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auditing assurance

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ACC300 – AUDITING AND ASSURANCE TRIMESTER 3 2013 -ASSIGNMENT You have recently been appointed as auditor of 6 Star Ltd which is a company that runs cinema complexes in Australia and has been in operation since 1985. The company has a 30 June balance date. During the preliminary planning for the audit you gather the below facts regarding the business and its operational processes. Business Background 6 Star Ltd over the past few years has experienced challenges within their operations that have impacted their ability to turn over a profit. Events such as the Writers Guild of America strike in 2008, an increase of video piracy and demand for newer cinema technology (3D screens) has reduced what was a business that already had low margins. The 2013 financial year saw 6 Star Ltd experience a number of business challenges as they try to remain competitive with the rest of the market. The most notable operational challenges 6 Star faced in 2012/2013 were but not limited to: -Change in minimum release period of movies from Cinema to DVD has been shortened from 3 months to 1 month -More and more people are waiting to download movies for free rather than attend the cinemas. -Two of 6 Star Ltd’s major competitors “Silver Harvest” and “Grasshopper” have merged becoming “Silver Grasshopper” and actively reduced ticket prices to increase market share. “Silver Grasshopper” have actively expanded and have opened more suburban cinemas -Availability of new technology for projectors so that more movies can be shown in 3D has resulted in significant additions and disposals in 2012/2013. 4k High Definition technology has been announced to be released in 2013 and 6 Star expects to upgrade all projectors once again when technology becomes available. -There has been a change in the modern industrial award which has resulted in a pay increase to all cinema workers. -The above statutory increase in wages has caused 6 Star to think about its staffing with a view to reducing staff numbers and…

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