HA3032 Auditing – Get an Orginal Paper (homeworkcorp.com/order)

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Assessment Task – Tutorial Questions Assignment
Unit Code: HA3032
Unit Name: Auditing
Assignment: Tutorial Questions Assignment (Individual)
Due: Week 13 – Friday 16th October 2020 (11:30PM)
Weighting: 50%
Total Mark: 50 Marks
Purpose:
This assignment is designed to assess your level of knowledge of the key topics covered in this unit
Unit Learning Outcomes Assessed:
1. Demonstrate a thorough understanding of the reporting requirements of
auditing standards relating to auditors’reports.
2. Explain how the auditplanningprocess directs theauditorto obtain adequate
evidence to support audit findings and address the importance of materiality in
an audit.
3. Explaintheprocessofauditplanningtodetermineriskassessmentsandanoverallaudit
strategy.
4. Explain the auditors’ obligations with regards to understanding the client’s
business and internal controls and assessing business risks.
5. Achieve a high level of competence in applying prescribed auditing techniques
in gathering evidence to satisfy audit assertions.
Description:
Each week students were provided with three tutorial questions of varying degrees of difficulty.
These tutorial questions are available in the Tutorial Folder for each week on Blackboard. The
Interactive Tutorials are designed to assist students with the process, skills and knowledge to answer
the provided tutorial questions. Your task is to answer a selection of tutorial questions from weeks
3 ,4 ,5 ,6 ,7 & 11 inclusive and submit these answers in a single document.
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The questions to be answered are:
Question 1 (7 marks)
(This question is from the Week 3 Tutorial)
You have reviewed the work performed by your assistant, Raymond Snow, on the audit of Tin Ltd
for the year ended 30 June 20X8 and you have noted the following two independent matters:
(i) In testing investments in listed securities, Raymond selected all shareholdings with a market
value above $200,000 and checked them to the closing market value reported by the
Australian Stock Exchange (ASX) to determine the net realisable value of each shareholding.
The items tested totaled $5,500,000 or 60% of the total balance. Of the items tested, only
one error of $110,000 was discovered. Raymond concluded that the error was not itself
material, as it was only 2% of the balance tested. He extrapolated this error to the total
population and estimated that the error for the total population would be $185,000, which
was also immaterial. Therefore, he concluded that the investments in listed securities were
fairly stated at the lower of cost or net realisable value.
(ii) Tin Ltd has 1,000 stock lines that are maintained on a perpetual inventory system. Stock is
counted on a cyclical basis so that all lines are covered at least once per year. Raymond
attended the March stocktake to observe the counting procedures and conducted 20 test
counts from the floor to the client’s count sheets and 20 from the client’s count sheets to
the floor. He uncovered two minor discrepancies of one item each, which he considered to
be immaterial. The client also uncovered five minor discrepancies between the perpetual
records and the actual quantity on hand. None of these discrepancies were adjusted on the
perpetual records, as the amounts involved only totaled $50,000 and were considered to be
immaterial. Raymond concluded that no further work was considered necessary on stock
quantities at year end.
Required:

(a) In your own words, explain what is meant by sufficient appropriate audit evidence.
(2 marks)
Explain whether sufficient appropriate audit evidence has been obtained for each of the
above situations. Give reasons for your answer. (5 marks)
(b)

(Word Limit: Minimum of 250 words. Maximum of 300 words)
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Question 2 (7 marks)
(This question is from the Week 4 Tutorial)
The following financial ratios have been calculated for Nova Ltd for the year ended 30 June 2008:

Ratio Actual
results
Budgeted
results
Previous
year
Industry Average
Current ratio 1.97 1.92 1.87 1.92
Quick asset ratio 1.06 1.06 1.06 1.11
Inventory turnover 4.21 4.91 4.86 4.76
Net profit ratio 0.05 0.03 0.03 0.03
Gross margin 0.65 0.59 0.61 0.61

Required:
Provide four (4) possible explanations for the results of the various ratios for Nova Ltd and explain
their implications for the audit. (7marks)
(Word Limit: Minimum of 200 words. Maximum 250 of words)
Question 3 (7 marks)
(This question is from the Week 5 Tutorial)
Everyday Supplies Pty Ltd is a single-store retailer that sells a variety of tools, garden supplies,
timber, small appliances, and electrical fixtures to the public, although about half of Everyday
Supplies’ sales are to construction contractors on account.
Retail customers pay for merchandise by cash or credit card at cash registers when merchandise is
purchased. A contractor may purchase merchandise on account, if approved by the credit manager
based only on the manager’s familiarity with the contractor’s reputation. After credit is approved,
the sales associate files a prenumbered charge form with the accounts receivable supervisor to set
up the receivable.
The accounts receivable supervisor independently verifies the pricing and other details on the
charge form by reference to a management – authorised price list, corrects any errors, prepares
the invoice, and supervises a part-time employee who mails the invoice to the contractor. The
accounts receivable supervisor electronically posts the details of the invoice in the accounts
receivable subsidiary ledger; simultaneously, the transaction’s details are transmitted to the
bookkeeper. The accounts receivable supervisor also prepares a monthly computer-generated
accounts receivable subsidiary ledger without a reconciliation with the accounts receivable control
account and a monthly report of overdue accounts.
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The cash receipts functions are performed by the cashier, who also supervises the cash register
clerks. The cashier opens the mail, compares each cheque with the enclosed remittance advice,
stamps each cheque “for deposit only”, and lists cheques for deposit. The cashier then gives the
remittance advices to the bookkeeper for recording. The cashier deposits the cheques daily,
separate from the daily deposit of cash register receipts. The cashier retains the verified deposit
slips to assist in reconciling the monthly bank statements, but forwards to the bookkeeper a copy
of the daily cash register summary. The cashier does not have access to the journals or ledgers.
The bookkeeper receives the details of transactions from the accounts receivable supervisor and
the cashier for journalising and positing to the general ledger. After recording the remittance
advices received from the cashier, the bookkeeper electronically transmits the remittance
information to the accounts receivable supervisor for subsidiary ledger updating. The bookkeeper
sends monthly statements to contractors with unpaid balances upon receipt of the monthly report
of overdue balances from the accounts receivable supervisor. The bookkeeper authorises the
accounts receivable supervisor to write off accounts as uncollectible when six months have passed
since the initial overdue notice was sent. At this time, the credit manager is notified by the
bookkeeper not to grant additional credit to that contractor.
Required:
Describe five (5) internal control weaknesses in Everyday Supplies’ internal control for the cash
receipts and billing functions (5 marks) and explain why they are weaknesses for two (2) that you
have identified. (2 marks)
(Word Limit: Minimum of 550 words. Maximum of 600 words)
Question 4 (7 marks)
(This question is from the Week 6 Tutorial)
During your review of the audit field work completed by a new junior employee of the audit firm,
John Smith, you have noted many areas which require additional review notes. John, who has just
completed the interim audit of Taxon Ltd for the year ended 30 June 2019, has just performed
testing of controls. When testing controls over payments made to related parties, there should be
evidence of approval and sign-off by the chief financial officer (CFO). John selected a sample of
payments made to related parties and vouched them back to the electronic funds transfer (EFT)
forms to sight the CFO’s signature of approval. Based on a sample of ten payments, six had been
approved by the CFO in writing. However, the remaining four EFT forms (for immaterial amounts)
did not have the CFO’s signature, but John noted that the CFO had given verbal approval. John
concluded that because all internal controls were working, the audit team could use analytical
procedures alone to audit payments made to related parties.
Required:
Based on the results of the testing of controls outlined above, determine whether John has arrived
at the appropriate conclusion? (1 mark)
Justify your answer by addressing the following areas: the risks associated with related party
transactions, and the reliability of controls at Taxon Ltd. (6 marks)
(Word Limit: Minimum of 150 words. Maximum of 600 words)
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Question 5 (11 marks)
(This question is from the Week 7 Tutorial)
Magi Chen is the managing director of Sun Construction Pty Ltd, a family owned business that
provides construction services. As Magi is interested in purchasing some new construction
equipment’s for her business, she has approached her local bank for finance. The bank has asked
that Magi provide an audited financial statement to assist them in considering her loan application.
Magi has approached your audit firm for this service and you have been allocated the task of
auditing Sun Construction for the year ended 30 June 2019. You have undertaken a preliminary
review of the business and determined that a substantive testing approach would be suitable and
appropriate. You are currently preparing an audit program for the revenue cycle. The following
information has been obtained from your review:
• Magi usually works 120 hours a fortnight. Part of this time is spent travelling between different
clients and is not charged to the clients. The remaining time is charged at $60 per hour, regardless
of the task undertaken.
• Customers typically pay Magi in cash for the work undertaken, except for a small number of
regular small-business customers. Magi allows these customers to pay on account by bank transfer
on a monthly basis.
• Magi supplies each cash customer with a written receipt, prepared manually from a receipt book
purchased at the local news-agency. The book contains pre-numbered blank receipts, which are
completed in duplicate.
Required:
For each of the assertions of occurrence, completeness and accuracy, identify a procedure(s) you
could use to audit Sun Construction’s revenue. (11 marks)
(Word Limit: Minimum of 150 words. Maximum of 200 words)
Question 6 (11 marks)
(This question is from the Week 11 Tutorial)
Several firms have internal audit function to govern their business operations. The head of internal
audit department of one of your clients has invited you to give a talk to the members of his
department during their annual training week. He would like your views on the different roles of
external and internal auditors, the type of work that each carry out and their reporting
responsibilities.
Required:
Draft notes that you will use when giving your talk, paying particular attention to the differences
and similarities of the following features of internal and external auditors:

(i)
(ii)
(iii)
independence; (3 marks)
the work carried out on systems of internal control and operations; (4 marks)
reporting responsibilities. (4 marks)

(Word Limit: Minimum of 550 words. Maximum of 600 words)
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Submission Directions
The assignment will be submitted via Blackboard. Each student will be permitted only ONE
submission to Blackboard. You need to ensure that the document submitted is the correct
one.
Academic Integrity
Holmes Institute is committed to ensuring and upholding Academic Integrity, as Academic
Integrity is integral to maintaining academic quality and the reputation of Holmes’ graduates.
Accordingly, all assessment tasks need to comply with academic integrity guidelines. Table 1
identifies the six categories of Academic Integrity breaches. If you have any questions about
Academic Integrity issues related to your assessment tasks, please consult your lecturer or
tutor for relevant referencing guidelines and support resources. Many of these resources can
also be found through the Study Skills link on Blackboard.
Academic Integrity breaches are a serious offence punishable by penalties that may range
from deduction of marks, failure of the assessment task or unit involved, suspension of
course enrolment, or cancellation of course enrolment.
Table 1: Six Categories of Academic Integrity breaches

Plagiarism Reproducing the work of someone else without attribution.
When a student submits their own work on multiple
occasions this is known as self-plagiarism.
Collusion Working with one or more other individuals to complete an
assignment, in a way that is not authorised.
Copying Reproducing and submitting the work of another student,
with or without their knowledge. If a student fails to take
reasonable precautions to prevent their own original work
from being copied, this may also be considered an offence.
Impersonation Falsely presenting oneself, or engaging someone else to
present as oneself, in an in-person examination.
Contract cheating Contracting a third party to complete an assessment task,
generally in exchange for money or other manner of
payment.
Data fabrication and
falsification
Manipulating or inventing data with the intent of supporting
false conclusions, including manipulating images.

Source: INQAAHE, 2020
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If any words or ideas used the assignment submission do not represent your original words
or ideas, you must cite all relevant sources and make clear the extent to which such sources
were used.
In addition, written assignments that are similar or identical to those of another student is
also a violation of the Holmes Institute’s Academic Conduct and Integrity policy. The
consequence for a violation of this policy can incur a range of penalties varying from a 50%
penalty through suspension of enrolment. The penalty would be dependent on the extent
of academic misconduct and your history of academic misconduct issues.
All assessments will be automatically submitted to Safe-Assign to assess their originality.
Further Information:
For further information and additional learning resources please refer to your Discussion
Board for the unit.

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