Determine the audit methodologies to conduct an audit, Auditing

You are the external auditor of Apex tour Ltd, a company which promotes New Zealand tours to Australia and owns chain duty free shops. You have been auditing the company since it was listed on the Australian stock exchange 10 years ago. Although the accounts have never been qualified, you are aware that the company the company has been making loss for past three years as result of short term cash flow difficulties. The company has no longer loans and the bank overdraft near its limit at the financial year.

During the financial year, the company upgraded its accounting system to computer data base. A consultant was hired to aid in the correct changeover of files for this system. At year end, this new system had been place for 6 months, and directors report they are with the in which they are operating. You don't have expertise to review and evaluate the data base management system, so you can ask an independent expert to undertake this role. The person concludes that the system appears reliable and that changeover was correctly carried out. You have never before audited this types of system, so you attend some courses to familiarise yourself with its new feature.

In our review of the minutes of the board of directors meeting, you become aware that the New Zealand parent company (which own 40% of the shares of the company) is considering making an offer for the remaining shares.

After your audited 30 June 2009 financial statement are published, the takeover offer from the New Zealand parent company proceeds on the basis of an offer price equivalent to net assets per shares $1.1.

While these compulsory acquisition proceedings are being instituted, it is discovered that there were error in the changeover of the computer system, which resulted in inventory at the duty free stores being materially misstated. After the subsequent write down inventory, a new net assets per share $0.70 per share is established. The New Zealand parent is suing you for alleged negligence for its loss of $0.40 per shares.

Required:  Question:

1. What audit methodologies are established to conduct an audit? What substantive test you can apply when you conduct audit to Apex tour Ltd?

2. As an external auditor of Apex tour Ltd how would you achieve audit objective?

3. What is audit evidence? As qualified auditor what procedure you would use to gather evidence to form an opinion?

4. What does mean by term" materially "? Above mention case have you found any information that is materially misstated?

5. What is the difference between qualified opinion and unqualified opinion? In your case studies what type's opinion you would express and why?

6. Prepare standard format of independent audit report that can be used for Apex tour Ltd. What types of information contain in independent audit report?

7. What weakness you can identify of Apex tour Ltd when you have conducted audit.

Posted Date: 3/1/2013 6:19:53 AM | Location : United States







Related Discussions:- Determine the audit methodologies to conduct an audit, Assignment Help, Ask Question on Determine the audit methodologies to conduct an audit, Get Answer, Expert's Help, Determine the audit methodologies to conduct an audit Discussions

Write discussion on Determine the audit methodologies to conduct an audit
Your posts are moderated
Related Questions
(a) Define each of the following four concepts. -Master Data Management -Data Quality -Data Governance -Cloud Computing Explain how they relate to the various Busine

Audit of Assets- Audit Process Non current assets have the fundamental characteristic which they are held for require in the business and not about resale. IAS 1 Presentation

You are just appointed as the Trainee Accountant of the Compaq Computing Sdn Bhd - the newly established company. The manager is facing difficulties in maintaining the manual accou

Types of audits So far we have tended to think in terms of the audit of limited companies, and indeed, the emphasis throughout this text will be on such companies incorporated

Problem 1: You have been asked to design a system of controls so as to prevent unauthorized payments being made from the bank account. You are required to identify the controls


Non-Attendance at Stock Takes Whether the auditor is unable to attend a stock take, since he has numerous clients along with the same accounting date, or stock is situate at r

An audit team is currently engaged in planning the audit of the financial statements of E Limited as at 30 June 2011. This was the first accounting period during which all the tran


Auditors Responsibilities with regard to related parties ISA 550 Related Parties states which the auditor should perform audit process designed to find sufficient suitable