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- Question Inherent Risk, Control Risk and Audit planning You are the audit senior responsible for the audit of Delilah Ltd. You are currently planning the audit for the year ended 30 June 2012. During your initial planning meeting held with the financial controller, he told you of the following changes in the company's operations: Due to the financial controller's workload, the company has employed a treasurer. The financial (i) controller is excited about the appointment because in the two months that the treasurer has been with the company he has realised a small profit for the company through foreign-exchange transactions in yen. Delilah has planned to close an inefficient factory in country New South Wales before the end of (ii) 2012. It is expected that the redeployment and disposal of the factory's assets will not be completed until the end of the following year. However, the financial controller is confident that he will be able to determine reasonably accurate closure provisions. o help achieve the budgeted sales for the year, Delilah is about to introduce bonuses for its sales (iii) T staff. The bonuses will be an increasing percentage of the gross sales made, by each salesperson, above certain monthly targets. The company is using a new general ledger software package. The financial controller is (iv) impressed with the new system, because management accounts are easily produced and allow detailed comparisons with budgets and prior-period figures across product lines and geographical areas. The conversion to the new system occurred with a minimum of fuss. As it is a popular computer package, it required only minor modifications. As part of the conversion, the position of systems administrator was created. This position is (v) responsible for all systems maintenance, including data backups and modifications. These tasks were the responsibility of the accountant. The managing director has returned from the USA, where he signed a contract to import a line of (vi) clothing that has become the latest fashion fad in the USA. The company has not previously been engaged in the clothing industry. Required:
For each of the scenarios above, identify which of the components of audit risk (inherent, control or detection risk) are affected.
A staff auditor was listening to a conversation between two senior auditors regarding the audit risk model. Following are some statements made in that conversation.
Explain how the acceptance of large, high-risk audit clients for relatively high audit fees may threaten an audit firm's de facto and perceived independence.
listed below are 12 internal control procedures or requirements for the expenditure cycle purchasing payroll accounts
Define professional skepticism and discuss why it so important to the practice of auditing. Read the attached article, "A Model and Literature Review of Professional Skepticism in Auditing" by Mark W.
questionnicoles getaway spa ngs has been so successful that nicole has decided to expand her spa by selling
Describe the substantive tests that you would perform on transactions in the acquisitions cycle of this system to gain adequate assurance over the assertions of completeness, cut off and accuracy.
The information below was disclosed during the audit of Elbert Inc.
Identify and explain how some parts of the Corporations Act allow certain business conducted at company meetings to stand notwithstanding that the meeting has not strictly complied with all the legal requirements of the Act.
Using the information above, prepare the statement of activities and the statement of net assets on a government-wide basis (using full accrual accounting). The beginning fund balance in the government-wide Statement of Net Assets is $2,686,283.
Obtain and review the annual report of a public company and locate its audit committed charter. What are the key features of the charter? What are its strengths? What are the weaknesses?
Define lapping and give an example. What is a substantive test of transactions? How would it be applied to accounts receivable an inventory?
Describe about owning a computerized accounting system by (developing internally; purchased from 3rd party provider or purchased from 3rd party with company custom made features).
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