Reference no: EM131388780
AUDITING Group Assignment
Case 1 -
Brown Industries Ltd manufactures and wholesales small tools. It sells the tools to a large group of regular customers and makes most sales by telephone to this group.
Additionally, it receives orders online by its sales team who sign up new customers within the sales area.
In the past, Bundy Industries Ltd has had trouble with customers who do not pay their accounts on time. Despite instructing the sales team not to make sales to customers before their creditworthiness has been assessed, sales are still being made to new customers before their limits have been set and to existing customers beyond their credit limit.
Also, the economic recession has started to impact its customers, and Bundy's management is concerned about the possibility of increasing bad debts.
Required:
(a) Explain the purpose of detect controls.
(b) Why would it be important for an entity to have both types of controls (prevent and detect controls)?
(c) Assume Brown Industries Ltd implemented a control to prevent sales being made if the sale took the account balance beyond the approved credit limit unless authorised by the credit manager. During the year following implementation of the prevent control, the auditor finds two sales transactions that are in excess of a customer's credit limit at the time of the sale.
What conclusion would the auditor draw from this evidence?
What other evidence could the auditor consider before concluding that the prevent control has failed to prevent customers exceeding their credit limit?
Case 2 -
The following items are documented in the audit working papers:
(a) A sales transaction for $1,200,000 was included in the year ended June 2016 but evidence from the cut-off procedure suggests that the sale should be dated 1 July 2016.
(b) No expense for impairment of assets has been made by management. A drought-induced recession has adversely impacted property values in regional cities where seven branch offices are located (head office and two branch offices are located in the capital city). Total land and buildings in the trial balance is $5,500,000.
Required:
(a) Evaluate each item above and explain whether it is an error or a judgemental misstatement.
(b) Which accounts would be affected?
(c) What action do you recommend for each item?
Explore product or service including its main characteristic
: Describe the product or service, including its main characteristics. Why do you believe this product is worthwhile? A profile of your audience/s. Why are these audience/s important?
|
What is expected opportunity loss of optimal decision
: If a decision has to be made without sampling, what is that decision? What is the expected opportunity loss of the optimal decision?
|
Slave auctions in the american colonies
: Identify the name given to the most dangerous portion of the journey of slave ships from Africa to the slave auctions in the American colonies and the Caribbean.
|
Primary causes of the march revolution
: What were the primary causes of the March Revolution (the one that overthrew the tsar) in the Russian Empire. Two specific causes and analyze their interconnections, focus on social, political, and economic reasons.
|
Explain the purpose of detect controls
: AUDT317 AUDITING Group Assignment. Explain the purpose of detect controls. Why would it be important for an entity to have both types of controls (prevent and detect controls)
|
Myths associated with egypt
: What are the myths associated with Egypt and who are the significant people in it?
|
What your most recent decisions are and why
: What strategy you will be implementing. What your most recent decisions are, and why. What your current view of your anticipated results is. And optionally, where you are going in the future.
|
Professional baseball shortstop
: Derek Sanderson Jeter is an American former professional baseball shortstop who played 20 seasons in Major League Baseball for the New York Yankees, Derek Jeter Statistics and History?
|
What does a plantagenet king mean
: Richard III(2 October 1452 - 22 August 1485) was King of England from 1483 until his death in 1485, at the age of 32, in the Battle of Bosworth Field. He was the last king of the House of York and the last of the Plantagenet dynasty. What does a P..
|