You are planning the audit of Lola Ltd, a company with investments in listed securities that you consider to have a low level of inherent risk. What is the most appropriate level of planning materiality for the 30 June 2022 audit given the following balances: (all amounts are in $'000) Sales: 1500 (2022); 1350 (2021); 1200 (2020) Profit: 18 (2022); 147.6 (2021): -126 (2020) Current assets: 1840 (2022); 1656 (2021); 1472 (2020) а. 18.4 b. 15.0 С. 0.9 d. 1.8
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- You are planning the audit of Bluechip Ltd, a company with investments in listed securities that you consider to have a low level of inherent risk. What is the most appropriate level of planning materiality for the 30 June 2021 audit given the following balances: (all amounts are in $'000) Sales: 1200 (2021); 1080 (2020); 960 (2019) Profit: 15.5 (2021); 127.1 (2020): -108.5 (2019) Current assets: 1990 (2021); 1791 (2020); 1592 (2019) a. 1.6 b. 0.8 c. 19.9 d. 12.0You are the senior in charge of the audit of Jewels Manufacturing Limited. The information below has been prepared to assess the going concern of the company at the planning stage of the audit and to identify other issues that may impact on audit risk. Ratio Unaudited 2020 figures 2019 2018 2017 Inventory turnover 1.45 1.83 2.69 3.35 Quick asset ratio 0.97 1.4 1.81 1.8 Accounts Receivable turnover 3.8 5.5 4.1 5.4 Required: Identify issues that affect going concern and/or raise issues and explain the audit steps that you would undertake to minimise audit risk. Complete the table below in the answer box.You are the senior in charge of the audit of Jewels Manufacturing Limited. The information below has been prepared to assess the going concern of the company at the planning stage of the audit and to identify other issues that may impact on audit risk. Ratio Unaudited 2020 figures 2019 2018 2017 Inventory turnover 1.45 1.83 2.69 3.35 Quick asset ratio 0.97 1.4 1.81 1.8 Accounts Receivable turnover 3.8 5.5 4.1 5.4 Required: Identify issues that affect going concern and/or raise issues and explain the audit steps that you would undertake to minimise audit risk. Complete the table.
- You are currently planning the audit of your client, DEF plc. Its year end is 31 December 2019 and the forecast profit before tax is £15.5 million.DEF has a small internal audit (IA) department. During the year, IA started a programme of physically verifying the company’s assets and comparing the results to the non-current assets register, as this type of reconciliation had not occurred for some time. To date only 15% of assets have had their existence confirmed as IA has experienced significant staff shortages and several members of the current IA team are new to DEF plc.Inventory is held in six locations and on 25 and 26 December a full inventory count will be held with adjustments for movements to the year end. This is due to a lack of available staff on 31 December. The number of audit team members are not enough to attend the counts in all the locations. In November, there was a fire in one of the inventory warehouses; inventory of £5 million was damaged and this has been written…FOR THE ANSWER OF THIS QUESTION IN THE AUDIT RISK COLUMN, WITH THE EXPLANATION COULD YOU ALSO WRITE DOWN WEATHER IT IS CONTROL RISK, INHERENT RISK OR DETECTION RISK PART B - QUESTION You are currently planning the audit of your client, DEF plc. Its year end is 31December 2019 and the forecast profit before tax is £15.5 million. DEF has a small internal audit (IA) department. During the year, IA started a programme of physically verifying the company’s assets and comparing the results to the non-current assets register, as this type of reconciliation had not occurred for some time. To date only 15% of assets have had their existence confirmed as IA has experienced significant staff shortages and several members of the current IA team are new to DEF plc. Inventory is held in six locations and on 25 and 26 December a full inventory count will be held with adjustments for movements to the year end. This is due to a lack of available staff on 31 December. The number of audit team…You are in charge of auditing PLM (PopoyLangMalakas) Company's investmentaccounts for the year ended December 31, 2021, which was incorporated last March 3, 2020. During the course of the audit, you have obtained the balances and therelated journal entries of its investment related transactions and have revealed thefollowing information: Question 1: The adjustment to correct the interest income for 2021 includes adebit/(credit) to the interest revenue account amounting to? (Put a negativesign if credit) Question 2: How much is the retroactive adjustment to the beginning balance ofretained earnings for the year 2021, pertaining to the investment in BSP bonds?(Please indicate debit or (credit), use negative sign if credit).Question 3: The correct amount of investment in BSP bonds that should bepresented in the statement of financial position as of December 31, 2021 is?
- You are the manager responsible for the audit of the Kanu Group (the Group), a listed manufacturer of high quality musical instruments, for the year ended 31 March 2018. The draft financial statements of the Group recognize a loss before tax of GH¢2.2 million (2017 – loss of GH¢1.5 million) and total assets of GH¢14.1 million (2017 – GH¢18.3 million). The audit is nearing completion and the audit senior has drafted the auditor’s report which contains the following extract:Key audit matters 1. Valuation of financial instruments The Group enters into structured forward contracts to purchase materials used in its manufacturing process. The valuation of these unquoted instruments involves guesswork and is based on internal models developed by the Group’s finance director, Vincent Addo. Mr. Addo joined the Group in January 2018 and there is significant measurement uncertainty involved in his valuations as a result of his inexperience. As a result, the valuation of these contracts was…You are the audit partner at Smart Auditors Inc. For the month of April 2020, you have received the following technical queries relating to different audit clients. Please note that the matters below are not related. Matter 1: In terms of the basic evidence gathered on the audit of We Fix (Pty ) Ltd, the auditor noted that inventory with a cost of N$500 000 and a net realisable value of N$750 000 has been recorded at the net realisable value amount. The issue has been discussed with management and they have refused to correct the misstatement. Matter 2: On the audit of Grey Fade (Pty) Ltd, based on the audit evidence obtained, the auditor concluded that there are material uncertainty relating to events and conditions which cast significant doubt on the company’s ability to continue as a going concern. However, the audit committee and management had come to the same conclusion and adequate disclosure in the financial statements relating to the material uncertainty had been made. The…Mazars Audit Firm is re-appointed as auditors in Beautiful Jewels for a year ended 31st March 2020. The overall level of acceptable audit risk of the client is considered as 10%. The inherent risk and control risk are assessed at 50% and 80% respectively. (i)Calculate the detection risk, if the audit risk falls down to 5% .
- Mazars Audit Firm is re-appointed as auditors in Beautiful Jewels for a year ended 31st March 2020. The overall level of acceptable audit risk of the client is considered as 10%. The inherent risk and control risk are assessed at 50% and 80% respectively. (i)Calculate the detection risk from the case let using the audit risk modelYou were assigned to audit the financial statements of Swansea Corporation as at and for the year ended December 31, 2021. Your senior asked you to draft a memo on materiality and tolerable error for your client. Swansea Corporation has incurred substantial net losses due to COVID-19 pandemic. Up to 2019, it has been profitable. Which of the following is least likely to be your starting point in computing materiality? Group of answer choices Normalized net income Net loss Total assets Normalized revenueYou are the auditor in charge of the audit of Irene PLC, which has a 30 June year end. The subsequent events review for the year ended 30 June 2022 revealed that, on 1 August 2022, a receiver was appointed at a major customer. At 30 June 2022 that customer owed GHS 150,000 and goods costing GHS 200,000 made to that customer’s specification were held in inventory. Both these amounts are material.RequiredList the matters to which you would direct your attention in respect of the above in relation to the audit for the year ended 30 June 2022, if the audit report on the financial statements has not yet been written.