Assume that the audit for National Australia Bank Limited (NAB), a financial institution, will be coming up for tender. You and your colleagues are required client evaluation report based on your research for the senior members of your auditing firm. Your report should provide preliminary information as to whether the auditing firm should consider tendering for the audit of NAB.
You should conduct extensive research and perform an analysis of the annual report of National Australia Bank Limited together with its controlled entities for the year ended 30 June 2018 and any other relevant information (Hint: Company’s website and Business news) that you have obtained.
1. What are the areas in which NAB conducts its operations?
2. Identify and explain THREE business risks that could have an impact on the audit of NAB.
3. Using the NAB 2018 annual report, identify and discuss THREE accounts that could be at significant risk. You also need to identify the key assertion at risk for each account. Do not use the same accounts reported in the Key Audit Matter section in the audit report.
4. The recent Royal Commission highlighted a number of internal control deficiencies and fraud perpetuated on NAB clients for an extended period of time. These findings have serious ramifications for NAB. How will these findings affect your tendering decision?
5. Based on your assessment of the client’s business and audit risks, would you undertake the audit? Why?
The answers for the above questions should be reflective of your in-depth understanding of how the NAB operates.