You are an audit senior of Beech & Co and have been allocated to the audit of Willow W

第1题

The following scenario relates to questions 1–5You are an audit senior of Viola & Co a

The following scenario relates to questions 1–5

You are an audit senior of Viola & Co and are currently conducting the audit of Poppy Co for the year ended 30 June 20X6.

Materiality has been set at $50,000, and you are carrying out the detailed substantive testing on the year-end payables balance. The audit manager has emphasised that understatement of the trade payables balance is a significant audit risk.

Below is an extract from the list of supplier statements as at 30 June 20X6 held by the company and corresponding payables ledger balances at the same date along with some commentary on the noted differences:

Carnation Co

The difference in the balance is due to an invoice which is under dispute due to faulty goods which were returned on 29 June 20X6.

Lily Co

The difference in the balance is due to the supplier statement showing an invoice dated 28 June 20X6 for $70,000 which was not recorded in the financial statements until after the year end. The payables clerk has advised the audit team that the invoice was not received until 2 July 20X6.

The audit manager has asked you to review the full list of trade payables and select balances on which supplier statement reconciliations will be performed.

Which of the following items should you select for testing？

(1) Suppliers with material balances at the year end

(2) Suppliers which have a high volume of business with Poppy Co

(3) Major suppliers with nil balances at the year end

(4) Major suppliers where the statement agrees to the ledger

A.1 only

B.1, 2 and 3 only

C.2 and 4 only

D.1, 2, 3 and 4

Which of the following audit procedures should be performed in relation to the balance with Lily Co to determine if the payables balance is understated？

A.Inspect the goods received note to determine when the goods were received

B.Inspect the purchase order to confirm it is dated before the year end

C.Review the post year-end cashbook for evidence of payment of the invoice

D.Send a confirmation request to Lily Co to confirm the outstanding balance

Which of the following audit procedures should be carried out to confirm the balance owing to Carnation Co？

(1) Review post year-end credit notes for evidence of acceptance of return

(2) Inspect pre year-end goods returned note in respect of the items sent back to the supplier

(3) Inspect post year-end cash book for evidence that the amount has been settled

A.1, 2 and 3

B.1 and 3 only

C.1 and 2 only

D.2 and 3 only

The audit manager has asked you to review the results of some statistical sampling testing, which resulted in 20% of the payables balance being tested.

The testing results indicate that there is a $45,000 error in the sample: $20,000 which is due to invoices not being recorded in the correct period as a result of weak controls and additionally there is a one-off error of $25,000 which was made by a temporary clerk.

What would be an appropriate course of action on the basis of these results？

A.The error is immaterial and therefore no further work is required

B.The effect of the control error should be projected across the whole population

C.Poppy Co should be asked to adjust the payables figure by $45,000

D.A different sample should be selected as these results are not reflective of the population

To help improve audit efficiency, Viola & Co is considering introducing the use of computer assisted audit techniques (CAATs) for some audits. You have been asked to consider how CAATs could be used during the audit of Poppy Co.

Which of the following is an example of using test data for trade payables testing？

A.Selecting a sample of supplier balances for testing using monetary unit sampling

B.Recalculating the ageing of trade payables to identify balances which may be in dispute

C.Calculation of trade payables days to use in analytical procedures

D.Inputting dummy purchase invoices into the client system to see if processed correctly

请帮忙给出每个问题的正确答案和分析，谢谢！

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第2题

The following scenario relates to questions 6–10You are an audit manager at Blenkin &

The following scenario relates to questions 6–10

You are an audit manager at Blenkin & Co and are approaching the end of the audit of Sampson Co, which is a large listed retailer. The draft financial statements currently show a profit before tax of $6·5m and revenue of $66m for the financial year ended 30 June 20X6. You have been informed that the finance director left Sampson Co on 31 May 20X6.

As part of the subsequent events audit procedures, you reviewed post year-end board meeting minutes and discovered that a legal case for unfair dismissal has been brought against Sampson Co by the finance director. During a discussion with the Human Resources (HR) director of Sampson Co, you established that the company received notice of the proposed legal claim on 10 July 20X6.

The HR director told you that Sampson Co’s lawyers believe that the finance director’s claim is likely to be successful, but estimate that $150,000 is the maximum amount of compensation which would be paid. However, management does not intend to make any adjustments or disclosures in the financial statements.

Blenkin & Co has a responsibility to perform. procedures to obtain sufficient, appropriate evidence that subsequent events are appropriately reflected in the financial statements of Sampson Co.

Subsequent events procedures should be performed between the date of the financial statements and WHICH DATE？

A.The date the subsequent events review is performed

B.The date of approval of the financial statements

C.The date of the auditor’s report

D.The date the financial statements are issued

If, after the financial statements have been issued, Blenkin & Co becomes aware of a fact which may have caused its report to be amended, the firm should consider several possible actions.

Which of the following are appropriate actions for Blenkin & Co to take？

(1) Discuss the matter with management and, where appropriate, those charged with governance

(2) Obtain a written representation from management

(3) Consider whether the firm should resign from the engagement

(4) Enquire how management intends to address the matter in the financial statements where appropriate

A.1 and 2

B.1 and 4

C.2 and 3

D.3 and 4

Which of the following audit procedures should be performed to form. a conclusion as to whether the financial statements require amendment in relation to the unfair dismissal claim？

(1) Inspect relevant correspondence with Sampson Co’s lawyers

(2) Write to the finance director to confirm the claim and level of damages

(3) Review the post year-end cash book for evidence of payments to the finance director

(4) Request that management confirm their views in a written representation

A.1, 2 and 3

B.1, 2 and 4

C.1, 3 and 4

D.2, 3 and 4

You are drafting the auditor’s report for Sampson Co and the audit engagement partner has reminded you that the report will need to reflect the requirements of ISA 701 Communicating Key Audit Matters in the Independent Auditor’s Report.

According to ISA 701, which of the following should be included in the ‘Key Audit Matters’ paragraph in the auditor’s report？

A.Matters which required significant auditor attention

B.Matters which result in a modification to the audit opinion

C.All matters which were communicated to those charged with governance

D.All matters which are considered to be material to the financial statements

Which of the following audit opinions will be issued if the unfair dismissal case is NOT adjusted for or disclosed within the financial statements？

A.A qualified audit opinion as the financial statements are materially misstated

B.A qualified audit opinion as the auditor is unable to obtain sufficient appropriate evidence

C.An unmodified opinion with an emphasis of matter paragraph

D.An unmodified audit opinion

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第3题

You are the audit supervisor of Seagull & Co and are currently planning the audit of y

our existing client, Eagle Heating Co (Eagle), for the year ending 31 December 2014. Eagle manufactures and sells heating and plumbing equipment to a number of home improvement stores across the country.

Eagle has experienced increased competition and as a result, in order to maintain its current levels of sales, it has decreased the selling price of its products significantly since September 2014. The finance director has informed your audit manager that he expects increased inventory levels at the year end. He also notified your manager that one of Eagle’s key customers has been experiencing financial difficulties. Therefore, Eagle has agreed that the customer can take a six-month payment break, after which payments will continue as normal. The finance director does not believe that any allowance is required against this receivable.

In October 2014 the financial controller of Eagle was dismissed. He had been employed by the company for over 20 years, and he has threatened to sue the company for unfair dismissal. The role of financial controller has not yet been filled and so his tasks have been shared between the existing finance department team. In addition, the purchase ledger supervisor left in August and a replacement has been appointed in the last week. However, for this period no supplier statement reconciliations or purchase ledger control account reconciliations were performed.

You have undertaken a preliminary analytical review of the draft year to date statement of profit or loss, and you are surprised to see a significant fall in administration expenses.

Required:

Explain FIVE audit risks, and the auditor’s response to each risk, in planning the audit of Eagle Heating Co.

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第4题

Introduction and client backgroundYou are an audit senior in Staple and Co and you are com

Introduction and client background

You are an audit senior in Staple and Co and you are commencing the planning of the audit of Smoothbrush Paints Co for the year ending 31 August 2010.

Smoothbrush Paints Co is a paint manufacturer and has been trading for over 50 years, it operates from one central site, which includes the production facility, warehouse and administration ffices.

Smoothbrush sells all of its goods to large home improvement stores, with 60% being to one large chain store Homewares. The company has a one year contract to be the sole supplier of paint to Homewares. It secured the contract through signifi cantly reducing prices and offering a four-month credit period, the company’s normal credit period is one month.

Goods in/purchases

In recent years, Smoothbrush has reduced the level of goods directly manufactured and instead started to import paint from South Asia. Approximately 60% is imported and 40% manufactured. Within the production facility is a large amount of old plant and equipment that is now redundant and has minimal scrap value. Purchase orders for overseas paint are made six months in advance and goods can be in transit for up to two months. Smoothbrush accounts for the inventory when it receives the goods.

To avoid the disruption of a year end inventory count, Smoothbrush has this year introduced a continuous/perpetual inventory counting system. The warehouse has been divided into 12 areas and these are each to be counted once over the year. The counting team includes a member of the internal audit department and a warehouse staff member. The following procedures have been adopted;

1. The team prints the inventory quantities and descriptions from the system and these records are then compared to the inventory physically present.

2. Any discrepancies in relation to quantities are noted on the inventory sheets, including any items not listed on the sheets but present in the warehouse area.

3. Any damaged or old items are noted and they are removed from the inventory sheets.

4. The sheets are then passed to the fi nance department for adjustments to be made to the records when the count has fi nished.

5. During the counts there will continue to be inventory movements with goods arriving and leaving the warehouse.

At the year end it is proposed that the inventory will be based on the underlying records. Traditionally Smoothbrush has maintained an inventory provision based on 1% of the inventory value, but management feels that as inventory is being reviewed more regularly it no longer needs this provision.

Finance Director

In May 2010 Smoothbrush had a dispute with its fi nance director (FD) and he immediately left the company. The company has temporarily asked the fi nancial controller to take over the role while they recruit a permanent replacement. The old FD has notifi ed Smoothbrush that he intends to sue for unfair dismissal. The company is not proposing to make any provision or disclosures for this, as they are confi dent the claim has no merit.

Required:

(a) Identify and explain the audit risks identifi ed at the planning stage of the audit of Smoothbrush Paints Co. (10 marks)

(b) Discuss the importance of assessing risks at the planning stage of an audit. (4 marks)

(c) List and explain suitable controls that should operate over the continuous/perpetual inventory counting system, to ensure the completeness and accuracy of the existing inventory records at Smoothbrush Paints Co. (10 marks)

(d) Describe THREE substantive procedures the auditor of Smoothbrush Paints Co should perform. at the year end in confi rming each of the following:

(i) The valuation of inventory; (3 marks)

(ii) The completeness of provisions or contingent liabilities. (3 marks)

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第5题

Heraklion Co is a manufacturer of footballs and is a new audit client for your firm. You a

re an audit supervisor of Spinalonga & Co and are currently preparing for the forthcoming interim and final audit for the year ending 31 October 20X6. You are required to document and assess the sales system, recommend control improvements to deal with a specific fraud issue as well as undertake substantive testing of revenue.

Sales ordering, goods despatched and invoicing

Heraklion Co sells footballs to a range of large and small sports equipment retailers in several countries. Sales are made through a network of sales staff employed by Heraklion Co, but new customer leads are generated through a third party company. Sales staff are responsible for assessing new customers’ creditworthiness and proposing a credit limit which is then authorised by the sales director. The sales staff have monthly sales targets and are able to use their discretion in granting sales discounts up to a maximum of 10%. They then record any discount granted in the customer master data file.

The sales staff visit customer sites personally and orders are completed using a two-part pre-printed order form. One copy is left with the customer and the other copy is retained by the sales person. The sales order number is based on the sales person’s own identification (ID) number.

The company markets itself on being able to despatch all orders within three working days. Once the order is taken, the sales person emails the finance department and warehouse despatch team with the customer ID and the sales order details and from this a pick list is generated. Sequentially numbered goods despatched notes are completed and filed in the warehouse.

Sequentially numbered invoices are generated using the pick lists for quantities and the customer master data file for prices. Standard credit terms for customers are 30 days and on a monthly basis sales invoices which are over 90 days outstanding are notified to the relevant sales person to chase payment directly with the customer.

Payroll fraud

The finance director, Montse Mirabelle, has informed you that a significant fraud took place during the year in the payroll department. A number of fictitious employees were set up on the payroll and wages were paid into one bank account. This bank account belonged to two supervisors, who were married, and were employed by Heraklion Co. One had sole responsibility for setting up new joiners in the payroll system and the other processed and authorised bank transfer requests for wages and supplier payments. These employees no longer work for the company and Montse has asked the audit firm for recommendations on how to improve controls in this area to prevent this type of fraud occurring again. Heraklion Co operates a Human Resources department.

Required:

(a) Describe TWO methods for documenting the sales system, and for each explain ONE advantage and ONE disadvantage of using this method. (6 marks)

(b) Identify and explain SEVEN deficiencies in the sales system of Heraklion Co and provide a recommendation to address each of these deficiencies. Note: Prepare your answer using two columns headed Control deficiency and Control recommendation respectively. (14 marks)

(c) In relation to the payroll fraud, identify and explain THREE controls Heraklion Co should implement to reduce the risk of this type of fraud occurring again and, for each control, describe how it would mitigate the risk. (6 marks)

(d) Describe substantive procedures the auditor should perform. to obtain sufficient and appropriate audit evidence in relation to Heraklion Co’s revenue. (4 marks)

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第6题

You are the audit supervisor of Maple & Co and are currently planning the audit of an

existing client, Sycamore Science Co (Sycamore), whose year end was 30 April 2015. Sycamore is a pharmaceutical company, which manufactures and supplies a wide range of medical supplies. The draft financial statements show revenue of $35·6 million and profit before tax of $5·9 million.

Sycamore’s previous finance director left the company in December 2014 after it was discovered that he had been claiming fraudulent expenses from the company for a significant period of time. A new finance director was appointed in January 2015 who was previously a financial controller of a bank, and she has expressed surprise that Maple & Co had not uncovered the fraud during last year’s audit.

During the year Sycamore has spent $1·8 million on developing several new products. These projects are at different stages of development and the draft financial statements show the full amount of $1·8 million within intangible assets. In order to fund this development, $2·0 million was borrowed from the bank and is due for repayment over a ten-year period. The bank has attached minimum profit targets as part of the loan covenants.

The new finance director has informed the audit partner that since the year end there has been an increased number of sales returns and that in the month of May over $0·5 million of goods sold in April were returned.

Maple & Co attended the year-end inventory count at Sycamore’s warehouse. The auditor present raised concerns that during the count there were movements of goods in and out the warehouse and this process did not seem well controlled.

During the year, a review of plant and equipment in the factory was undertaken and surplus plant was sold, resulting in a profit on disposal of $210,000.

Required:

(a) State Maples & Co’s responsibilities in relation to the prevention and detection of fraud and error. (4 marks)

(b) Describe SIX audit risks, and explain the auditor’s response to each risk, in planning the audit of Sycamore Science Co. (12 marks)

(c) Sycamore’s new finance director has read about review engagements and is interested in the possibility of Maple & Co undertaking these in the future. However, she is unsure how these engagements differ from an external audit and how much assurance would be gained from this type of engagement.

Required:

(i) Explain the purpose of review engagements and how these differ from external audits; and (2 marks)

(ii) Describe the level of assurance provided by external audits and review engagements. (2 marks)

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第7题

当方向KR的φsen不能刚好等于被保护线路的φk时，从减小过渡电阻的影响出发，是选择φsenφk好，还是选择φsenφk合适？为什么？

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第8题

Choppy sentences mean too many()piled together.

Choppy sentences mean too many（)piled together.

A.complex sentences

B.short simple sentences