Identify the direct concerns for the external auditor

Assignment Help Accounting Basics
Reference no: EM132582549

The following information relating to Tedy Brown's operations has been identified:

Issue 1

Tedy Brown has an accounts receivable insurance policy that allows the company to claim for bad debts of up to $50 000 per annum. The amount covered under the policy has remained the same since 2012 (when the accounts receivable balance averaged $2 000 000). Since 2012, the average accounts receivable balance has increased to $3 800 000.

Issue 2

Tedy Brown sales representatives are entitled to commission on sales above quarterly targets. Any commission earned is required to be paid in the month following the quarter. In the year ended 30 June 2015, on two occasions, the commissions were paid three months following the quarter.

Issue 3

There were numerous occasions during the year where major debtors, representing 40 per cent of gross revenues, settled their accounts 45 days after the due date. These debtors have been long- standing and reliable customers.

Issue 4

Tedy Brown does not enter into foreign exchange contracts to fix its exposure to foreign currency movements, as it has never previously suffered significant foreign currency losses. During the year ended 30 June 2015, Tedy Brown incurred foreign exchange losses representing 10 per cent of net profit before income tax.

Required:

Question (a) Identify which two (2) items are primarily relevant only to the head of internal audit. Justify your answer.

Question (b) Identify which two (2) items are significant and direct concerns for both the external auditor and the head of internal audit. Justify your answer.

Reference no: EM132582549

Questions Cloud

Write reflection about the organizational structure : Identified the different organizational parts of your summary, write a 100-word reflection about the organizational structure of your summary
Relationship between the structure of soaps and cleaning : Describe the relationship between the structure of soaps and their cleaning action.
How much is able to withdraw from the annuity at the end : $67,250 into an annuity earning 4.4% compounded semi-annually. How much is he able to withdraw from the annuity at the end of every 3 months for 7 years?
What significant information is included in auditor report : What crucial information to completely understanding the financial statements could be included in the notes to the financial statements?
Identify the direct concerns for the external auditor : Identify which two (2) items are significant and direct concerns for both the external auditor and the head of internal audit. Justify your answer.
Greater risk of suffering heat exhaustion or heat stroke : Explain why would older people with poor circulation have a greater risk of suffering heat exhaustion or heat stroke.
Explain the sources of business law in australia : Provide a short description of the sources of business law in Australia - Identify and evaluate the relevant sections of the Constitution and legislation
Explain the effect of the misstatement on the auditor report : Explain the effect of the misstatement on the auditor's report and the audit opinion.What are key audit matters? How do these affect the format of audit report
Philosophy Essay Assignment : Philosophy Essay Assignment - 'Evolutionary theory can explain why we have the moral beliefs that we do. This tells against moral realism.' Do you agree

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd