家洪 asked in 社會及文化語言 · 1 decade ago

Adit 一問

小弟有現在一AUDIT問題一問,現post出黎:

 

During your audit of B Ltd the following evidential matters have been included in your working papers:

1) Flowcharts of the company's payroll routine prepared by your audit assistant backed up by walk through tests.

2) An oral statement by the production director that the expected working life of plant acquired during the year is ten years.

3) A nwespaper report to the effect that nwe technology is expected to have a n adverse effect on the sales of products representing 20% of the company's turnover.

4) A letter to the managing director from the company's bank manager indicatingthat the bank intends to extend overdraft facilities for a period of one year.

5) List of items of stock counted by a member of your firm of Certified Accountants during observation of the company's stock count.

6) A letter from a debtor to your firm in reply to a confirmation request indicating agreement with the balance as recorded in the books of B Ltd.

Required:

a)1. Explain its relevance to the overall audit objective of forming an opinion and reporting on the financial statements

2. State,giving reasons,how reliable you judge the evidence to be.

3. Describe one additional item of audit evidence you would seek to support the matter described.

b) If any of the items of evidence referred to above were inconsistent with other evidence collected by you(e.g.in relation to 2 above, working lives in the past of the kind of plant referred to have been seven years and not ten years), what steps would you take?

2 Answers

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  • 1 decade ago
    Favorite Answer

    well, 5 points is too stingy for answering this question. It's worth 10 or more and it's more abt Accounting than English.

    a)1.) Payroll (P/L item) : Occurence & Completeness should be the main assertions, i.e. the objective of preparing the chart.

    2.) P & M (B/S item): Valuation & allocation

    3) Sales (P/L item): Accuracy, Sales may be overstated

    4) Overdraft (B/S item): Completeness, Rights and Obligations

    5) Stock (B/S item): Existence

    6) A/R (B/S item): Existence

    2. 1.) Payroll flowchart : Information obtained by direct observation of auditor. It's regarded as reliable source.

    2.) P & M (B/S item): Audit evidence appeared on documentary form provided by an independent is more reliable than oral. So, the oral statement provided by directly is least reliable than any written document provided by 3rd party, e.g. professional valuer.

    3) 3) Sales (P/L item): The news is provided by independent source outside the entity which is more reliable. However, the reliability of the media itself and source of the news for technology change are concerned.For example, if the news is provided by well-known companies, such as Reuter, CNN, it is more reliable.

    4) Overdraft (B/S item): The document is provided by a reliable independent. So, the letter is a reliable evidence.

    5) Stock (B/S item): It's obtained directly by auditor and it's reliable source of evidence

    6) A/R (B/S item): The confirmation is provided by independent outside of the firm. So, it's a reliable source of information.

    2008-10-22 19:38:33 補充:

    3.1) Select samples of employee records from HR and vouch against the payroll record

    2) Obtain evidence from the supplier for the useful life or compare the useful life of the same model or similar mode used by competitors.

    2008-10-22 19:38:50 補充:

    3) Enquire the sales manager for the expected sales in the coming years and review the budget provided by the company.

    4) Obtain confirmation from bank and vouch against the information appeared on the letter.

    2008-10-22 19:39:03 補充:

    5) Enquire the staff who conducted stocktake

    6) Check subsequent settlement of the debt.

    2008-10-22 19:39:16 補充:

    b)

    1. Decide the matter is material or immaterial

    2. If the matter is material or a series of immaterial matters made up to be material, discuss with the management.

    2008-10-22 19:39:27 補充:

    3. In case there is conflict between the management and the matter is material but not extreme, a qualified opinion is usually formed. If the matter is extremem, an adversed opinion is formed.

    2008-10-22 19:39:40 補充:

    You can refer to the Auditing standardard regarding to on "Audit Evidence" and "The Audit Report".

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  • Anonymous
    1 decade ago

    You may get better help if you post your question under 會計.

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