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Assume you are responsible for the preparation of an audit plan in each of the situation discussed above. In each case, describe h

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Assume you are responsible for the preparation of an audit plan in each of the situation discussed above. In each case, describe how the situation posed would affect your audit plan. Include reference to the nature and/or extent of audit evidence to be co

Task 2 – Assignment – 75 Marks

Instructions to the students:

  • Students are advised to attempt all the activities successfully in order to get a satisfactory outcome.
  • Students may please refer the learning materials provided by the trainer in the class and other research conducted by you to answer these questions.
  • This Assessment (Assignment) is to be completed in addition to the other activities you complete in class during the course.
  • This Assignment evaluates a number of elements of competency that will assess your knowledge and skills in analysing business performances.
  • In order to facilitate completion process, provided herewith the appropriate templates with proper noting and headings..
  • Some of the activities within the assessment may be more difficult and complex compared to rest of activities which may require considerable time and concentration. While it can be completed in the classroom, sufficient time will need to be allocated and consideration given to the space and resources learners will need to complete this assessment.
  • This assessment is of 75 Marks

Short Cases – Activity 1                                                                                                                 35 Marks

Consider each of the following situations, which are independent of each other:

  1. Your audit plan for sales places extensive reliance on internal controls and use of substantive analytical procedures. Your testing for internal control for sales has found a significant number of instances where clients’ credit ratings have not been checked and abnormally large discounts have been given. The sales manager states that these changes have been the results of difficulties in maintaining sales levels.
  2. You are planning the annual audit engagement of a tractor retailer. You are aware of significant problems in the rural industry over the past six months and little improvement is in sight.
  3. Since the last audit your client has introduced a new management compensation scheme with the result that top managers’ salaries are closely tied to the company’s profitability.
  4. Management informs you that during the year the internal auditors discovered that a substantial amount of stock had disappeared from a small branch of your client. A number of local managers have subsequently resigned although there were no prosecutions. The losses equalled 1% of the company’s profits before income tax expense.
  5. Since your last audit the client has introduced a new IT system for inventory to replace the old manual system. Management has indicated that the big advantage of the new system over the old one is that it provides information on inventory levels and gross margin for both product lines and geographical area.
  6. A new competitor of your client entered the market two months before year end and, since that time, selling prices have fallen significantly. Your inquiries have revealed that the industry expects heavy discounting to continue for the whole of next year.
  7. There were neither major disposals nor additions to plant and equipment during the period. Plant and equipment is not a material balance and consists mainly of furniture and fittings.

Required:

Assume you are responsible for the preparation of an audit plan in each of the situation discussed above. In each case, describe how the situation posed would affect your audit plan. Include reference to the nature and/or extent of audit evidence to be collected.

Probable Answers:

Activity 2 (Short answer questions)                                                                               

Provide two possible causes for the failure to effectively implement internal controls for corporate governance requirements.                                                  (12 marks)                        

 

Answer.

3. Describe a key approach that you would take to assist in the implementation of a modified or new internal control process.                                                                        (4 Marks)

 

Answer

 

4.             Financial Legislation                                                                                       (6 Marks)

 

a. What is the name of the board that sets accounting reporting requirements and what legislation does it operate under?

b. What legislation or act governs and/or describes taxable transactions? Give an example of a non- taxable transaction.

c. What department or body regulates Australia’s corporate and financial services and under what act do they carry out most of their work?                   

 

Answer.

 

5.       Identify and describe three principles of internal control and corporate governance.

                                                                                                                                (8 marks)

Answer.

 

6.     Describe two ethical considerations when managing files and records.  (6 marks)

Answer.

7.             Describe the steps you would undertake when setting up a system to maintain privacy sensitive files on a computer and in physical form. Incorporate privacy principles in your answer.                                                                                                          (4 Marks)

 

Answer.

 

Feedback to Student:

 

 

 

 

 

 

 

 

 

The Student’s knowledge was:

£  Satisfactory                      £  Not satisfactory

 

 

 

 

 

 


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  • Title: Assume you are responsible for the preparation of an audit plan in each of the situation discussed above. In each case, describe how the situation posed would affect your audit plan. Include reference to the nature and/or extent of audit evidence to be co
  • Price: £ 99
  • Post Date: 2018-11-10T07:51:54+00:00
  • Category: Assignment
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