Auditing and assurance

Assignment Help Auditing
Reference no: EM131240

Your recent review of management financial data for 2012/13 has shown the following key statistics:

FINANCIAL DATA

                                               2013                 2012
Members                                  1,324                1,128
New Members                            212                   54
Members exiting                        100                   38
Membership fee per year            $960                  $940
Membership Revenue                 984,880             1,053,986
Sales commissions expense        44,980               34,670

Balance Sheet
                                                                                                  30/06/2013        30/06/2012

                                                                                                       $000                 $000

Current Assets

Cash Assets                                                                                      600                     590
Inventory                                                                                          50                       40
Other current assets                                                                           10                       10
Total Current Assets                                                                           660                     640

Non-Current Assets

Property, plant and equipment                                                           3,480                   2,800
Total Non-Current Assets                                                                   3,480                   2,800
 Total Assets                                                                                    4,140                   3,440

Current Liabilities

Accounts Payable                                                                               430                       350
Unearned revenue                                                                             120                        90
Lease liability                                                                                    350                       310
Total current liabilities                                                                        900                       750

Non-current Liabilities

Lease Liability                                                                                   500                      460
Secured bank loan                                                                           1,560                   1,000
Total non-current liabilities                                                               2,060                    1,460

Total Liabilities                                                                                2,960                    2,210

Net Assets                                                                                      1,180                  1,230

Equity

Share Capital                                                                                    500                      500
Retained earnings                                                                             680                      730

Total equity                                                                                      1,180                   810

QUESTIONS

PART A

Since 4X Heavy Ltd is a new client of KCA outline the steps that you would initially undertake as part of taking on this client

PART B

Based on the facts specific to 4X Heavy Ltd:

(a) Identify the audit inherent risk and rate the risk as low, medium or high.
(b) Identify the audits control risk
(c) Evaluate control and inherent risk
(d) Determine overall audit strategy

PART C

a) Identify 2 key account balances that are at highest risk of misstatement
b) Explain why these are the highest risk
c) Design 4 substantive audit tests to carry out the work performed on each of the identified 2 key account balances.
d) For each of the 4 substantive audit test designed identify the key assertion it addresses.

PART D

(a) Based on the above make 4 recommendations to management on completion of audit.

Reference no: EM131240

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