(a) Explain what you should consider and do before accepting the audit engagement from Hope-well Limited. (b) Identify and explain SIX audit risks that exist in the audit of Hope-well Limited? (c) Explain why it is not possible to eliminate audit risk completely.
Q: . Why do you need to make pre - engagement activities before making an actual audit?
A: At the beginning of audit engagement the auditor should undertake the following activities - 1)…
Q: Respond to each of the following comments that you heard related to the audit of Swan Company, a…
A:
Q: Determine which of the following is most correct statement regarding the reliability of audit…
A: Auditing refers to the process of physically inspecting all the financial records of an entity or an…
Q: Which of the following tests are considered further audit procedures that may be designed after…
A: Substantive test of details are considered further audit procedures that may be designed after…
Q: Auditors need to identify audit risk in planning an audit engagement. In doing so, the audit risk…
A: Answer (a) – Audit Risk – Audit risk is a risk that the auditor may give inappropriate opinion when…
Q: Which one below is not an example of auditors'substantive testing? Select one: a. Controls testing.…
A: Substantive testing is such an audit procedure that is used for examination of financial statement…
Q: Which of the following statements is not true with respect to the performance principle?a. Auditors…
A: Answer: Option a.
Q: Which of the following is part of phase III of the audit process, which is responding to assessment…
A: Answer: C) Asses the risk or material misstatement
Q: Which of the following is appropriate about risk assessment? A. The assessed level of inherent and…
A: Risks are the unfavourable situations or circumstances that can make loss for the organisation or…
Q: Explain what types of audit opinions auditors can issue and what are the possible reasons for…
A: Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: Each of the following steps should be performed prior to accepting an audit engagement except:
A: Explanation and answer is given below,
Q: Which of the following statements is correct regarding detection risk and the audit risk model? OA.…
A: Audit risk is a tool for auditor to evaluate various risks may arise while performing an audit.…
Q: Which of the following terms best describes the risk that audit procedures will fail to detect…
A: The Correct Option is C
Q: Directions: Please select the appropriate answer on the statement below; B - If the statement is…
A: Audit procedure is different types of steps that are followed by an auditor while conducting the…
Q: Discuss how important is the risk assessment stage in audit engagements? Explain what audit…
A: The risk assessment stage is very important in an audit, as it gives the auditor an idea on the risk…
Q: Which of the following statements is NOT accurate as it relates to testing and the audit risk? O…
A: auditor shall test the audit risk and perform the risk assessment procedure in order to determine…
Q: 11 - Which of the following statements is not among the characteristics of the audit function ? A)…
A: Introduction Auditing is a process which have been done by an external independent expert after the…
Q: Which of the following is correct about ISA 520? O a. ISA 520 deals with the procedures after an…
A: The International Standard on Auditing 520 focuses on the analytical procedure used by the auditors…
Q: Explain what is included in the risk assessment section of the audit file and the purpose of each…
A: Auditing refers to the art of inspecting and investigating financial accounts of a company. It is…
Q: Examine the information enunciated below carefully and identify the impact of increase in the…
A: The first step in conducting audit is the assessment of audit risk inherent to the business which…
Q: What are the objectives of ISA 520? O a. To obtain evidence from third parties O b. To obtain the…
A: SOLUTION- ISA 520- IT DEALS WITH THE AUDITORS USE OF ANALYTICAL PROCEDURES AS SUBSTANTIVE PROCEDURES…
Q: For each of the following independent situations, assume that any amounts would be material. (1)…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: a) The risk of the auditor "getting it wrong" or giving opinions that are not 100% accurate will…
A: Materiality as it is used in audit reporting can be defined as determining those significant issues,…
Q: Auditors must collect sufficient and appropriate audit evidence to reduce audit risk. This audit…
A: Auditors must collect sufficient and appropriate audit evidence to reduce audit risk. This audit…
Q: The results of analytical procedures may identify previously unrecognized risk of material…
A: Analytical procedures: In obtaining the audit evidence, the auditor has to finally undergo…
Q: List two major characteristics that are useful in predicting the likelihood of fraudulent financial…
A: Audit: An audit is defined as: the independent examination of and expression of opinion on the…
Q: Explain what is meant by lapping and discuss how the auditorcan uncover it. Under what circumstances…
A:
Q: Explain how ratio analysis and industry comparisons can be useful to the auditor identifying…
A: Ratio Analysis is a tool by which an auditor can examine the data for the two financial years and…
Q: Which one of the following statement is TRUE as per ISA 300? Answer saved Marked out of The audit…
A: Audit plan is detailed and structured planned program which provides instructions as to how each…
Q: Explain the circumstances when an auditor needs to assess the components of the audit risk model…
A:
Q: Which of the following statements is not correct? A) There are many ways an auditor can accumulate…
A: Lets understand the basics. Auditing is a verifying books of account to check whether it shows true…
Q: In auditing receivables, what are the audit objectives and how would you be performed to arrive at…
A: Auditing implies an exhaustive and formal review of your records. Auditors give extraordinary…
Q: Which of the following aspects of an audit examination is not related to the performance principle?…
A: The audit is a process wherein the books of accounts are examined and checked so as to check their…
Q: Which TWO of the following statements regarding the use of analytical procedures of the audit are…
A: Audit procedure is different types of steps that are followed by an auditor while conducting the…
Q: Which type of service may not need an audit opinion or review conclusion from auditors? Select all…
A: An audit engagement is an arrangement between an auditor and client to perform an audit and express…
Q: Assume that you are a senior on an audit engagement and need to explain to your intern/trainee what…
A: Answer: Concept: Audit engagement is the agreement between the auditor and the business to perform…
Q: In deciding about the form, contents, and extent of audit documentation, the audit should consider…
A: Audit documentation is the record of audit procedure form by the auditor and the relevant audit…
Q: Which of the following should not be considered at the planning phase of the audit? a.…
A: Please see the next step for the solution
Q: 1. Explain the concepts of materiality and audit risk and the relationship between them? 2.…
A: 1. Concepts of materiality and audit risk. 2. Audit strategy and audit plan 3. Analytical procedure
Q: Which of the following are NOT part of the planning stage of the audit? Preliminary materiality…
A: Audit is a process wherein the auditor examines or inspects various books of accounts, followed by a…
Q: Documentation of an Audit Data Analytic (ADA), should be sufficient enough such that: O An…
A: Audit data analytics is an analysis of an entire population. It is not done on the sampling basis.…
Q: Which of the following is not a technique of collecting audit evidence? a. Analytical procedures. b.…
A: Audit Evidence It is the information collected by an auditor in order to make sure the accuracy and…
Q: Which of the following is NOT an assertion relating to 'general presentation and disclosure-related…
A: Management is responsible for the fair presentation of financial statements as per the applicable…
Q: With regard to corrective action on audit results, which of the following is not theinternal…
A: Internal auditor is the one who provides independent and correct evaluation of operating and…
Q: Which of the following documents would be the most reliable evidence for an audit? Group of answer…
A: Reliable evidence: It implies to the evidence that has been obtained from a reliable and independent…
Q: Please outline the audit process, concentrating on the notion of materiality in the audit plan,…
A: The audit process refers to examining a client's financial records by an auditing company or…
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- Ginnian and Fitch, a regional accounting firm, performs yearly audits on a number of different for-profit and not-for-profit entities. Two years ago, Luisa Mellina, Ginnians partner in charge of operations, became concerned about the amount of audit time required by not-for-profit entities. As a result, she instituted a series of training programs focusing on the auditing of not-forprofit entities. Now, she would like to see if the training seemed to work. So, she ran a multiple regression on 22 months of data for Ginnian for three variables: the total monthly cost of audit professional time, the number of not-for-profit audits, and the hours of training in the audit of not-for-profit entities. The following printout was obtained: Required: 1. Write out the cost equation for Ginnians audit professional time. 2. If Ginnian expects to have 9 audits of not-for-profits next month and expects that audit professionals will have a total of 130 hours of not-for-profit training, what is the anticipated cost of professional time? 3. Are the hours spent auditing not-for-profit entities positively or negatively correlated with audit professional costs? Is percentage of experienced team members positively or negatively correlated with audit professional cost? 4. What does R2 mean in this equation? Overall, what is your evaluation of the cost equation that was developed for the cost of audit professionals?You are the audit manager of Matfine & Co and are reviewing the key issues identified in the files of two audit clients as follows: Pito Industries Co (Pito) Pito’s year-end was 31 March 2019 and the draft financial statements show revenue of $32·2 million, receivables of $6·1 million and profit before tax of $3.4 million. The fieldwork stage for this audit has been completed. A customer of Pito owed an amount of $375,000 at the year-end. Testing of receivables in April highlighted that no amounts had been paid to Pito from this customer as they were disputing the quality of certain goods received from Pito. The finance director is confident the issue will be resolved and no allowance for receivables was made with regards to this balance. Albo Trading Co (Albo) Albo is a new client of Matfine & Co, its year-end was 31 January 2019 and the firm was only appointed auditors in February 2019, as the previous auditors were suddenly unable to undertake the audit. The fieldwork…You are the audit manager of Matfine & Co and are reviewing the key issues identified in the files of two audit clients as follows: Pito Industries Co (Pito) Pito’s year-end was 31 March 2019 and the draft financial statements show revenue of $32·2 million, receivables of $6·1 million and profit before tax of $3.4 million. The fieldwork stage for this audit has been completed. A customer of Pito owed an amount of $375,000 at the year-end. Testing of receivables in April highlighted that no amounts had been paid to Pito from this customer as they were disputing the quality of certain goods received from Pito. The finance director is confident the issue will be resolved and no allowance for receivables was made with regards to this balance. Albo Trading Co (Albo) Albo is a new client of Matfine & Co, its year-end was 31 January 2019 and the firm was only appointed auditors in February 2019, as the previous auditors were suddenly unable to undertake the audit. The fieldwork…
- You are the audit manager of Matfine & Co and are reviewing the key issues identified in the files of two audit clients as follows: Pito Industries Co (Pito) Pito’s year-end was 31 March 2019 and the draft financial statements show revenue of $32·2 million, receivables of $6·1 million and profit before tax of $3.4 million. The fieldwork stage for this audit has been completed. A customer of Pito owed an amount of $375,000 at the year-end. Testing of receivables in April highlighted that no amounts had been paid to Pito from this customer as they were disputing the quality of certain goods received from Pito. The finance director is confident the issue will be resolved and no allowance for receivables was made with regards to this balance. Albo Trading Co (Albo) Albo is a new client of Matfine & Co, its year-end was 31 January 2019 and the firm was only appointed auditors in February 2019, as the previous auditors were suddenly unable to undertake the audit. The fieldwork…You are the audit manager of Matfine & Co and are reviewing the key issues identified in the files of two audit clients as follows: Pito Industries Co (Pito) Pito’s year-end was 31 March 2019 and the draft financial statements show revenue of $32·2 million, receivables of $6·1 million and profit before tax of $3.4 million. The fieldwork stage for this audit has been completed. A customer of Pito owed an amount of $375,000 at the year-end. Testing of receivables in April highlighted that no amounts had been paid to Pito from this customer as they were disputing the quality of certain goods received from Pito. The finance director is confident the issue will be resolved and no allowance for receivables was made with regards to this balance. Albo Trading Co (Albo) Albo is a new client of Matfine & Co, its year-end was 31 January 2019 and the firm was only appointed auditors in February 2019, as the previous auditors were suddenly unable to undertake the audit. The fieldwork…You are the audit manager of Matfine & Co and are reviewing the key issues identified in the files of two audit clients as follows: 1) Pito Industries Co (Pito) Pito’s year-end was 31 March 2019 and the draft financial statements show revenue of $32·2 million, receivables of $6·1 million and profit before tax of $3.4 million. The fieldwork stage for this audit has been completed. A customer of Pito owed an amount of $375,000 at the year-end. Testing of receivables in April highlighted that no amounts had been paid to Pito from this customer as they were disputing the quality of certain goods received from Pito. The finance director is confident the issue will be resolved and no allowance for receivables was made with regards to this balance. 2) Albo Trading Co (Albo) Albo is a new client of Matfine & Co, its year-end was 31 January 2019 and the firm was only appointed auditors in February 2019, as the previous auditors were suddenly unable to undertake the audit. The fieldwork…
- You are the audit senior responsible for the audit of Sampson Limited. You are currently planning the audit for the year ended 31 December 2019. During your initial planning meeting held with the financial controller, he told you of the following changes in the company’s operations. 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 realized a small profit for the company through foreign-exchange transactions in dollars. explain how the components of audit risk (inherent, control or detection risk) are affected.You are the audit senior responsible for the audit of Sampson Limited. You are currently planning the audit for the year ended 31 December 2019. 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 atreasurer. The financial controller is excited about the appointment because in the two months that the treasurer has been with the company he has realized a small profit for the company through foreign-exchange transactions in dollars. (ii) Sampson has planned to close an inefficient factory in the northern partof the country before the end of 2019. It is expected that the redeploymentand disposal of the factory’s assets will not be completed until the end ofthe following year. However, the financial controller is confident that hewill be able to determine reasonably accurate closure provisions. (iii) To help achieve the budgeted…AJ Kumar is completing the December 31, 2020, audit of Kiwi Company. As part of the final procedures, Kumar has requested representations from Kiwi’s management regarding their assertion as to the fairness of the financial statements and other important matters addressed by professional standards. Because Kiwi’s management is attending an analyst briefing in the upcoming week, Kumar receives these signed representations dated February 6, 2021. Kumar has a few remaining items to complete, does so, and dates the auditor’s report February 9, 2021. Describe the most appropriate course of action that the auditors should take.
- You are an audit senior of Beckham & Co and have been allocated to the audit of Willian Co (Willian), a listed company which has been an audit client for eight years and specializes in manufacturing musical instruments.Spice Posh was the audit engagement partner for Willian and as she had completed seven years as the audit engagement partner, she has recently been rotated off the audit engagement. The current audit partner, ShakiraPique, has suggested that in order to maintain a close relationship with Willian, Spice should undertake the role of independent review partner this year. In addition, Willian has requested that Spice assist them by attendingtheir audit committee meetings, as a non-executive director has recently left the company. Willian has also asked Shakira and the other partners at Beckham & Co to help them in recruiting a new non-executive director.The total fees received by Beckham & Co for last year equated to 16% of the firm’s total fee income. The…You are an audit senior of Beckham & Co and have been allocated to the audit of Willian Co (Willian), a listed company which has been an audit client for eight years and specializes in manufacturing musical instruments. Spice Posh was the audit engagement partner for Willian and as she had completed seven years as the audit engagement partner, she has recently been rotated off the audit engagement. The current audit partner, Shakira Pique, has suggested that in order to maintain a close relationship with Willian, Spice should undertake the roleof independent review partner this year. In addition, Willian has requested that Spice assist them by attending their audit committee meetings, as a non-executive director has recently left the company. Willian has also asked Shakira and the other partners at Beckham & Co to help them in recruiting a new non-executive director. The total fees received by Beckham & Co for last year equated to 16% of the firm’s total fee income. The…You are the audit senior on the audit of PXT Ltd for the yearended 31 January 2020. A former member of the auditengagement team for PXT Ltd left your firm two years ago totake up employment with this client.Identify and explain the potential threats to your firm’sobjectivity and independence when auditing PXT Ltd and listtwo factors you would consider when assessing thesignificance of these threats