Reference no: EM132877358

You are an audit partner in charge of the interim audit 30th June 2017 for XSU Pty Ltd, a large manufacturing company. You are reviewing the working papers prepared by your audit team and notice the following matter listed below: Required for each scenario explain, with reference to audit assertion, whether appropriate audit evidence has been obtained. Also indicate which assertion(s), if any require more audit effort.

Scenarios:

• Susan selected 20 invoices to test the control that the sales clerk checks that the prices agree with the authorised price list. She found 3 instances where the sales clerk had not signed the "prices checked" box in the invoice. The sales manager explained that the sales clerk always checks the prices but sometimes forgets to sign the box. As the prices on all the invoices agreed with the authorised price list, Susan concluded that the control was operating satisfactorily.
• As part of her work on subsequent events, Susan noted that there were a large number of returns in July of Product 75L. However, as this product was first sold in June and represented only 1% of sales for the year, Susan concluded that the amount was immaterial and no further work was necessary
• Advertising expenses are material, although only 50% of last year's balance. Susan selected a large sample of entries and agreed them to supporting documents. No errors were found. Susan concluded that advertising expenses was reasonable

Problem 1: For each scenario, Has sufficient and appropriate audit evidence been obtained by the audit assistance? Yes/No. Give reason If, no what assertion(s) still require additional audit effort