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ACC302: Auditing & Assurance- Auditing Case Study Assignment Solution

May 31, 2017
Author : Kristy

Solution Code: 1JJFB

Question: Auditing Case Study Assignment

This assignment is related to " Auditing Case Study Assignment" and experts at My Assignment Services AU successfully delivered HD quality work within the given deadline.

Case Study Assignment

Team - Case Studies:

Students are required to form audit teams of 3 students (please get your lecturer’s prior approval to change the team size) and complete the questions noted in the assignment details section on the next page. A copy of the minutes of team meetings must be attached to the group assignment and submitted electronically as noted above.

The team will also carry out a peer review for team work and award each member of the team a mark (include justification) which will be added to the lecturer’s assessment of the team to arrive at a mark for teamwork. Any work which has been copied or shared between teams or groups will result in a Fail grade for all students concerned. This assignment must be your teams own work and all members of the team will be awarded the same team mark. Your team’s work must not be copied directly from any source; any work copied will result in a mark of zero.

Please check the marking rubric for each part to ensure that you have followed all the guidelines for presenting your work. The assignment will need to be submitted electronically via the portal by the due date. Please make sure you follow the guidelines noted in your subject outline especially those relating to presentation of written work, late policy and academic integrity. You should also familiarise yourself with the assessment marking rubric (attached) to guide you in how you can score marks.

Team Meetings

The team should have a minimum of three meetings (the team may have as many meetings as they need to) and should maintain minutes of those meetings which should be included with the hard copy of your assignment as an attachment. Minutes should include - 1) Where and when the meeting was held

  1. People present; absent; apologies
  2. What was discussed and agreed on;
  3. The follow up action relating to each member of the team;
  4. Any other relevant matter, things you agreed or disagreed on etc.

Each member will need to complete a peer review sheet (attached) for the other team members. An average of the mark awarded will be taken into the peer review marks for each person and will form the mark for your team work. Please note that you need to give a reason for the mark you have given your team members or you will lose half your team marks. The assignment should be treated as a team effort and not different questions being done by team members – all members are responsible for all questions in the assignment and marks will not be pro-rated for questions in any way.

Assignment: Case Study

Students are required to form groups or audit teams of 3 students and complete the following questions that form a continuous case study from the prescribed textbook; Auditing and Assurance Services in Australia 6th edition, by Gay, G., and Simnett, R. Please note that the questions are linked to the background information contained in the Appendix A1 to A12 at the back of the textbook:

Chapter 4: Question 4.34

Chapter 5: Question 5.30

Chapter 6: Question 6.28

Chapter 7: Question 7.28

Chapter 8: Question 8.27

Chapter 9: Question 9.34

REQUIRED:

You are required to work as an audit team intending to present your findings for each separate client (question) to the Audit Manager (your lecturer):

  1. Hand in a written version (one for the group) of your assignment,
  2. Assess the contribution of each member in your team – scoring each one out of a maximum of 5 marks. Complete the peer review forms (one for each team member) and submit it with the written assignment.

These assignments are solved by our professional Auditing Case Study Assignment Assignment Experts at My Assignment Services AU and the solution are high quality of work as well as 100% plagiarism free. The assignment solution was delivered within 2-3 Days.

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Solution:

An engagement letter is a legal document that states the nature of service that has to be performed in exchange of compensation. An engagement letter is an important document for audit as it serves as a legal document between the auditor and the company whose audit has been undertaken. This letter sets out the terms of engagement and the scope within which the work would be performed. This letter is agreed and signed upon by both the parties. The letter confirms that the company whose audit has to be conducted has appointed the audit firm as their auditor for the current year and it also affirms the acceptance by the audit firm to act as auditor for any given financial year. If a firm is reappointed as auditor for next year also a fresh letter of engagement is drafted. The management of the company and the auditors has a formal communication before the drafting of the audit engagement letter. The letter states the scope of work the auditors would perform. It also contains a clause that the audit does not assure that the financial statements are free from material misstatements. The auditors have applied their skill and judgement but due to inherent risk of the audit there may be some material misstatements which could not be detected by the audit alone and additional audit procedures might have to be applied to identify the same.

The engagement letter contents are similar for all the companies whose audit is conducted. But there are certain specified points that are drafted keeping in mind the nature and working of the industry in which the company operates and essential to ensure the smooth functioning of the company. Therefore, the points that can be specifically related to Reliable Printers Ltd have been discussed hereunder:

  • In the given case, if we examine the sale vouchers or tax invoices of the company we can observe that the vouchers are signed by Rebecca Chan irrespective of the amount of the invoice. Therefore, the auditor has to confirm from the company if any hierarchy is present regarding sanctioning the amount for which the invoices are raised. In the absence, of the same it has to be enquired that what additional measures are being taken by the company to confirm and cross-check the authenticity of the amount of invoices that are being raised on the companies. The authority ascertaining the rate on which the vendors have to be billed has to be understood and confirm if the billing is made under any agreement that is being entered into by the company prior to undertaking the order. The dispatch note that is being sent to the customers also states only about the quantity that is being sent to the customer and it does not state the billing amount. Therefore, the manner in which the acceptance of the bill is ensured by the company has to be understood. In the given samples of the invoices, we can observe that all the invoices have been signed by Rebecca Chan except for one. The invoice number is 17524 and is dated 25March 2015. All other invoices confirm for the arithmetical accuracy and the prices that have been mentioned. However, this invoice does not confirm regarding the same. Therefore, the circumstances under which such declarations can be omitted have to be understood by the management. The reason for the omission of such declaration and the factors that it has to be ascertained and understood by the auditor. The reasons that would be stated by the management cannot be accepted by the auditor on an oral basis. Rather, a management representation letter stating the reasons for exclusion of declaration in the invoice has to be obtained. The management representation letter should further state the nature of invoices where the declaration for the same would be missing and it would be the duty of the auditor to obtain a sample of such invoices for the purpose of review. The extent of audit procedures that have to be applied on these invoices would be determined based upon the review of the sample tax invoices.
  • If we study the cash documents review of the company we can observe that the receipt of cash is accounted by Carly Barnes. The cash and other banking transfers that are received by the company on any given day are reconciled by Carly Barnes. The reconciliation statement tallies with the banking statement at the day end. However, if we notice the monthly reconciliations that are made by Terry Graham we can observe that the balance has not tallied between the books of accounts and the bank statement. However, the accounts have been reconciled by applying the unreconciled amount in unreconciled difference. It has also been mentioned that the difference is immaterial. Therefore, there are certain facts that have to be confirmed by the management regarding the same. Since, the accounts were reconciled on a daily basis with the bank statement the factors that led to arising of immaterial amount have to be understood. It has been stated that the unreconciled amount is immaterial. Therefore, a declaration regarding the same has to be obtained by the management representation letter. However, keeping in mind the nature of the circumstances the management representation letter would not serve as sufficient appropriate audit evidence. The factors that led to the amount being considered as immaterial has to be understood by the management and if the auditor is not satisfied by the facts that are stated by the management the auditor has to approach to those charged with governance. If the management and those charged with governance are not able to resolve the issue the auditor might consider issuing a qualified report.

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