Recent Question/Assignment

Assessment Task – Tutorial Questions Assignment 1
Unit Code: HA3032
Unit Name: Auditing
Assignment: Tutorial Questions Assignment 1
Due: 11:30pm 15th May 2020
Weighting: 25%
Total Marks: 50 marks
Purpose: This assignment is designed to assess your level of knowledge of the key topics covered in this unit
Unit Learning Outcomes Assessed:
1. Demonstrate a thorough understanding of the reporting requirements of auditing standards relating to auditors’ reports.
2. Explain how the audit planning process directs the auditor to obtain adequate evidence to support audit findings and address the importance of materiality in an audit.
3. Explain the process of audit planning to determine risk assessments and an overall audit strategy.
4. Explain the auditors’ obligations with regards to understanding the client’s business and internal controls and assessing business risks.
Description: Each week students were provided with three tutorial questions of varying degrees of difficulty. These tutorial questions are available in the Tutorial Folder for each week on Blackboard. The Interactive Tutorials are designed to assist students with the process, skills and knowledge to answer the provided tutorial questions. Your task is to answer a selection of tutorial questions from weeks 1 to 5 inclusive and submit these answers in a single document.
The questions to be answered are;
Week 1 Question (10 marks)
Chan & Chow offer their clients a range of professional services, including: a. providing advice on accounting policies and accounting standards
b. auditing annual financial reports
c. providing assistance to management and the board in strengthening internal controls and corporate governance practices
d. providing assistance with the establishment and training of internal audit teams
e. checking compliance with company policies and legislative regulations
Required: For each of the five (5) services (a. – e.) listed above, determine whether it is an assurance engagement or not and explain your answer.
Week 2 Question (10 marks)
Shelly, Kelly & Mark (SKM) are the auditors of Bass. SKM’s IT consulting division has undertaken a number of accounts receivable management system implementation projects and is actively looking for opportunities to perform more of this type of work. As a result, SKM’s IT consulting division is planning to submit a proposal to implement an accounts receivables management system at Mass.
(a) Identify and explain the two primary threats to independence for SKM. (5 marks)
(b) Outline an appropriate safeguard to address each of the threats identified above. (5 marks) Week 3 Question (10 marks)
You are the audit senior responsible for the audit of Sampson Limited. You are currently planning the audit for the year ended 31 December 20X7. During your initial planning meeting held with the financial controller, he told you of the following changes in the company’s operations.
(i) Due to the financial controller’s workload, the company has employed a treasurer. The financial controller is excited about the appointment because in the two months that the treasurer has been with the company he has realised a small profit for the company through foreign-exchange transactions in yen.
(ii) Sampson has planned to close an inefficient factory in country New South Wales before the end of 20X7. It is expected that the redeployment and disposal of the factory’s assets will not be completed until the end of the following year. However, the financial controller is confident that he will be able to determine reasonably accurate closure provisions.
(iii) To help achieve the budgeted sales for the year, Sampson is about to introduce bonuses for its sales staff. The bonuses will be an increasing percentage of the gross sales made, by each salesperson, above certain monthly targets.
(iv) The company is using a new general ledger software package. The financial controller is impressed with the new system, because management accounts are easily produced and allow detailed comparisons with budgets and prior-period figures across product lines and geographical areas. The conversion to the new system occurred with a minimum of fuss. As it is a popular computer package, it required only minor modifications.
(v) As part of the conversion, the position of systems administrator was created. This position is responsible for all systems maintenance, including data backups and modifications. These tasks were the responsibility of the accountant.
Required:
For each of the five (5) scenarios (i – v) above, explain how the components of audit risk (inherent risk, control risk or detection risk) are affected. (10 marks)
Week 4 Question (10 marks)
You are the audit senior on the audit of Easy Fit Pty Limited, a large manufacturer of shoes. Easy Fit Pty Limited’s main market lies with 18 to 24-year olds.
This is the first year in which your firm has performed the audit. As part of the planning work, you have performed analytical procedures on an annualised basis and compared the results to industry averages and last year’s audited financial information. The results are given below:
Industry Average Easy Fit Pty Limited
Ratio 20X7 20X6 20X7 20X6
1 Current ratio 2.84 3.27 1.89 2.24
2 Receivables turnover ratio 4.9 4.6 6.3 7.0
3 Inventory turnover ratio 3.7 3.8 5.0 5.5
4 Return on total assets 7% 5% 13% 11%
5 Net profit ratio 0.06 0.06 0.04 0.04
Required:
Explain the general meaning of each of the above ratios (1 - 5), discuss the conclusions that you can draw about Easy Fit’s financial position and identify potential audit risks to be investigated further.
Week 5 Question (10 marks)
Super-Savers Ltd is a major manufacturer of industrial machinery. When the stores department requires items to be purchased, they issue a three-part pre-numbered purchase requisition that needs to be approved by the stores’ manager. Copy 1 is sent to the purchasing department, copy 2 is sent to the accounts payable department and copy 3 is filed in the stores department. On receipt of an approved purchase requisition, the purchasing department issues a five-part pre-numbered purchase order. Copy 1 is sent to the supplier, copies 2 and 3 are forwarded to the receiving department, copy 4 is forwarded to the accounts payable department and copy 5 is filed in the purchasing department.
When goods are received, the receiving department just stamps ‘order received’ on its two copies of the purchase order, which then forms its receiving record. One copy of the receiving record is filed in the receiving department and the other is forwarded to the accounts payable department. The accounts payable department checks that there is a purchase requisition, purchase order and receiving record for each supplier invoice and then approves it for payment. The accounts payable department prepares a pre-numbered payment voucher and forwards it, along with the supplier’s invoice, purchase requisition, purchase order and receiving record, to the financial accountant, who signs the payment voucher, completes the payment by bank transfer to the supplier and returns the supporting documents to the accounts payable department. At the end of the month, the assistant accountant undertakes a sequence check of all pre-numbered documents. The financial accountant receives the monthly bank statement, prepares a bank reconciliation and investigates any reconciling items.
Required:
(a) Identify the weaknesses in Super-Savers’ internal control concerning the purchases and payments functions. (5 marks)
(b) Explain why each is a weakness and provide a recommendation as to how to overcome the weakness. (5 marks)
Submission Directions:
The assignment has to be submitted via Blackboard. Each student will be permitted one submission to Blackboard only. Each student needs to ensure that the document submitted is the correct one.
Academic Integrity
Academic honesty is highly valued at Holmes Institute. Students must always submit work that represents their original words or ideas. If any words or ideas used in a class posting or assignment submission do not represent the student’s original words or ideas, the student must cite all relevant sources and make clear the extent to which such sources were used. Written assignments that include material similar to course reading materials or other sources should include a citation including source, author, and page number.
In addition, written assignments that are similar or identical to those of another student in the class is also a violation of the Holmes Institute’s Academic Conduct and Integrity Policy. The consequence for a violation of this policy can incur a range of penalties varying from a 50% penalty through to suspension of enrolment. The penalty would be dependent on the extent of academic misconduct and the student’s history of academic misconduct issues. All assessments will be automatically submitted to Safe-Assign to assess their originality.
Further Information:
For further information and additional learning resources, students should refer to their Discussion Board for the unit.

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