BUS306 Case Study Risk Assessment Questions : Outback Retail Ltd Audit Strategy | MU
Case Study: Risk Assessment
Assessment Type: Written Case Analysis
Topic: Risk Assessment
Company: Outback Retail Ltd
Assessment Weight: 10 Marks
Case Background
Outback Retail Ltd is a mid-sized Australian retailer specialising in outdoor gear. It operates 22 physical stores across WA, SA, and NT, and has recently expanded its e-commerce platform. The company is audited by Western Auditors Pty Ltd for the year ending 30 June 2025.
Recent Developments:
- A new ERP system was implemented in February 2025, integrating inventory, sales, and finance.
- The company launched a “Buy Now, Pay Later” (BNPL) scheme in partnership with a fintech startup.
- A cyberattack in April 2025 led to temporary data loss in inventory records.
- The CFO resigned in May 2025 amid internal investigations into aggressive revenue recognition practices.
- The board is considering an IPO in early 2026.
Financial Highlights:
- Revenue increased by 38% YoY, with 60% from online sales.
- Inventory turnover dropped from 4.2 to 2.9.
- Gross margin improved from 48% to 52%.
- Trade receivables increased by 70%, with 25% past due >90 days.
- Significant increase in deferred revenue from BNPL transactions.
Assessment Questions
Students must answer the following questions. Responses should be analytical, not descriptive.
Question 1: Audit Risk Identification (4 marks)
Identify and explain three distinct audit risks arising from the case. Each risk must relate to a different domain:
- Financial Reporting Risk
- Technology/Operational Risk
- Governance/Strategic Risk
For each risk:
- Describe the nature of the risk and its relevance to the audit.
- Identify the financial statement assertions most affected.
- Discuss how the risk could lead to a material misstatement.
Question 2: Audit Strategy Implications (3 marks)
For each risk identified in Question 1:- Explain how the risk affects your audit planning and procedures.
- Discuss whether it increases inherent risk, control risk, or detection risk.
- Suggest how audit resources or timing should be adjusted in response.
Question 3: Substantive Testing Design (3 mark)
Design one tailored substantive procedure for each risk that directly addresses the relevant assertion and audit objective. Justify your choice.
Submission Format
- Typed document (Word)
- Maximum 1,000 words
- Referencing required (any sources used)
Marking Criteria
| Criteria | Description | Marks |
| Risk Identification | Depth, relevance, and clarity of analysis | 4 |
| Audit Strategy Impact | Logical connection to audit planning and risk response | 3 |
| Substantive Procedures | Appropriateness and specificity | 3 |
| Total
|
10
|
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Auditing Risk Assessment – Assessment Rubric
This rubric outlines the marking criteria for the auditing case study assessment worth 10 marks.
- Criteria 1: Risk Identification (4 marks)
- Demonstrates depth and relevance in identifying three distinct audit risks.
- Clearly explains the nature, significance, and affected assertions for each risk.
- Shows understanding of financial reporting, operational, and governance risks.
- Criteria 2: Audit Strategy Impact (3 marks)
- Explains how each risk affects audit planning and procedures.
- Correctly identifies the type of risk (inherent, control, detection).
- Provides logical adjustments to audit strategy and resource allocation.
- Criteria 3: Substantive Procedures (3 mark)
- Recommends appropriate and tailored substantive procedures for each risk.
- Justifies the relevance of each procedure to the audit objective.
Total: 10 Mark
