or the shape of an audit
Dialogue: 0,0:28:50.40,0:28:53.88,Default,,0000,0000,0000,,firm previously they looked like
Dialogue: 0,0:28:53.88,0:28:56.52,Default,,0000,0000,0000,,this all right so you had the partners
Dialogue: 0,0:28:56.52,0:28:59.20,Default,,0000,0000,0000,,at the very top and then lots of junior
Dialogue: 0,0:28:59.20,0:29:01.52,Default,,0000,0000,0000,,staff doing what we call grunt work
Dialogue: 0,0:29:01.52,0:29:03.12,Default,,0000,0000,0000,,ticking and bashing or ticking and
Dialogue: 0,0:29:03.12,0:29:06.56,Default,,0000,0000,0000,,flicking at the bottom what we're seeing
Dialogue: 0,0:29:06.56,0:29:08.48,Default,,0000,0000,0000,,in terms of Trends and the data that's
Dialogue: 0,0:29:08.48,0:29:09.88,Default,,0000,0000,0000,,coming out of
Dialogue: 0,0:29:09.88,0:29:12.68,Default,,0000,0000,0000,,CA is that the audit firm is looking a
Dialogue: 0,0:29:12.68,0:29:13.88,Default,,0000,0000,0000,,lot more
Dialogue: 0,0:29:13.88,0:29:16.76,Default,,0000,0000,0000,,rectangular now um and that you're
Dialogue: 0,0:29:16.76,0:29:19.60,Default,,0000,0000,0000,,having a lot less staff at the junior
Dialogue: 0,0:29:19.60,0:29:21.12,Default,,0000,0000,0000,,levels and that comes from a number of
Dialogue: 0,0:29:21.12,0:29:23.40,Default,,0000,0000,0000,,different reasons the first
Dialogue: 0,0:29:23.40,0:29:26.60,Default,,0000,0000,0000,,one is
Dialogue: 0,0:29:26.68,0:29:28.88,Default,,0000,0000,0000,,outsourcing or
Dialogue: 0,0:29:28.88,0:29:32.76,Default,,0000,0000,0000,,offshoring um and that's especially you
Dialogue: 0,0:29:32.76,0:29:34.48,Default,,0000,0000,0000,,scan a lot of audit documentation that
Dialogue: 0,0:29:34.48,0:29:37.28,Default,,0000,0000,0000,,you would have had graduates um interns
Dialogue: 0,0:29:37.28,0:29:39.52,Default,,0000,0000,0000,,doing a lot of ticking and checking all
Dialogue: 0,0:29:39.52,0:29:41.40,Default,,0000,0000,0000,,of that gets scanned and then sent off
Dialogue: 0,0:29:41.40,0:29:44.64,Default,,0000,0000,0000,,to India or you know Pakistan and they
Dialogue: 0,0:29:44.64,0:29:46.44,Default,,0000,0000,0000,,do a whole lot of the audit checking
Dialogue: 0,0:29:46.44,0:29:48.12,Default,,0000,0000,0000,,work for about a third the price
Dialogue: 0,0:29:48.12,0:29:50.48,Default,,0000,0000,0000,,overnight so the amount of staff doing
Dialogue: 0,0:29:50.48,0:29:53.48,Default,,0000,0000,0000,,that work is much less um and then we've
Dialogue: 0,0:29:53.48,0:29:55.92,Default,,0000,0000,0000,,also seen a lot more automation so we're
Dialogue: 0,0:29:55.92,0:29:58.16,Default,,0000,0000,0000,,using a lot more big data we're using a
Dialogue: 0,0:29:58.16,0:30:00.40,Default,,0000,0000,0000,,lot more intelligent agents um and
Dialogue: 0,0:30:00.40,0:30:03.48,Default,,0000,0000,0000,,artificial intelligence in audits so you
Dialogue: 0,0:30:03.48,0:30:04.80,Default,,0000,0000,0000,,know the future is still looking bright
Dialogue: 0,0:30:04.80,0:30:06.36,Default,,0000,0000,0000,,for auditing and auditing at this point
Dialogue: 0,0:30:06.36,0:30:08.92,Default,,0000,0000,0000,,is not going to be replaced by machines
Dialogue: 0,0:30:08.92,0:30:10.64,Default,,0000,0000,0000,,but there's a lot less at the bottom
Dialogue: 0,0:30:10.64,0:30:12.76,Default,,0000,0000,0000,,level than there was
Dialogue: 0,0:30:12.76,0:30:14.92,Default,,0000,0000,0000,,before what do the professional bodies
Dialogue: 0,0:30:14.92,0:30:16.88,Default,,0000,0000,0000,,do they do a few different things they
Dialogue: 0,0:30:16.88,0:30:18.44,Default,,0000,0000,0000,,help establish standards through the
Dialogue: 0,0:30:18.44,0:30:20.72,Default,,0000,0000,0000,,auditing Standards Board they do a lot
Dialogue: 0,0:30:20.72,0:30:22.76,Default,,0000,0000,0000,,of research and then they the biggest
Dialogue: 0,0:30:22.76,0:30:24.60,Default,,0000,0000,0000,,one is education to make sure that once
Dialogue: 0,0:30:24.60,0:30:27.48,Default,,0000,0000,0000,,you become a member you are continuously
Dialogue: 0,0:30:27.48,0:30:31.28,Default,,0000,0000,0000,,up to date on latest auditing Trends and
Dialogue: 0,0:30:31.28,0:30:33.48,Default,,0000,0000,0000,,changes within legislation especially at
Dialogue: 0,0:30:33.48,0:30:34.96,Default,,0000,0000,0000,,the international
Dialogue: 0,0:30:34.96,0:30:37.28,Default,,0000,0000,0000,,level now what about our auditing
Dialogue: 0,0:30:37.28,0:30:38.92,Default,,0000,0000,0000,,standards our auditing standards are
Dialogue: 0,0:30:38.92,0:30:40.68,Default,,0000,0000,0000,,called
Dialogue: 0,0:30:40.68,0:30:43.08,Default,,0000,0000,0000,,ASAS all right and you can find those
Dialogue: 0,0:30:43.08,0:30:48.92,Default,,0000,0000,0000,,free on the aub's website AAS
Dialogue: 0,0:30:48.92,0:30:50.44,Default,,0000,0000,0000,,sb.gov
Dialogue: 0,0:30:50.44,0:30:54.40,Default,,0000,0000,0000,,Au now remember our exam is open book so
Dialogue: 0,0:30:54.40,0:30:56.32,Default,,0000,0000,0000,,you can bring in oh somebody has one of
Dialogue: 0,0:30:56.32,0:30:58.88,Default,,0000,0000,0000,,these I'm just going to borrow this here
Dialogue: 0,0:30:58.88,0:31:01.20,Default,,0000,0000,0000,,one of these handbooks if you want all
Dialogue: 0,0:31:01.20,0:31:03.48,Default,,0000,0000,0000,,your standards in one book or you could
Dialogue: 0,0:31:03.48,0:31:04.44,Default,,0000,0000,0000,,print them
Dialogue: 0,0:31:04.44,0:31:06.88,Default,,0000,0000,0000,,out right and bring them into the exam
Dialogue: 0,0:31:06.88,0:31:08.16,Default,,0000,0000,0000,,you can bring your textbook into the
Dialogue: 0,0:31:08.16,0:31:11.40,Default,,0000,0000,0000,,exam you could bring anything you like
Dialogue: 0,0:31:11.40,0:31:12.60,Default,,0000,0000,0000,,comic books if you think you're going to
Dialogue: 0,0:31:12.60,0:31:14.44,Default,,0000,0000,0000,,have time at the end to you know have a
Dialogue: 0,0:31:14.44,0:31:17.32,Default,,0000,0000,0000,,bit of a read um so you don't
Dialogue: 0,0:31:17.32,0:31:19.32,Default,,0000,0000,0000,,necessarily need to buy the standards
Dialogue: 0,0:31:19.32,0:31:21.20,Default,,0000,0000,0000,,book if you don't want to you can look
Dialogue: 0,0:31:21.20,0:31:23.00,Default,,0000,0000,0000,,at them online and then print out the
Dialogue: 0,0:31:23.00,0:31:24.88,Default,,0000,0000,0000,,sections that you think you'll need I
Dialogue: 0,0:31:24.88,0:31:26.32,Default,,0000,0000,0000,,will actually tell you in the last week
Dialogue: 0,0:31:26.32,0:31:27.48,Default,,0000,0000,0000,,of term which ones I think are going to
Dialogue: 0,0:31:27.48,0:31:29.96,Default,,0000,0000,0000,,be key ones for the final exam so you
Dialogue: 0,0:31:29.96,0:31:31.44,Default,,0000,0000,0000,,don't have to worry about
Dialogue: 0,0:31:31.44,0:31:34.20,Default,,0000,0000,0000,,that so the
Dialogue: 0,0:31:34.20,0:31:37.84,Default,,0000,0000,0000,,aasb issues the auditing standards and
Dialogue: 0,0:31:37.84,0:31:39.68,Default,,0000,0000,0000,,uh we're internationally harmonized so
Dialogue: 0,0:31:39.68,0:31:41.44,Default,,0000,0000,0000,,they come down from the international
Dialogue: 0,0:31:41.44,0:31:44.96,Default,,0000,0000,0000,,auditing Standards Board and the key is
Dialogue: 0,0:31:44.96,0:31:46.52,Default,,0000,0000,0000,,that they are
Dialogue: 0,0:31:46.52,0:31:48.60,Default,,0000,0000,0000,,mandatory all right so while some
Dialogue: 0,0:31:48.60,0:31:51.00,Default,,0000,0000,0000,,companies or some countries sorry the
Dialogue: 0,0:31:51.00,0:31:54.00,Default,,0000,0000,0000,,auditing standards say the auditor
Dialogue: 0,0:31:54.00,0:31:56.64,Default,,0000,0000,0000,,May our auditing standards say the
Dialogue: 0,0:31:56.64,0:31:59.76,Default,,0000,0000,0000,,auditor must or the auditor shall
Dialogue: 0,0:31:59.76,0:32:02.24,Default,,0000,0000,0000,,because our requirements are enshrined
Dialogue: 0,0:32:02.24,0:32:05.44,Default,,0000,0000,0000,,within the corporations act we must do
Dialogue: 0,0:32:05.44,0:32:08.68,Default,,0000,0000,0000,,them as the minimum set of Standards you
Dialogue: 0,0:32:08.68,0:32:10.32,Default,,0000,0000,0000,,could do more than what the standard
Dialogue: 0,0:32:10.32,0:32:13.52,Default,,0000,0000,0000,,says but the minimum is contained within
Dialogue: 0,0:32:13.52,0:32:15.96,Default,,0000,0000,0000,,the ASAS and we'll be referring back and
Dialogue: 0,0:32:15.96,0:32:17.48,Default,,0000,0000,0000,,I'll show you excerpts from the
Dialogue: 0,0:32:17.48,0:32:20.24,Default,,0000,0000,0000,,standards on a regular basis of things
Dialogue: 0,0:32:20.24,0:32:21.64,Default,,0000,0000,0000,,that are really critical and important
Dialogue: 0,0:32:21.64,0:32:23.08,Default,,0000,0000,0000,,to
Dialogue: 0,0:32:23.08,0:32:25.44,Default,,0000,0000,0000,,understand all right so how do we make
Dialogue: 0,0:32:25.44,0:32:27.36,Default,,0000,0000,0000,,sure that everybody who's doing an audit
Dialogue: 0,0:32:27.36,0:32:29.04,Default,,0000,0000,0000,,is doing the right right thing that
Dialogue: 0,0:32:29.04,0:32:31.64,Default,,0000,0000,0000,,comes from quality control and so
Dialogue: 0,0:32:31.64,0:32:37.04,Default,,0000,0000,0000,,quality control needs to exist across
Dialogue: 0,0:32:38.64,0:32:41.88,Default,,0000,0000,0000,,firms and quality control also needs to
Dialogue: 0,0:32:41.88,0:32:45.32,Default,,0000,0000,0000,,exist within
Dialogue: 0,0:32:45.92,0:32:48.56,Default,,0000,0000,0000,,firms all right so I need to make sure
Dialogue: 0,0:32:48.56,0:32:51.32,Default,,0000,0000,0000,,that PWC are doing the same minimum
Dialogue: 0,0:32:51.32,0:32:55.68,Default,,0000,0000,0000,,standard as KPMG and then within pwc's
Dialogue: 0,0:32:55.68,0:32:57.44,Default,,0000,0000,0000,,however many offices we need to make
Dialogue: 0,0:32:57.44,0:32:59.76,Default,,0000,0000,0000,,sure that all staff are doing the same
Dialogue: 0,0:32:59.76,0:33:03.04,Default,,0000,0000,0000,,thing and there are specific whoops
Dialogue: 0,0:33:03.04,0:33:06.20,Default,,0000,0000,0000,,specific quality control standards um
Dialogue: 0,0:33:06.20,0:33:09.00,Default,,0000,0000,0000,,that the uh auditing standards and the
Dialogue: 0,0:33:09.00,0:33:11.44,Default,,0000,0000,0000,,corporations act actually set out so
Dialogue: 0,0:33:11.44,0:33:13.96,Default,,0000,0000,0000,,things about having leadership um
Dialogue: 0,0:33:13.96,0:33:15.68,Default,,0000,0000,0000,,meeting ethical and Independence
Dialogue: 0,0:33:15.68,0:33:18.20,Default,,0000,0000,0000,,requirements rules about how to accept
Dialogue: 0,0:33:18.20,0:33:21.08,Default,,0000,0000,0000,,clients selecting the right people doing
Dialogue: 0,0:33:21.08,0:33:22.92,Default,,0000,0000,0000,,the Audits and then monitoring or
Dialogue: 0,0:33:22.92,0:33:24.28,Default,,0000,0000,0000,,checking each
Dialogue: 0,0:33:24.28,0:33:27.52,Default,,0000,0000,0000,,other and that's where the peer review
Dialogue: 0,0:33:27.52,0:33:29.00,Default,,0000,0000,0000,,Pro
Dialogue: 0,0:33:29.00,0:33:31.16,Default,,0000,0000,0000,,program comes in from Chartered
Dialogue: 0,0:33:31.16,0:33:33.28,Default,,0000,0000,0000,,Accountants and zpa Australia where
Dialogue: 0,0:33:33.28,0:33:36.56,Default,,0000,0000,0000,,firms check each other's work to make
Dialogue: 0,0:33:36.56,0:33:38.52,Default,,0000,0000,0000,,sure that they're all following the
Dialogue: 0,0:33:38.52,0:33:40.64,Default,,0000,0000,0000,,standards
Dialogue: 0,0:33:40.64,0:33:44.16,Default,,0000,0000,0000,,appropriately so CA and CPA both have
Dialogue: 0,0:33:44.16,0:33:45.92,Default,,0000,0000,0000,,sets of Auditors that actually audit
Dialogue: 0,0:33:45.92,0:33:50.76,Default,,0000,0000,0000,,them also on top of that we have
Dialogue: 0,0:33:50.76,0:33:53.88,Default,,0000,0000,0000,,the Australian Securities and investment
Dialogue: 0,0:33:53.88,0:33:56.72,Default,,0000,0000,0000,,commission doing their own inspection
Dialogue: 0,0:33:56.72,0:33:59.00,Default,,0000,0000,0000,,program
Dialogue: 0,0:33:59.00,0:34:00.72,Default,,0000,0000,0000,,all right so they audit the big four
Dialogue: 0,0:34:00.72,0:34:03.36,Default,,0000,0000,0000,,firms every single year smaller firms on
Dialogue: 0,0:34:03.36,0:34:05.96,Default,,0000,0000,0000,,a rotating schedule and they can find
Dialogue: 0,0:34:05.96,0:34:08.00,Default,,0000,0000,0000,,audit firms for not complying with the
Dialogue: 0,0:34:08.00,0:34:10.48,Default,,0000,0000,0000,,auditing standards um I'll provide you
Dialogue: 0,0:34:10.48,0:34:13.00,Default,,0000,0000,0000,,guys with a link to look at the latest
Dialogue: 0,0:34:13.00,0:34:15.80,Default,,0000,0000,0000,,inspection report from Asic um it
Dialogue: 0,0:34:15.80,0:34:18.68,Default,,0000,0000,0000,,doesn't actually show names of firms um
Dialogue: 0,0:34:18.68,0:34:20.24,Default,,0000,0000,0000,,this also happens in the US that the US
Dialogue: 0,0:34:20.24,0:34:22.00,Default,,0000,0000,0000,,has started naming firms who are not
Dialogue: 0,0:34:22.00,0:34:24.28,Default,,0000,0000,0000,,doing the right thing so there's big
Dialogue: 0,0:34:24.28,0:34:27.44,Default,,0000,0000,0000,,bucks um in making sure that everybody
Dialogue: 0,0:34:27.44,0:34:30.12,Default,,0000,0000,0000,,Within in The Firm is doing the right
Dialogue: 0,0:34:30.12,0:34:31.72,Default,,0000,0000,0000,,thing in terms of following the order
Dialogue: 0,0:34:31.72,0:34:33.80,Default,,0000,0000,0000,,standards acting independently and
Dialogue: 0,0:34:33.80,0:34:35.68,Default,,0000,0000,0000,,acting ethically how are we doing on
Dialogue: 0,0:34:35.68,0:34:39.52,Default,,0000,0000,0000,,time oh okay all right operations act
Dialogue: 0,0:34:39.52,0:34:42.76,Default,,0000,0000,0000,,besides governing company directors
Dialogue: 0,0:34:42.76,0:34:46.68,Default,,0000,0000,0000,,setting up companies uh in Australian
Dialogue: 0,0:34:46.68,0:34:47.92,Default,,0000,0000,0000,,you guys have all done Australian
Dialogue: 0,0:34:47.92,0:34:50.84,Default,,0000,0000,0000,,company law you guys done company law
Dialogue: 0,0:34:50.84,0:34:52.08,Default,,0000,0000,0000,,yep or for the people who haven't done
Dialogue: 0,0:34:52.08,0:34:54.68,Default,,0000,0000,0000,,it yet one of the assignments many many
Dialogue: 0,0:34:54.68,0:34:56.92,Default,,0000,0000,0000,,years ago used to be prepare all the
Dialogue: 0,0:34:56.92,0:34:59.20,Default,,0000,0000,0000,,documents to start company right we'd
Dialogue: 0,0:34:59.20,0:35:00.36,Default,,0000,0000,0000,,have to actually go back to the
Dialogue: 0,0:35:00.36,0:35:01.92,Default,,0000,0000,0000,,corporations act and figure out what
Dialogue: 0,0:35:01.92,0:35:04.28,Default,,0000,0000,0000,,that is so while the corporations act
Dialogue: 0,0:35:04.28,0:35:06.80,Default,,0000,0000,0000,,specifies how companies get set up it
Dialogue: 0,0:35:06.80,0:35:10.12,Default,,0000,0000,0000,,also specifies what Auditors need to do
Dialogue: 0,0:35:10.12,0:35:12.28,Default,,0000,0000,0000,,you need to be qualified you need to be
Dialogue: 0,0:35:12.28,0:35:14.72,Default,,0000,0000,0000,,registered management can't just choose
Dialogue: 0,0:35:14.72,0:35:17.40,Default,,0000,0000,0000,,the auditor it has to be ratified by
Dialogue: 0,0:35:17.40,0:35:18.88,Default,,0000,0000,0000,,shareholders at an annual general
Dialogue: 0,0:35:18.88,0:35:21.28,Default,,0000,0000,0000,,meeting we can't just quit as an auditor
Dialogue: 0,0:35:21.28,0:35:22.28,Default,,0000,0000,0000,,there's all sorts of rules about
Dialogue: 0,0:35:22.28,0:35:24.60,Default,,0000,0000,0000,,quitting what our responsibilities are
Dialogue: 0,0:35:24.60,0:35:25.76,Default,,0000,0000,0000,,and
Dialogue: 0,0:35:25.76,0:35:27.80,Default,,0000,0000,0000,,Reporting um and you can go into those
Dialogue: 0,0:35:27.80,0:35:29.32,Default,,0000,0000,0000,,in more detail in the
Dialogue: 0,0:35:29.32,0:35:32.40,Default,,0000,0000,0000,,textbook all right so here is the output
Dialogue: 0,0:35:32.40,0:35:33.60,Default,,0000,0000,0000,,and this is really important and you
Dialogue: 0,0:35:33.60,0:35:35.12,Default,,0000,0000,0000,,might be thinking well why am I
Dialogue: 0,0:35:35.12,0:35:38.56,Default,,0000,0000,0000,,interested in looking at the end point
Dialogue: 0,0:35:38.56,0:35:39.92,Default,,0000,0000,0000,,when we're only at the beginning and
Dialogue: 0,0:35:39.92,0:35:42.36,Default,,0000,0000,0000,,this is so that you have in your mind
Dialogue: 0,0:35:42.36,0:35:45.48,Default,,0000,0000,0000,,the idea of what we're striving for or
Dialogue: 0,0:35:45.48,0:35:47.72,Default,,0000,0000,0000,,what we're uh planning to
Dialogue: 0,0:35:47.72,0:35:52.08,Default,,0000,0000,0000,,create so we're going to look at why do
Dialogue: 0,0:35:52.08,0:35:54.96,Default,,0000,0000,0000,,we have the report um what goes into
Dialogue: 0,0:35:54.96,0:35:56.72,Default,,0000,0000,0000,,something called an unmodified audit
Dialogue: 0,0:35:56.72,0:35:58.64,Default,,0000,0000,0000,,report we're we're going to look at when
Dialogue: 0,0:35:58.64,0:36:00.76,Default,,0000,0000,0000,,we might do different sorts of reports
Dialogue: 0,0:36:00.76,0:36:05.76,Default,,0000,0000,0000,,and adding extra information okay now
Dialogue: 0,0:36:05.76,0:36:07.80,Default,,0000,0000,0000,,before Oh I'm trying to remember what
Dialogue: 0,0:36:07.80,0:36:09.60,Default,,0000,0000,0000,,case it was we'll go into the cases I
Dialogue: 0,0:36:09.60,0:36:11.12,Default,,0000,0000,0000,,think uh next
Dialogue: 0,0:36:11.12,0:36:13.68,Default,,0000,0000,0000,,week there was never a legal requirement
Dialogue: 0,0:36:13.68,0:36:15.48,Default,,0000,0000,0000,,to produce a paper audit report you
Dialogue: 0,0:36:15.48,0:36:17.80,Default,,0000,0000,0000,,could have done a verbal audit report at
Dialogue: 0,0:36:17.80,0:36:20.52,Default,,0000,0000,0000,,one stage but now we must provide a
Dialogue: 0,0:36:20.52,0:36:22.88,Default,,0000,0000,0000,,written audit report about the financial
Dialogue: 0,0:36:22.88,0:36:24.76,Default,,0000,0000,0000,,statements in accordance with the
Dialogue: 0,0:36:24.76,0:36:27.56,Default,,0000,0000,0000,,Australian accounting uh uh the
Dialogue: 0,0:36:27.56,0:36:28.92,Default,,0000,0000,0000,,accounting standards and our auditing
Dialogue: 0,0:36:28.92,0:36:31.00,Default,,0000,0000,0000,,standards and Reporting is pretty
Dialogue: 0,0:36:31.00,0:36:33.00,Default,,0000,0000,0000,,similar to the point where if you go to
Dialogue: 0,0:36:33.00,0:36:35.32,Default,,0000,0000,0000,,the auditing standard on audit reporting
Dialogue: 0,0:36:35.32,0:36:37.48,Default,,0000,0000,0000,,there's actually templates in the back
Dialogue: 0,0:36:37.48,0:36:39.64,Default,,0000,0000,0000,,and if you look at almost all of the
Dialogue: 0,0:36:39.64,0:36:41.52,Default,,0000,0000,0000,,publicly listed companies their audit
Dialogue: 0,0:36:41.52,0:36:43.88,Default,,0000,0000,0000,,reports almost say exactly the same
Dialogue: 0,0:36:43.88,0:36:45.52,Default,,0000,0000,0000,,thing word for word except the company
Dialogue: 0,0:36:45.52,0:36:47.64,Default,,0000,0000,0000,,name is different and the year might be
Dialogue: 0,0:36:47.64,0:36:49.04,Default,,0000,0000,0000,,different and the name of the audit
Dialogue: 0,0:36:49.04,0:36:50.96,Default,,0000,0000,0000,,partner might be
Dialogue: 0,0:36:50.96,0:36:53.52,Default,,0000,0000,0000,,different so audit reporting is fairly
Dialogue: 0,0:36:53.52,0:36:56.24,Default,,0000,0000,0000,,standardized and it has very specific
Dialogue: 0,0:36:56.24,0:36:58.72,Default,,0000,0000,0000,,legal language because it is a legal
Dialogue: 0,0:36:58.72,0:37:01.04,Default,,0000,0000,0000,,document that exposes the auditor to
Dialogue: 0,0:37:01.04,0:37:04.16,Default,,0000,0000,0000,,liability if we've done something wrong
Dialogue: 0,0:37:04.16,0:37:06.40,Default,,0000,0000,0000,,so what is the gold standard that
Dialogue: 0,0:37:06.40,0:37:08.72,Default,,0000,0000,0000,,everybody is looking for so what most
Dialogue: 0,0:37:08.72,0:37:11.20,Default,,0000,0000,0000,,firms
Dialogue: 0,0:37:12.64,0:37:16.72,Default,,0000,0000,0000,,want firms want what we call an
Dialogue: 0,0:37:16.72,0:37:20.52,Default,,0000,0000,0000,,unmodified audit report and is also
Dialogue: 0,0:37:20.52,0:37:23.32,Default,,0000,0000,0000,,sometimes called an unqualified report
Dialogue: 0,0:37:23.32,0:37:25.64,Default,,0000,0000,0000,,now this is where it's a bit funny and a
Dialogue: 0,0:37:25.64,0:37:26.52,Default,,0000,0000,0000,,bit
Dialogue: 0,0:37:26.52,0:37:29.12,Default,,0000,0000,0000,,counterintuitive so when you do your ca
Dialogue: 0,0:37:29.12,0:37:31.52,Default,,0000,0000,0000,,or you do a medical degree or you finish
Dialogue: 0,0:37:31.52,0:37:34.04,Default,,0000,0000,0000,,your engineering qualification you
Dialogue: 0,0:37:34.04,0:37:35.40,Default,,0000,0000,0000,,become
Dialogue: 0,0:37:35.40,0:37:38.36,Default,,0000,0000,0000,,qualified right and qualified is a good
Dialogue: 0,0:37:38.36,0:37:41.56,Default,,0000,0000,0000,,thing okay when it comes to an audit it
Dialogue: 0,0:37:41.56,0:37:44.28,Default,,0000,0000,0000,,is the exact opposite the one that
Dialogue: 0,0:37:44.28,0:37:47.08,Default,,0000,0000,0000,,people want the one that
Dialogue: 0,0:37:47.08,0:37:50.88,Default,,0000,0000,0000,,says big tick management are telling the
Dialogue: 0,0:37:50.88,0:37:54.36,Default,,0000,0000,0000,,truth is something called an unqualified
Dialogue: 0,0:37:54.36,0:37:55.52,Default,,0000,0000,0000,,or an
Dialogue: 0,0:37:55.52,0:37:58.32,Default,,0000,0000,0000,,unmodified audit report
Dialogue: 0,0:37:58.32,0:38:00.20,Default,,0000,0000,0000,,okay you might think why is it that way
Dialogue: 0,0:38:00.20,0:38:02.48,Default,,0000,0000,0000,,I don't know it's probably something I
Dialogue: 0,0:38:02.48,0:38:04.68,Default,,0000,0000,0000,,could historically uh dig into the
Dialogue: 0,0:38:04.68,0:38:06.80,Default,,0000,0000,0000,,archives and look at sometimes I wonder
Dialogue: 0,0:38:06.80,0:38:08.40,Default,,0000,0000,0000,,if we do things sort of a bit back to
Dialogue: 0,0:38:08.40,0:38:10.96,Default,,0000,0000,0000,,front in auditing to make it seem really
Dialogue: 0,0:38:10.96,0:38:13.40,Default,,0000,0000,0000,,mysterious and difficult because
Dialogue: 0,0:38:13.40,0:38:15.16,Default,,0000,0000,0000,,auditing is a lot about logic and Common
Dialogue: 0,0:38:15.16,0:38:16.60,Default,,0000,0000,0000,,Sense and we don't want too many people
Dialogue: 0,0:38:16.60,0:38:18.36,Default,,0000,0000,0000,,getting into the awesome area that is
Dialogue: 0,0:38:18.36,0:38:20.68,Default,,0000,0000,0000,,auditing so we want to make it seem
Dialogue: 0,0:38:20.68,0:38:22.80,Default,,0000,0000,0000,,really complicated and Tricky by using
Dialogue: 0,0:38:22.80,0:38:25.24,Default,,0000,0000,0000,,language that doesn't quite make sense
Dialogue: 0,0:38:25.24,0:38:27.60,Default,,0000,0000,0000,,so most firms
Dialogue: 0,0:38:27.60,0:38:29.48,Default,,0000,0000,0000,,probably
Dialogue: 0,0:38:29.48,0:38:31.84,Default,,0000,0000,0000,,about I think the last time we checked
Dialogue: 0,0:38:31.84,0:38:35.12,Default,,0000,0000,0000,,it was something like 98% of firms um on
Dialogue: 0,0:38:35.12,0:38:38.24,Default,,0000,0000,0000,,the ASX get an unqualified unmodified
Dialogue: 0,0:38:38.24,0:38:40.80,Default,,0000,0000,0000,,report management are telling the truth
Dialogue: 0,0:38:40.80,0:38:43.24,Default,,0000,0000,0000,,now that sends a signal to shareholders
Dialogue: 0,0:38:43.24,0:38:46.20,Default,,0000,0000,0000,,that says management telling the truth
Dialogue: 0,0:38:46.20,0:38:47.72,Default,,0000,0000,0000,,you can rely on this information for
Dialogue: 0,0:38:47.72,0:38:51.08,Default,,0000,0000,0000,,your decision- making all right what
Dialogue: 0,0:38:51.08,0:38:53.76,Default,,0000,0000,0000,,happens do you think to company share
Dialogue: 0,0:38:53.76,0:38:55.92,Default,,0000,0000,0000,,prices if I give them the opposite if I
Dialogue: 0,0:38:55.92,0:38:57.92,Default,,0000,0000,0000,,say management are not being truthful
Dialogue: 0,0:38:57.92,0:39:00.20,Default,,0000,0000,0000,,and here are the reasons why what do you
Dialogue: 0,0:39:00.20,0:39:01.80,Default,,0000,0000,0000,,think is going to happen to share
Dialogue: 0,0:39:01.80,0:39:04.56,Default,,0000,0000,0000,,price it's going to go down and it goes
Dialogue: 0,0:39:04.56,0:39:07.12,Default,,0000,0000,0000,,down pretty quickly um in terms of what
Dialogue: 0,0:39:07.12,0:39:08.68,Default,,0000,0000,0000,,we see from the research in terms of
Dialogue: 0,0:39:08.68,0:39:11.28,Default,,0000,0000,0000,,share price reaction so firms want this
Dialogue: 0,0:39:11.28,0:39:13.92,Default,,0000,0000,0000,,managers want to work with us as the
Dialogue: 0,0:39:13.92,0:39:16.68,Default,,0000,0000,0000,,Auditors to come to an agreement on a
Dialogue: 0,0:39:16.68,0:39:18.24,Default,,0000,0000,0000,,set of financial statements that we
Dialogue: 0,0:39:18.24,0:39:21.84,Default,,0000,0000,0000,,think is unqualified is free from
Dialogue: 0,0:39:21.84,0:39:25.48,Default,,0000,0000,0000,,statement so ASA this is our first ASA
Dialogue: 0,0:39:25.48,0:39:27.88,Default,,0000,0000,0000,,700 and all the the ones on reporting
Dialogue: 0,0:39:27.88,0:39:30.28,Default,,0000,0000,0000,,you're in the 700 area say that we want
Dialogue: 0,0:39:30.28,0:39:33.44,Default,,0000,0000,0000,,to get M reasonable assurance that it's
Dialogue: 0,0:39:33.44,0:39:36.04,Default,,0000,0000,0000,,free from misstatements due to fraud or
Dialogue: 0,0:39:36.04,0:39:37.92,Default,,0000,0000,0000,,error so I'm not interest I don't care
Dialogue: 0,0:39:37.92,0:39:40.72,Default,,0000,0000,0000,,whether it's a mistake type 5,000
Dialogue: 0,0:39:40.72,0:39:43.64,Default,,0000,0000,0000,,instead of 500,000 or it's fraud I have
Dialogue: 0,0:39:43.64,0:39:46.28,Default,,0000,0000,0000,,a responsibility to detect those I want
Dialogue: 0,0:39:46.28,0:39:48.00,Default,,0000,0000,0000,,to make sure that it matches the
Dialogue: 0,0:39:48.00,0:39:50.88,Default,,0000,0000,0000,,applicable financial reporting framework
Dialogue: 0,0:39:50.88,0:39:54.16,Default,,0000,0000,0000,,which for us is at
Dialogue: 0,0:39:54.32,0:39:57.44,Default,,0000,0000,0000,,aasbs all right and that it is a fair
Dialogue: 0,0:39:57.44,0:39:58.60,Default,,0000,0000,0000,,fair
Dialogue: 0,0:39:58.60,0:40:01.12,Default,,0000,0000,0000,,presentation that it fairly represents
Dialogue: 0,0:40:01.12,0:40:03.04,Default,,0000,0000,0000,,what happened during the during the
Dialogue: 0,0:40:03.04,0:40:05.84,Default,,0000,0000,0000,,company's Financial period so if the
Dialogue: 0,0:40:05.84,0:40:07.48,Default,,0000,0000,0000,,company was exposed to a lot of
Dialogue: 0,0:40:07.48,0:40:10.04,Default,,0000,0000,0000,,fluctuation changes and adverse
Dialogue: 0,0:40:10.04,0:40:12.64,Default,,0000,0000,0000,,movements in foreign exchange and a
Dialogue: 0,0:40:12.64,0:40:14.56,Default,,0000,0000,0000,,decline in sales then we'd expect to see
Dialogue: 0,0:40:14.56,0:40:17.20,Default,,0000,0000,0000,,a loss from that company is what we're
Dialogue: 0,0:40:17.20,0:40:19.88,Default,,0000,0000,0000,,seeing uh commensurate with what we know
Dialogue: 0,0:40:19.88,0:40:22.36,Default,,0000,0000,0000,,about the firm um and then making sure
Dialogue: 0,0:40:22.36,0:40:24.64,Default,,0000,0000,0000,,that the financial report is again in
Dialogue: 0,0:40:24.64,0:40:28.56,Default,,0000,0000,0000,,accordance with our double asbs
Dialogue: 0,0:40:28.56,0:40:30.56,Default,,0000,0000,0000,,there's all sorts of parts to the audit
Dialogue: 0,0:40:30.56,0:40:34.00,Default,,0000,0000,0000,,report um and uh this has actually
Dialogue: 0,0:40:34.00,0:40:37.60,Default,,0000,0000,0000,,changed a little bit so this bit here
Dialogue: 0,0:40:37.60,0:40:40.00,Default,,0000,0000,0000,,used to be right at the end we have a
Dialogue: 0,0:40:40.00,0:40:41.92,Default,,0000,0000,0000,,new standard change so in the textbook
Dialogue: 0,0:40:41.92,0:40:42.76,Default,,0000,0000,0000,,this is going to be a little bit
Dialogue: 0,0:40:42.76,0:40:43.96,Default,,0000,0000,0000,,different than what you're looking at
Dialogue: 0,0:40:43.96,0:40:49.12,Default,,0000,0000,0000,,right here um new ASA 700 now says that
Dialogue: 0,0:40:49.12,0:40:51.32,Default,,0000,0000,0000,,we tell the shareholders the very first
Dialogue: 0,0:40:51.32,0:40:54.36,Default,,0000,0000,0000,,thing here's our opinion we used to give
Dialogue: 0,0:40:54.36,0:40:56.76,Default,,0000,0000,0000,,them all this legal jargon first all
Dialogue: 0,0:40:56.76,0:40:59.48,Default,,0000,0000,0000,,this other crap used to come first and
Dialogue: 0,0:40:59.48,0:41:01.16,Default,,0000,0000,0000,,then we would do this sort of at the end
Dialogue: 0,0:41:01.16,0:41:03.44,Default,,0000,0000,0000,,but now it's right at the front to make
Dialogue: 0,0:41:03.44,0:41:05.52,Default,,0000,0000,0000,,sure that shareholders know what's going
Dialogue: 0,0:41:05.52,0:41:10.12,Default,,0000,0000,0000,,on now on UTS online in this week's
Dialogue: 0,0:41:10.12,0:41:12.64,Default,,0000,0000,0000,,folder I've also put a whole lot of
Dialogue: 0,0:41:12.64,0:41:14.40,Default,,0000,0000,0000,,audited opinions in there for you to
Dialogue: 0,0:41:14.40,0:41:18.36,Default,,0000,0000,0000,,look at um and I'll also copy in for you
Dialogue: 0,0:41:18.36,0:41:21.04,Default,,0000,0000,0000,,um the link to the QBE
Dialogue: 0,0:41:21.04,0:41:24.72,Default,,0000,0000,0000,,Insurance annual report because it is
Dialogue: 0,0:41:24.72,0:41:27.44,Default,,0000,0000,0000,,one of the few early adopters of some
Dialogue: 0,0:41:27.44,0:41:29.40,Default,,0000,0000,0000,,new regulations and so I'll make a
Dialogue: 0,0:41:29.40,0:41:30.76,Default,,0000,0000,0000,,little video on that in a couple of
Dialogue: 0,0:41:30.76,0:41:34.72,Default,,0000,0000,0000,,weeks as well all right now what happens
Dialogue: 0,0:41:34.72,0:41:37.52,Default,,0000,0000,0000,,if management aren't being truthful how
Dialogue: 0,0:41:37.52,0:41:39.48,Default,,0000,0000,0000,,do I know what sort of opinion to give
Dialogue: 0,0:41:39.48,0:41:41.80,Default,,0000,0000,0000,,them then I'm going to use this table
Dialogue: 0,0:41:41.80,0:41:44.92,Default,,0000,0000,0000,,and this table comes out of Asa 700 uh
Dialogue: 0,0:41:44.92,0:41:48.16,Default,,0000,0000,0000,,705 sorry and so I'm just going to lean
Dialogue: 0,0:41:48.16,0:41:49.56,Default,,0000,0000,0000,,over here because I want to write some
Dialogue: 0,0:41:49.56,0:41:52.68,Default,,0000,0000,0000,,numbers here so Step One is this step
Dialogue: 0,0:41:52.68,0:41:54.28,Default,,0000,0000,0000,,over
Dialogue: 0,0:41:54.28,0:41:57.28,Default,,0000,0000,0000,,here all right the first thing I want to
Dialogue: 0,0:41:57.28,0:41:59.40,Default,,0000,0000,0000,,do is find out why I'm not giving an
Dialogue: 0,0:41:59.40,0:42:01.84,Default,,0000,0000,0000,,unqualified opinion number one the
Dialogue: 0,0:42:01.84,0:42:04.36,Default,,0000,0000,0000,,financial report is materially misstated
Dialogue: 0,0:42:04.36,0:42:06.88,Default,,0000,0000,0000,,that is essentially saying management
Dialogue: 0,0:42:06.88,0:42:09.52,Default,,0000,0000,0000,,are not being
Dialogue: 0,0:42:09.64,0:42:12.80,Default,,0000,0000,0000,,truthful about something all right so
Dialogue: 0,0:42:12.80,0:42:14.88,Default,,0000,0000,0000,,they they're understating a number
Dialogue: 0,0:42:14.88,0:42:16.72,Default,,0000,0000,0000,,they're failing to make a disclosure
Dialogue: 0,0:42:16.72,0:42:19.00,Default,,0000,0000,0000,,they're just lying about something all
Dialogue: 0,0:42:19.00,0:42:21.52,Default,,0000,0000,0000,,right the second one which is this one
Dialogue: 0,0:42:21.52,0:42:24.08,Default,,0000,0000,0000,,here is that we cannot get enough
Dialogue: 0,0:42:24.08,0:42:27.60,Default,,0000,0000,0000,,evidence all right so not
Dialogue: 0,0:42:27.60,0:42:30.08,Default,,0000,0000,0000,,enough
Dialogue: 0,0:42:30.48,0:42:32.76,Default,,0000,0000,0000,,evidence this is a bit like Donald Trump
Dialogue: 0,0:42:32.76,0:42:35.36,Default,,0000,0000,0000,,refusing to uh release his tax returns
Dialogue: 0,0:42:35.36,0:42:36.80,Default,,0000,0000,0000,,can't make an opinion if I don't have
Dialogue: 0,0:42:36.80,0:42:40.32,Default,,0000,0000,0000,,any information so Step One is I look at
Dialogue: 0,0:42:40.32,0:42:42.28,Default,,0000,0000,0000,,well what are the two reasons why I
Dialogue: 0,0:42:42.28,0:42:44.64,Default,,0000,0000,0000,,might go away from the
Dialogue: 0,0:42:44.64,0:42:48.04,Default,,0000,0000,0000,,unqualified step two is I need to look
Dialogue: 0,0:42:48.04,0:42:50.48,Default,,0000,0000,0000,,at the severity and there's two terms
Dialogue: 0,0:42:50.48,0:42:53.00,Default,,0000,0000,0000,,here material but not pervasive or
Dialogue: 0,0:42:53.00,0:42:55.24,Default,,0000,0000,0000,,material and pervasive for material
Dialogue: 0,0:42:55.24,0:42:56.56,Default,,0000,0000,0000,,means it's important enough that we
Dialogue: 0,0:42:56.56,0:42:59.12,Default,,0000,0000,0000,,think shareholders should know about it
Dialogue: 0,0:42:59.12,0:43:00.76,Default,,0000,0000,0000,,but not pervasive and I'm going to
Dialogue: 0,0:43:00.76,0:43:02.20,Default,,0000,0000,0000,,introduce you to two different
Dialogue: 0,0:43:02.20,0:43:03.76,Default,,0000,0000,0000,,characters here and I didn't name these
Dialogue: 0,0:43:03.76,0:43:05.16,Default,,0000,0000,0000,,guys actually one of my other lectures
Dialogue: 0,0:43:05.16,0:43:06.60,Default,,0000,0000,0000,,did
Dialogue: 0,0:43:06.60,0:43:10.36,Default,,0000,0000,0000,,so here we have
Dialogue: 0,0:43:10.44,0:43:13.56,Default,,0000,0000,0000,,Norman Norman the
Dialogue: 0,0:43:13.56,0:43:15.44,Default,,0000,0000,0000,,non
Dialogue: 0,0:43:15.44,0:43:17.64,Default,,0000,0000,0000,,pervasive
Dialogue: 0,0:43:17.64,0:43:20.84,Default,,0000,0000,0000,,slug all right and so Norman's there
Dialogue: 0,0:43:20.84,0:43:22.40,Default,,0000,0000,0000,,because if you imagine your financial
Dialogue: 0,0:43:22.40,0:43:24.72,Default,,0000,0000,0000,,statements let me pick a different color
Dialogue: 0,0:43:24.72,0:43:26.72,Default,,0000,0000,0000,,here so imagine you've got your
Dialogue: 0,0:43:26.72,0:43:29.20,Default,,0000,0000,0000,,financial Cal statements and all of your
Dialogue: 0,0:43:29.20,0:43:30.24,Default,,0000,0000,0000,,different
Dialogue: 0,0:43:30.24,0:43:33.64,Default,,0000,0000,0000,,accounts here if you plong to Norman on
Dialogue: 0,0:43:33.64,0:43:35.08,Default,,0000,0000,0000,,one of
Dialogue: 0,0:43:35.08,0:43:39.76,Default,,0000,0000,0000,,those all right and you said okay Norman
Dialogue: 0,0:43:39.76,0:43:43.36,Default,,0000,0000,0000,,is right here Norman's only can self
Dialogue: 0,0:43:43.36,0:43:45.60,Default,,0000,0000,0000,,contained right he's only in a small
Dialogue: 0,0:43:45.60,0:43:47.92,Default,,0000,0000,0000,,part of the financial statements so
Dialogue: 0,0:43:47.92,0:43:50.24,Default,,0000,0000,0000,,Norman is the situation where we have
Dialogue: 0,0:43:50.24,0:43:52.48,Default,,0000,0000,0000,,either something not truthful or not
Dialogue: 0,0:43:52.48,0:43:56.04,Default,,0000,0000,0000,,enough evidence in just one spot and in
Dialogue: 0,0:43:56.04,0:43:58.84,Default,,0000,0000,0000,,that case we give an opinion called a
Dialogue: 0,0:43:58.84,0:44:00.28,Default,,0000,0000,0000,,qualified
Dialogue: 0,0:44:00.28,0:44:04.60,Default,,0000,0000,0000,,opinion okay now the second person I'm
Dialogue: 0,0:44:04.60,0:44:07.40,Default,,0000,0000,0000,,going to introduce you
Dialogue: 0,0:44:07.40,0:44:09.92,Default,,0000,0000,0000,,to let me make sure my pen is a bit
Dialogue: 0,0:44:09.92,0:44:14.52,Default,,0000,0000,0000,,smaller maybe I'll type here we go
Dialogue: 0,0:44:14.52,0:44:16.44,Default,,0000,0000,0000,,is
Dialogue: 0,0:44:16.44,0:44:20.24,Default,,0000,0000,0000,,Perry the pervasive
Dialogue: 0,0:44:20.24,0:44:22.48,Default,,0000,0000,0000,,octopus and I'd always use the octopus
Dialogue: 0,0:44:22.48,0:44:24.56,Default,,0000,0000,0000,,but i' never named him and then Nelson
Dialogue: 0,0:44:24.56,0:44:26.84,Default,,0000,0000,0000,,who who does our night classes said we
Dialogue: 0,0:44:26.84,0:44:29.56,Default,,0000,0000,0000,,need to give the octopus a name so his
Dialogue: 0,0:44:29.56,0:44:30.80,Default,,0000,0000,0000,,name is
Dialogue: 0,0:44:30.80,0:44:34.16,Default,,0000,0000,0000,,Perry so if I took Perry and I put Perry
Dialogue: 0,0:44:34.16,0:44:35.60,Default,,0000,0000,0000,,on the financial
Dialogue: 0,0:44:35.60,0:44:38.12,Default,,0000,0000,0000,,statements as my
Dialogue: 0,0:44:38.12,0:44:41.12,Default,,0000,0000,0000,,octopus all
Dialogue: 0,0:44:41.12,0:44:44.32,Default,,0000,0000,0000,,right there's his body there's his
Dialogue: 0,0:44:44.32,0:44:46.48,Default,,0000,0000,0000,,little
Dialogue: 0,0:44:46.48,0:44:48.68,Default,,0000,0000,0000,,legs everywhere oh that's not that's a
Dialogue: 0,0:44:48.68,0:44:50.80,Default,,0000,0000,0000,,really you obviously I'm not you're not
Dialogue: 0,0:44:50.80,0:44:53.36,Default,,0000,0000,0000,,coming for the art but the idea with
Dialogue: 0,0:44:53.36,0:44:56.64,Default,,0000,0000,0000,,Perry is that his little tentacles reach
Dialogue: 0,0:44:56.64,0:44:59.00,Default,,0000,0000,0000,,far and wide across the financial
Dialogue: 0,0:44:59.00,0:45:01.04,Default,,0000,0000,0000,,statements so that is what we call
Dialogue: 0,0:45:01.04,0:45:03.32,Default,,0000,0000,0000,,pervasive all right there's lots of
Dialogue: 0,0:45:03.32,0:45:06.56,Default,,0000,0000,0000,,tentacles of Errors so if I have errors
Dialogue: 0,0:45:06.56,0:45:08.12,Default,,0000,0000,0000,,in the financial statements and I have
Dialogue: 0,0:45:08.12,0:45:09.56,Default,,0000,0000,0000,,lots of them across lots of different
Dialogue: 0,0:45:09.56,0:45:11.28,Default,,0000,0000,0000,,areas I say I'm going to give an adverse
Dialogue: 0,0:45:11.28,0:45:13.44,Default,,0000,0000,0000,,opinion like this is bad this is the
Dialogue: 0,0:45:13.44,0:45:14.92,Default,,0000,0000,0000,,signal to shareholders that management
Dialogue: 0,0:45:14.92,0:45:17.04,Default,,0000,0000,0000,,aren't being truthful on a range of
Dialogue: 0,0:45:17.04,0:45:19.96,Default,,0000,0000,0000,,things if I can't get enough information
Dialogue: 0,0:45:19.96,0:45:22.76,Default,,0000,0000,0000,,over a lot of different areas then
Dialogue: 0,0:45:22.76,0:45:24.20,Default,,0000,0000,0000,,Perry's going to say give me a
Dialogue: 0,0:45:24.20,0:45:26.52,Default,,0000,0000,0000,,disclaimer of an opinion and disclaimer
Dialogue: 0,0:45:26.52,0:45:28.52,Default,,0000,0000,0000,,means that I'm not actually giving an
Dialogue: 0,0:45:28.52,0:45:30.80,Default,,0000,0000,0000,,opinion at all it's no
Dialogue: 0,0:45:30.80,0:45:35.04,Default,,0000,0000,0000,,opinion all right so you've got Norman
Dialogue: 0,0:45:35.04,0:45:36.48,Default,,0000,0000,0000,,and you've got
Dialogue: 0,0:45:36.48,0:45:39.16,Default,,0000,0000,0000,,Perry okay and a lot of students even
Dialogue: 0,0:45:39.16,0:45:41.44,Default,,0000,0000,0000,,draw the little animals that's cool um
Dialogue: 0,0:45:41.44,0:45:42.96,Default,,0000,0000,0000,,but that's a way to figure out the
Dialogue: 0,0:45:42.96,0:45:45.76,Default,,0000,0000,0000,,different sorts of modified audit
Dialogue: 0,0:45:45.76,0:45:47.56,Default,,0000,0000,0000,,reports when I say I'm not going to give
Dialogue: 0,0:45:47.56,0:45:49.84,Default,,0000,0000,0000,,a an unqualified I think something's
Dialogue: 0,0:45:49.84,0:45:52.60,Default,,0000,0000,0000,,wrong then there's my options right
Dialogue: 0,0:45:52.60,0:45:55.36,Default,,0000,0000,0000,,there
Dialogue: 0,0:45:55.36,0:45:58.64,Default,,0000,0000,0000,,now okay
Dialogue: 0,0:45:58.64,0:46:01.88,Default,,0000,0000,0000,,sometimes everything is truthful I have
Dialogue: 0,0:46:01.88,0:46:04.84,Default,,0000,0000,0000,,an unmodified or unqualified report but
Dialogue: 0,0:46:04.84,0:46:06.92,Default,,0000,0000,0000,,I want to say shareholders I want to
Dialogue: 0,0:46:06.92,0:46:08.88,Default,,0000,0000,0000,,draw your attention to some extra
Dialogue: 0,0:46:08.88,0:46:13.40,Default,,0000,0000,0000,,information and I do that using an
Dialogue: 0,0:46:13.40,0:46:15.68,Default,,0000,0000,0000,,emphasis of matter paragraph what color
Dialogue: 0,0:46:15.68,0:46:19.12,Default,,0000,0000,0000,,pen am I using oh let's change that to
Dialogue: 0,0:46:19.12,0:46:22.52,Default,,0000,0000,0000,,Blue all right I use an emphasis of
Dialogue: 0,0:46:22.52,0:46:25.20,Default,,0000,0000,0000,,matter paragraph sometimes shortened to
Dialogue: 0,0:46:25.20,0:46:27.92,Default,,0000,0000,0000,,an eoom
Dialogue: 0,0:46:27.92,0:46:29.76,Default,,0000,0000,0000,,okay now the emphasis of matter
Dialogue: 0,0:46:29.76,0:46:33.44,Default,,0000,0000,0000,,paragraph says everything is fine but I
Dialogue: 0,0:46:33.44,0:46:36.12,Default,,0000,0000,0000,,just want to draw your attention to a
Dialogue: 0,0:46:36.12,0:46:37.88,Default,,0000,0000,0000,,new joint venture the company might be
Dialogue: 0,0:46:37.88,0:46:40.88,Default,,0000,0000,0000,,involved in some unusual accounting
Dialogue: 0,0:46:40.88,0:46:42.52,Default,,0000,0000,0000,,about something that is a little bit
Dialogue: 0,0:46:42.52,0:46:46.04,Default,,0000,0000,0000,,different um that we've found a mistake
Dialogue: 0,0:46:46.04,0:46:47.60,Default,,0000,0000,0000,,in the previous report and we're now
Dialogue: 0,0:46:47.60,0:46:50.08,Default,,0000,0000,0000,,revising it and reissuing it so this is
Dialogue: 0,0:46:50.08,0:46:51.76,Default,,0000,0000,0000,,still saying that management is still
Dialogue: 0,0:46:51.76,0:46:54.24,Default,,0000,0000,0000,,being truthful but my emphasis of matter
Dialogue: 0,0:46:54.24,0:46:57.00,Default,,0000,0000,0000,,is just highlighting extra information
Dialogue: 0,0:46:57.00,0:46:59.48,Default,,0000,0000,0000,,to shareholders all right and in the
Dialogue: 0,0:46:59.48,0:47:01.84,Default,,0000,0000,0000,,bundle on UTS online you'll actually see
Dialogue: 0,0:47:01.84,0:47:04.48,Default,,0000,0000,0000,,some examples of the sorts of things
Dialogue: 0,0:47:04.48,0:47:07.00,Default,,0000,0000,0000,,that could go in emphasis of matter
Dialogue: 0,0:47:07.00,0:47:10.16,Default,,0000,0000,0000,,probably the biggest one is uh emphasis
Dialogue: 0,0:47:10.16,0:47:12.56,Default,,0000,0000,0000,,of matter about going concerned do we
Dialogue: 0,0:47:12.56,0:47:15.04,Default,,0000,0000,0000,,understand the concept of going concern
Dialogue: 0,0:47:15.04,0:47:17.84,Default,,0000,0000,0000,,yes hopefully that we expect companies
Dialogue: 0,0:47:17.84,0:47:20.36,Default,,0000,0000,0000,,to continue in the future if the company
Dialogue: 0,0:47:20.36,0:47:22.36,Default,,0000,0000,0000,,is experiencing financial
Dialogue: 0,0:47:22.36,0:47:24.96,Default,,0000,0000,0000,,distress but they are being truthful
Dialogue: 0,0:47:24.96,0:47:27.04,Default,,0000,0000,0000,,about their financial distress so they
Dialogue: 0,0:47:27.04,0:47:29.88,Default,,0000,0000,0000,,showing a loss they're showing lots of
Dialogue: 0,0:47:29.88,0:47:32.48,Default,,0000,0000,0000,,uh debts and not many assets then we can
Dialogue: 0,0:47:32.48,0:47:34.36,Default,,0000,0000,0000,,still give them the big tick in the
Dialogue: 0,0:47:34.36,0:47:36.40,Default,,0000,0000,0000,,financial report because they're being
Dialogue: 0,0:47:36.40,0:47:38.52,Default,,0000,0000,0000,,truthful but we might want to say hey
Dialogue: 0,0:47:38.52,0:47:40.40,Default,,0000,0000,0000,,shareholders there are some financial
Dialogue: 0,0:47:40.40,0:47:42.56,Default,,0000,0000,0000,,difficulties at this firm we do need to
Dialogue: 0,0:47:42.56,0:47:46.16,Default,,0000,0000,0000,,warn you about those so that's important
Dialogue: 0,0:47:46.16,0:47:49.92,Default,,0000,0000,0000,,now this is new this is not going to be
Dialogue: 0,0:47:49.92,0:47:52.84,Default,,0000,0000,0000,,in any textbook um that you're looking
Dialogue: 0,0:47:52.84,0:47:54.72,Default,,0000,0000,0000,,at oh I think there's a new textbook
Dialogue: 0,0:47:54.72,0:47:55.80,Default,,0000,0000,0000,,coming out at the end of this year that
Dialogue: 0,0:47:55.80,0:47:58.28,Default,,0000,0000,0000,,will'll have it in it new standard is
Dialogue: 0,0:47:58.28,0:48:02.12,Default,,0000,0000,0000,,Asa 701 about communicating key audit
Dialogue: 0,0:48:02.12,0:48:04.96,Default,,0000,0000,0000,,matters in the auditor's report and up
Dialogue: 0,0:48:04.96,0:48:07.64,Default,,0000,0000,0000,,until this point in
Dialogue: 0,0:48:07.64,0:48:10.64,Default,,0000,0000,0000,,time what the Auditors did was a black
Dialogue: 0,0:48:10.64,0:48:12.48,Default,,0000,0000,0000,,box the audit report simply said he's
Dialogue: 0,0:48:12.48,0:48:15.40,Default,,0000,0000,0000,,our opinion unmodified unqualified or
Dialogue: 0,0:48:15.40,0:48:18.60,Default,,0000,0000,0000,,one of the other options um and that was
Dialogue: 0,0:48:18.60,0:48:21.92,Default,,0000,0000,0000,,it now the Auditors must
Dialogue: 0,0:48:21.92,0:48:25.08,Default,,0000,0000,0000,,disclose parts of the processes that
Dialogue: 0,0:48:25.08,0:48:27.16,Default,,0000,0000,0000,,they go through to make their opinion
Dialogue: 0,0:48:27.16,0:48:29.00,Default,,0000,0000,0000,,all right now not for everything oh this
Dialogue: 0,0:48:29.00,0:48:30.48,Default,,0000,0000,0000,,is how we audited sales this is how we
Dialogue: 0,0:48:30.48,0:48:32.00,Default,,0000,0000,0000,,audited cash this is how we audited a
Dialogue: 0,0:48:32.00,0:48:34.92,Default,,0000,0000,0000,,property of plant and Equipment instead
Dialogue: 0,0:48:34.92,0:48:38.40,Default,,0000,0000,0000,,it's only for areas that they think
Dialogue: 0,0:48:38.40,0:48:41.24,Default,,0000,0000,0000,,there was significant judgment or that
Dialogue: 0,0:48:41.24,0:48:43.12,Default,,0000,0000,0000,,they found particularly difficult which
Dialogue: 0,0:48:43.12,0:48:47.56,Default,,0000,0000,0000,,they call Key audit matters or
Dialogue: 0,0:48:48.48,0:48:51.48,Default,,0000,0000,0000,,k all right
Dialogue: 0,0:48:51.48,0:48:54.52,Default,,0000,0000,0000,,now the idea is to have increased
Dialogue: 0,0:48:54.52,0:48:57.36,Default,,0000,0000,0000,,transparency over decision- making if I
Dialogue: 0,0:48:57.36,0:49:00.52,Default,,0000,0000,0000,,know how Auditors made a difficult
Dialogue: 0,0:49:00.52,0:49:02.88,Default,,0000,0000,0000,,decision about writing down an
Dialogue: 0,0:49:02.88,0:49:06.68,Default,,0000,0000,0000,,intangible asset then that allows me to
Dialogue: 0,0:49:06.68,0:49:08.00,Default,,0000,0000,0000,,interpret the information in the
Dialogue: 0,0:49:08.00,0:49:10.04,Default,,0000,0000,0000,,financial report with a little bit more
Dialogue: 0,0:49:10.04,0:49:12.08,Default,,0000,0000,0000,,clarity so this is about trying to make
Dialogue: 0,0:49:12.08,0:49:14.92,Default,,0000,0000,0000,,Auditors accountable and giving expert
Dialogue: 0,0:49:14.92,0:49:16.64,Default,,0000,0000,0000,,uses of financial statements more
Dialogue: 0,0:49:16.64,0:49:18.40,Default,,0000,0000,0000,,information now I'm pretty sure the key
Dialogue: 0,0:49:18.40,0:49:20.40,Default,,0000,0000,0000,,audit matters my mom and dad are still
Dialogue: 0,0:49:20.40,0:49:22.32,Default,,0000,0000,0000,,going to gloss over and be like oh
Dialogue: 0,0:49:22.32,0:49:24.40,Default,,0000,0000,0000,,whatever right they look at the glossy
Dialogue: 0,0:49:24.40,0:49:25.96,Default,,0000,0000,0000,,front part of the annual report with
Dialogue: 0,0:49:25.96,0:49:28.96,Default,,0000,0000,0000,,smiling employees and graphs that go up
Dialogue: 0,0:49:28.96,0:49:30.24,Default,,0000,0000,0000,,they're not really looking at the the
Dialogue: 0,0:49:30.24,0:49:33.20,Default,,0000,0000,0000,,tricky bit at the back but your share
Dialogue: 0,0:49:33.20,0:49:35.92,Default,,0000,0000,0000,,analysts your fun
Dialogue: 0,0:49:35.92,0:49:38.12,Default,,0000,0000,0000,,managers um those people are going to be
Dialogue: 0,0:49:38.12,0:49:39.36,Default,,0000,0000,0000,,looking at the key audit matters and
Dialogue: 0,0:49:39.36,0:49:41.88,Default,,0000,0000,0000,,saying okay well this is an account like
Dialogue: 0,0:49:41.88,0:49:44.32,Default,,0000,0000,0000,,intangibles that has a lot of discretion
Dialogue: 0,0:49:44.32,0:49:46.60,Default,,0000,0000,0000,,by managers and the Auditors how did
Dialogue: 0,0:49:46.60,0:49:49.84,Default,,0000,0000,0000,,they handle different opinions how did
Dialogue: 0,0:49:49.84,0:49:52.16,Default,,0000,0000,0000,,they handle a standard that was really
Dialogue: 0,0:49:52.16,0:49:53.68,Default,,0000,0000,0000,,you could do a couple of different
Dialogue: 0,0:49:53.68,0:49:57.16,Default,,0000,0000,0000,,things now this must come in for all
Dialogue: 0,0:49:57.16,0:50:00.24,Default,,0000,0000,0000,,Financial years uh after the 31st of
Dialogue: 0,0:50:00.24,0:50:02.64,Default,,0000,0000,0000,,December at the end of this year however
Dialogue: 0,0:50:02.64,0:50:05.24,Default,,0000,0000,0000,,we have three firms who are early
Dialogue: 0,0:50:05.24,0:50:08.76,Default,,0000,0000,0000,,adopters QBE Insurance ccka which are
Dialogue: 0,0:50:08.76,0:50:11.36,Default,,0000,0000,0000,,the medical implants and the Australian
Dialogue: 0,0:50:11.36,0:50:12.96,Default,,0000,0000,0000,,stock exchange limited because the stock
Dialogue: 0,0:50:12.96,0:50:14.84,Default,,0000,0000,0000,,exchange is a public entity they've
Dialogue: 0,0:50:14.84,0:50:17.12,Default,,0000,0000,0000,,actually gone ahead um I'll include some
Dialogue: 0,0:50:17.12,0:50:18.64,Default,,0000,0000,0000,,links so that you can look at the actual
Dialogue: 0,0:50:18.64,0:50:21.28,Default,,0000,0000,0000,,key audit matters um and over the next
Dialogue: 0,0:50:21.28,0:50:22.80,Default,,0000,0000,0000,,coming weeks I'm going to make a video
Dialogue: 0,0:50:22.80,0:50:24.76,Default,,0000,0000,0000,,where I actually walk through their
Dialogue: 0,0:50:24.76,0:50:26.44,Default,,0000,0000,0000,,financial statements and talk a little
Dialogue: 0,0:50:26.44,0:50:29.52,Default,,0000,0000,0000,,bit about what goes into these
Dialogue: 0,0:50:29.52,0:50:32.24,Default,,0000,0000,0000,,Kam at the moment firms can write a lot
Dialogue: 0,0:50:32.24,0:50:34.88,Default,,0000,0000,0000,,or they can write a little um kamam
Dialogue: 0,0:50:34.88,0:50:38.00,Default,,0000,0000,0000,,first came in in the UK or here's the
Dialogue: 0,0:50:38.00,0:50:39.40,Default,,0000,0000,0000,,requirements that says what they need to
Dialogue: 0,0:50:39.40,0:50:42.88,Default,,0000,0000,0000,,do it's not very exciting um but there
Dialogue: 0,0:50:42.88,0:50:45.32,Default,,0000,0000,0000,,is a risk there's nothing to say how
Dialogue: 0,0:50:45.32,0:50:47.04,Default,,0000,0000,0000,,many key audit matters the auditor needs
Dialogue: 0,0:50:47.04,0:50:49.52,Default,,0000,0000,0000,,to describe and when this was first
Dialogue: 0,0:50:49.52,0:50:51.60,Default,,0000,0000,0000,,introduced and the first place it came
Dialogue: 0,0:50:51.60,0:50:53.64,Default,,0000,0000,0000,,up was in the UK
Dialogue: 0,0:50:53.64,0:50:58.48,Default,,0000,0000,0000,,about 2012 I think it it's started
Dialogue: 0,0:50:58.48,0:51:01.00,Default,,0000,0000,0000,,rollsroyce and I think it was KPMG at
Dialogue: 0,0:51:01.00,0:51:05.24,Default,,0000,0000,0000,,the time wrote something like 12 pages
Dialogue: 0,0:51:05.24,0:51:08.24,Default,,0000,0000,0000,,on key audit matters in tiny tiny tiny
Dialogue: 0,0:51:08.24,0:51:09.64,Default,,0000,0000,0000,,font it was a lot of
Dialogue: 0,0:51:09.64,0:51:12.68,Default,,0000,0000,0000,,information the very same year Vodaphone
Dialogue: 0,0:51:12.68,0:51:15.64,Default,,0000,0000,0000,,wrote about two pages uh the audit of a
Dialogue: 0,0:51:15.64,0:51:18.20,Default,,0000,0000,0000,,vone in the UK wrote about two pages on
Dialogue: 0,0:51:18.20,0:51:20.92,Default,,0000,0000,0000,,key audit matters both were deemed to be
Dialogue: 0,0:51:20.92,0:51:23.36,Default,,0000,0000,0000,,compliant with the standard so what we
Dialogue: 0,0:51:23.36,0:51:25.12,Default,,0000,0000,0000,,worry about is something that we call
Dialogue: 0,0:51:25.12,0:51:28.00,Default,,0000,0000,0000,,boiler plating so the audit partner is
Dialogue: 0,0:51:28.00,0:51:30.64,Default,,0000,0000,0000,,meant to really describe the tricky
Dialogue: 0,0:51:30.64,0:51:33.16,Default,,0000,0000,0000,,decision-making per processes they went
Dialogue: 0,0:51:33.16,0:51:36.44,Default,,0000,0000,0000,,through to look at auditing this really
Dialogue: 0,0:51:36.44,0:51:38.80,Default,,0000,0000,0000,,difficult part of the firm but what we
Dialogue: 0,0:51:38.80,0:51:41.24,Default,,0000,0000,0000,,worry about is that firms will have
Dialogue: 0,0:51:41.24,0:51:44.28,Default,,0000,0000,0000,,standard lines that they will use for
Dialogue: 0,0:51:44.28,0:51:46.32,Default,,0000,0000,0000,,different things and that won't provide
Dialogue: 0,0:51:46.32,0:51:48.96,Default,,0000,0000,0000,,too much information it'll just be a
Dialogue: 0,0:51:48.96,0:51:51.80,Default,,0000,0000,0000,,standardized line that might not say
Dialogue: 0,0:51:51.80,0:51:53.20,Default,,0000,0000,0000,,anything at all and sometimes the
Dialogue: 0,0:51:53.20,0:51:55.96,Default,,0000,0000,0000,,wording has been really really bizarre
Dialogue: 0,0:51:55.96,0:51:57.52,Default,,0000,0000,0000,,in one of the early ones I read from
Dialogue: 0,0:51:57.52,0:52:00.80,Default,,0000,0000,0000,,Rolls-Royce it said something about um
Dialogue: 0,0:52:00.80,0:52:04.36,Default,,0000,0000,0000,,the auditor is reasonably optimistic
Dialogue: 0,0:52:04.36,0:52:08.04,Default,,0000,0000,0000,,that Management's forecasts are based on
Dialogue: 0,0:52:08.04,0:52:10.40,Default,,0000,0000,0000,,reasonable assumptions of blah blah blah
Dialogue: 0,0:52:10.40,0:52:11.84,Default,,0000,0000,0000,,blah blah I'm like what does reasonably
Dialogue: 0,0:52:11.84,0:52:12.92,Default,,0000,0000,0000,,optimistic
Dialogue: 0,0:52:12.92,0:52:15.52,Default,,0000,0000,0000,,mean so there is going to be some issue
Dialogue: 0,0:52:15.52,0:52:18.92,Default,,0000,0000,0000,,about what we see um and I tell you that
Dialogue: 0,0:52:18.92,0:52:20.64,Default,,0000,0000,0000,,the auditing researchers and the
Dialogue: 0,0:52:20.64,0:52:22.80,Default,,0000,0000,0000,,linguists are all going to be looking at
Dialogue: 0,0:52:22.80,0:52:25.52,Default,,0000,0000,0000,,this information of this topic very uh
Dialogue: 0,0:52:25.52,0:52:27.96,Default,,0000,0000,0000,,closely all right oh and we're doing I'm
Dialogue: 0,0:52:27.96,0:52:30.16,Default,,0000,0000,0000,,ahead of time this is awesome so if you
Dialogue: 0,0:52:30.16,0:52:31.40,Default,,0000,0000,0000,,didn't get a subject outline they're
Dialogue: 0,0:52:31.40,0:52:33.04,Default,,0000,0000,0000,,down here at the front come grab one
Dialogue: 0,0:52:33.04,0:52:36.12,Default,,0000,0000,0000,,next week we start the weekly accessible
Dialogue: 0,0:52:36.12,0:52:39.40,Default,,0000,0000,0000,,quizzes your quizzes will start 5
Dialogue: 0,0:52:39.40,0:52:41.68,Default,,0000,0000,0000,,minutes past the start of your class
Dialogue: 0,0:52:41.68,0:52:44.32,Default,,0000,0000,0000,,time so my 9800 class in the morning
Dialogue: 0,0:52:44.32,0:52:47.04,Default,,0000,0000,0000,,quiz starts at 9:05 a.m. and if you're
Dialogue: 0,0:52:47.04,0:52:48.28,Default,,0000,0000,0000,,late that doesn't matter you don't get
Dialogue: 0,0:52:48.28,0:52:51.32,Default,,0000,0000,0000,,any extra time how do you prep you can
Dialogue: 0,0:52:51.32,0:52:52.80,Default,,0000,0000,0000,,look at the textbook there'll be some
Dialogue: 0,0:52:52.80,0:52:55.92,Default,,0000,0000,0000,,videos this lecture video will go up um
Dialogue: 0,0:52:55.92,0:52:58.20,Default,,0000,0000,0000,,and remember it's open
Dialogue: 0,0:52:58.20,0:53:01.16,Default,,0000,0000,0000,,book okay so bring as much stuff as you
Dialogue: 0,0:53:01.16,0:53:03.92,Default,,0000,0000,0000,,want you can use the internet and one
Dialogue: 0,0:53:03.92,0:53:08.16,Default,,0000,0000,0000,,other thing sh just one last thing make
Dialogue: 0,0:53:08.16,0:53:11.24,Default,,0000,0000,0000,,sure that the night before or the day
Dialogue: 0,0:53:11.24,0:53:12.56,Default,,0000,0000,0000,,before and I'm going to send you a
Dialogue: 0,0:53:12.56,0:53:14.84,Default,,0000,0000,0000,,reminder email about this that you can
Dialogue: 0,0:53:14.84,0:53:16.92,Default,,0000,0000,0000,,log into learning catalytics if you
Dialogue: 0,0:53:16.92,0:53:18.32,Default,,0000,0000,0000,,haven't written down your password
Dialogue: 0,0:53:18.32,0:53:20.20,Default,,0000,0000,0000,,somewhere make sure you write it down
Dialogue: 0,0:53:20.20,0:53:22.12,Default,,0000,0000,0000,,because the retrieve password function
Dialogue: 0,0:53:22.12,0:53:26.64,Default,,0000,0000,0000,,in LC takes 6 hours so if you need to
Dialogue: 0,0:53:26.64,0:53:28.36,Default,,0000,0000,0000,,reset your password you need to do it
Dialogue: 0,0:53:28.36,0:53:30.68,Default,,0000,0000,0000,,well ahead of time uh cuz there's no
Dialogue: 0,0:53:30.68,0:53:32.72,Default,,0000,0000,0000,,paper quizzes if you don't bring your
Dialogue: 0,0:53:32.72,0:53:35.32,Default,,0000,0000,0000,,device if you need a device or you don't
Dialogue: 0,0:53:35.32,0:53:37.08,Default,,0000,0000,0000,,have one come talk to me we do have
Dialogue: 0,0:53:37.08,0:53:40.16,Default,,0000,0000,0000,,spares you can borrow otherwise thank
Dialogue: 0,0:53:40.16,0:53:41.60,Default,,0000,0000,0000,,you for coming along to our first week
Dialogue: 0,0:53:41.60,0:53:45.52,Default,,0000,0000,0000,,and I will see you next week