Memo to William Albanese, the Current Bletchington Engagement Partner


You are an experienced audit manager at Samway Baker Fitzgerald (SBF), an accounting firm with offices in Orange, Wagga Wagga, Tamworth, Port Macquarie and Albury in NSW, Toowoomba in Queensland and Ballarat in Victoria. Although a medium-sized firm by national standards, SBF includes Australia’s largest regionally-based auditing practice. Most of SBF’s audit clients are in the manufacturing and service industries.

It is a late summer afternoon in February 2019 and you are meeting with your audit team to discuss the 30 June 2019 year-end audit for Bletchington Limited, an innovative defence industry manufacturing company based in Orange, listed on the Australian Stock Exchange (ASX), and one of SBF’s largest clients by fee revenue. Bletchington often has to go through a competitive market tender process to win large government contracts and only does business with countries that have a recognised democratically elected government. Its main product is a highly specialised light armoured vehicle known as the Bush-Basher. Given the sensitive nature of its designs and clients, Bletchington maintains a highly secure environment.

William Albanese has been the engagement partner on the Bletchington audit for the last 5 years. Andrew is a specialist in the defence industry and intends to remain as the review partner when the audit is rotated next year to Skye Larke, who is to be promoted to partner in early 2020 to enable her to sign off on the 30 June 2020 Bletchington audit.

In September 2018, Bletchington installed an off the shelf costing system. The new system replaced a system that had been developed ‘in-house’ but could no longer keep up with the complex and detailed manufacturing costing process that provides tender costings. The old system also had difficulties with the company’s broader reporting requirements. Bletchington’s information technology (IT) department, together with the consultants from the software company, implemented the new manufacturing costing system. There were no customised modifications. Key operational staff and the internal audit team from Bletchington were heavily involved in the selection, testing, training, and implementation stages.

Bletchington has a small internal audit department which is headed by an ex-partner of SBF, Kev Kevanna. Kev joined Bletchington after leaving SBF 6 years ago. He is assisted by three junior internal auditors, all of whom are completing Bachelor of Accounting studies at Charles Sturt University.


Write a memo to William Albanese, the current Bletchington engagement partner, that advises him on the following:

Question 1 (4%)

The expectations gap that could exist for the audit of Bletchington, including the existence of any special users of Bletchington’s financial reports.

Question 2 (6%)

With reference to relevant legislation and the auditing standards:

  • threats to independence for SBF in its audit of Bletchington
  • safeguards against any potential threats to SBF’s independence.


Subject learning outcomes

This assessment task will work towards assessing the following learning outcome/s:

  • be able to explain and critically evaluate influences on audit and assurance services including: Australian and international professional standards, statutory and common laws, regulatory bodies, and public expectations within a global market.
  • be able to exercise critical and reflective judgement and appreciate the value of ethical practice.

Graduate learning outcomes

This task also contributes to the assessment of the following CSU Graduate Learning Outcome/s:

  • Academic Literacy and Numeracy (Application) – CSU Graduates consider the context, purpose, and audience when gathering, interpreting, constructing, and presenting information.
  • Ethics (Application) – CSU Graduates form judgements and apply ethical decision making and reasoning to identify creative solutions to ethical problems.

Marking criteria and standards 


Assessment tasks should be submitted on EASTS as a Microsoft Word document. Do not submit as a PDF document.

  • The first page should contain your name, student number, subject code, word count and due date. Please use 12 point font and avoid the use of fancy templates with added colour or graphics.
  • Lines should be double spaced.
  • The assessment tasks should be within +/- 10% of the word limit. The word count is taken from the first word to the last word and includes quotes. Quotes must comprise less than 10% of the total word count.
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Your reference list should contain all source documents that you refer to, quote or paraphrase from. It must conform to the APA referencing