Reference no: EM132716807

Question 1: Marc was the audit supervisor in charge of the audit of a mining company. Previously he had spent all of her time performing audits of retail clients. The audit firm has been short staffed for two years due to the partner's inability to find staff with experience in auditing mining companies. Rather than hiring or promoting another supervisor, the firm reallocated clients. Marc was asked to take on some of the other clients and spend less time reviewing files and supervising staff. The partners were expected more thorough audit review to help compensate for the fewer than usual number of supervisors. Limited audit procedures were done on the audit of the mining company. In fact, Marc simply performed a substantive audit alone as she thought this would improve efficiency.

His audit staff performing the audit of the mining were upset that he had not been present there for several days. Her audit staff left early as they could not address technical issues related to the reserves. .It was later discovered that the reserves were incorrect and an opinion other than unmodified should have been provided.

Required: Clearly explain where the Canadian Auditing Standards were violated. (Hint: identify the specific CSQC 1 / CAS 220 standard and the corresponding breach from the question

Question 2: James started a new business last year, selling outdoor sports wear and gear for snow sports enthusiast. The company suffered a break-in after 9 months of the calendar fiscal year. All of the company's clothes and sporting equipment was stolen including the computer used for the company's accounting system.

Required: a. Explain, with reason(s), whether the situation described above gives rise to a GAAP departure or a scope limitation.

b. Explain with reason(s) the type of audit opinion that would be provided.

c. Fully discuss the changes to the standard audit report

Question 3: Albright appliances is an established retailer of fine line appliances. DLG LLP has been the auditor of Albright for the past three years. DLG has decided to implement a combined audit strategy at the planning stage.

Required: a) To Prepare an audit plan with one audit procedure to test the internal control objective of completeness of sales.

Use a verb from the audit procedures (types of evidence in chapter 8), identify the key source documents and the population. It may be helpful to identify the purpose of the procedure as well from an audit perspective

b) After testing the controls for Albright, it was determined that the controls were not operating effectively this year due to some turnover in key staff mid way through the year.

Required: Discuss two courses of action DLG might take given that the key controls cannot be relied on.

Question 4: Briefly discuss the approach an auditor would use to audit revenues and expenses.