List two ways in which analytical procedures can help the auditor in the planning stage
of the audit
An entity uses internal control procedures in order to mitigate the
risks to which the entity is exposed. Listed below are two internal control procedures
which are applicable to an entity’s sales and receivables system.
Match each internal control procedure with the risk mitigated from the list below:
‘¢ Sales are made to customers who cannot pay
‘¢ Sales are not made to existing customers
‘¢ Deliveries are not made to bona fide customers
‘¢ Customer refuses to pay for goods allegedly not received
‘¢ Customer orders not being fulfilled
The audit work requires the verification of cut ‘“off procedures to ensure that all
transactions are recorded in the correct accounting period.
During the year end inventory count on 31 March 201X the audit team recorded the
following transactions.
The last Goods Received Note number was 10672.
Which invoices should be recorded in purchases for the year?
Discuss the difference between a review engagement and a statutory year-end audit.
The auditing profession has been criticised recently by politicians for its role in
monitoring potential corporate failure. Radical reforms have been called for in the way
the audit is regulated.
For example, politicians have stated that there should be a change of legislation in the
following ways:
(i) Auditing standards
Auditing standards should be set and enforced independently from the accounting
profession.
(ii) Fraud
Auditing firms should have a duty to detect and report fraud.
(iii) Non-audit services
Non-auditing services supplied to an audit client should be stopped.
(iv) The duration of the appointment of auditors
The appointment of auditors should be for a maximum period of seven years.
Discuss the reasons why you feel that the audit profession has been criticised over the
current regulations in the above areas.
Set out the audit objectives for the audit of a purchases and expenses system including
the relevant assertions