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（ii) Audit work on after-date bank transactions identified a transfer of cash from Batik C

(ii) Audit work on after-date bank transactions identified a transfer of cash from Batik Co. The audit senior has

documented that the finance director explained that Batik commenced trading on 7 October 2005, after

being set up as a wholly-owned foreign subsidiary of Jinack. No other evidence has been obtained.

(4 marks)

Required:

Identify and comment on the implications of the above matters for the auditor’s report on the financial

statements of Jinack Co for the year ended 30 September 2005 and, where appropriate, the year ending

30 September 2006.

NOTE: The mark allocation is shown against each of the matters.

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发布时间：2021-04-17

更多“（ii) Audit work on after-date bank transactions identified a transfer of cash from Batik C”相关的问题

第1题

Jackdaw Motor Cars Co （Jackdaw) manufactures a range of motor cars and its year end is 31

Jackdaw Motor Cars Co (Jackdaw) manufactures a range of motor cars and its year end is 31 January 2015. You are the audit supervisor of Puffin & Co and are currently preparing the audit programmes for the year-end audit of Jackdaw. You have had a meeting with your audit manager and he has notified you of a number of issues identified during the audit risk assessment process.

Land and buildings

Jackdaw have a policy of revaluing land and buildings, this is undertaken on a rolling basis over a five-year period. During the year Jackdaw requested an external valuer to revalue a number of properties, including a warehouse purchased in May 2014. Depreciation is charged on a pro rata basis.

Work in progress

Jackdaw undertakes continuous production of cars, 24 hours a day, seven days a week. An inventory count is to be undertaken at the year end and Puffin & Co will attend. You are responsible for the audit of work in progress (WIP) and will be part of the team attending the count as well as the final audit. WIP constitutes the partly assembled cars at the year end and this balance is likely to be material. Jackdaw values WIP according to percentage of completion, and standard costs are then applied to these percentages.

Required:

(a) Explain the factors Puffin & Co should consider when placing reliance on the work of the independent valuer. (5 marks)

(b) Describe the substantive procedures the auditor should perform. to obtain sufficient and appropriate audit evidence in relation to:

(i) The revaluation of land and buildings and the recently purchased warehouse; and (6 marks)

(ii) The valuation of work in progress. (4 marks)

(c) During the audit, your team has identified an error in the valuation of work in progress, as a number of the assumptions contain out of date information. The directors of Jackdaw have indicated that they do not wish to amend the financial statements.

Required:

Explain the steps Puffin & Co should now take and the impact on the audit report in relation to the directors’ refusal to amend the financial statements. (5 marks)

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第2题

（a) State the FIVE threats contained within ACCA’s Code of Ethics and Conduct and for each

(a) State the FIVE threats contained within ACCA’s Code of Ethics and Conduct and for each threat list ONE example of a circumstance that may create the threat. (5 marks)

(b) You are the audit manager of Jones & Co and you are planning the audit of LV Fones Co, which has been an audit client for four years and specialises in manufacturing luxury mobile phones.

During the planning stage of the audit you have obtained the following information. The employees of LV Fones Co are entitled to purchase mobile phones at a discount of 10%. The audit team has in previous years been offered the same level of staff discount.

During the year the fi nancial controller of LV Fones was ill and hence unable to work. The company had no spare staff able to fulfi l the role and hence a qualifi ed audit senior of Jones & Co was seconded to the client for three months. The audit partner has recommended that the audit senior work on the audit as he has good knowledge of the client. The fee income derived from LV Fones was boosted by this engagement and along with the audit and tax fee, now accounts for 16% of the fi rm’s total fees.

From a review of the correspondence fi les you note that the partner and the fi nance director have known each other socially for many years and in fact went on holiday together last summer with their families. As a result of this friendship the partner has not yet spoken to the client about the fee for last year’s audit, 20% of which is still outstanding.

Required:

(i) Explain the ethical threats which may affect the independence of Jones & Co’s audit of LV Fones Co; and (5 marks)

(ii) For each threat explain how it might be avoided. (5 marks)

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第3题

（a) Explain FOUR factors which influence the reliability of audit evidence. （4 marks)Andro

(a) Explain FOUR factors which influence the reliability of audit evidence. (4 marks)

Andromeda Industries Co (Andromeda) develops and manufactures a wide range of fast moving consumer goods. The company’s year end is 31 December 2015 and the forecast profit before tax is $8·3 million. You are the audit manager of Neptune & Co and the year-end audit is due to commence in January. The following information has been gathered during the planning process:

Inventory count

Andromeda’s raw materials and finished goods inventory are stored in 12 warehouses across the country. Each of these warehouses is expected to contain material levels of inventory at the year end. It is expected that there will be no significant work in progress held at any of the sites. Each count will be supervised by a member of Andromeda’s internal audit department and the counts will all take place on 31 December, when all movements of goods in and out of the warehouses will cease.

Research and development

Andromeda spends over $2 million annually on developing new product lines. This year it incurred expenditure on five projects, all of which are at different stages of development. Once they meet the recognition criteria under IAS 38 Intangible Assets for development expenditure, Andromeda includes the costs incurred within intangible assets. Once production commences, the intangible assets are amortised on a straight line basis over five years.

Required:

(b) Describe audit procedures you would perform. during the audit of Andromeda Industries Co:

(i) BEFORE and DURING the inventory counts; and (8 marks)

(ii) In relation to research and development expenditure. (4 marks)

(c) During the audit, the team discovers that one of the five development projects, valued at $980,000 and included within intangible assets, does not meet the criteria for capitalisation. The finance director does not intend to change the accounting treatment adopted as she considers this an immaterial amount.

Required:

Discuss the issue and describe the impact on the audit report, if any, if the issue remains unresolved. (4 marks)

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第4题

（b) Describe the principal audit work to be performed in respect of the useful lives of Sh

(b) Describe the principal audit work to be performed in respect of the useful lives of Shire Oil Co’s rig platforms.

(6 marks)

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第5题

One of your audit clients is Tye Co a company providing petrol, aviation fuel and similar

oil based products to the government of the country it is based in. Although the company is not listed on any stock exchange, it does follow best practice regarding corporate governance regulations. The audit work for this year is complete, apart from the matter referred to below.

As part of Tye Co’s service contract with the government, it is required to hold an emergency inventory reserve of 6,000 barrels of aviation fuel. The inventory is to be used if the supply of aviation fuel is interrupted due to unforeseen events such as natural disaster or terrorist activity.

This fuel has in the past been valued at its cost price of $15 a barrel. The current value of aviation fuel is $120 a barrel. Although the audit work is complete, as noted above, the directors of Tye Co have now decided to show the ‘real’ value of this closing inventory in the financial statements by valuing closing inventory of fuel at market value, which does not comply with relevant accounting standards. The draft financial statements of Tye Co currently show a profit of approximately $500,000 with net assets of $170 million.

Required:

(a) List the audit procedures and actions that you should now take in respect of the above matter. (6 marks)

(b) For the purposes of this section assume from part (a) that the directors have agreed to value inventory at

$15/barrel.

Having investigated the matter in part (a) above, the directors present you with an amended set of financial

statements showing the emergency reserve stated not at 6,000 barrels, but reported as 60,000 barrels. The final financial statements now show a profit following the inclusion of another 54,000 barrels of oil in inventory. When queried about the change from 6,000 to 60,000 barrels of inventory, the finance director stated that this change was made to meet expected amendments to emergency reserve requirements to be published in about six months time. The inventory will be purchased this year, and no liability will be shown in the financial statements for this future purchase. The finance director also pointed out that part of Tye Co’s contract with the government requires Tye Co to disclose an annual profit and that a review of bank loans is due in three months. Finally the finance director stated that if your audit firm qualifies the financial statements in respect of the increase in inventory, they will not be recommended for re-appointment at the annual general meeting. The finance director refuses to amend the financial statements to remove this ‘fictitious’ inventory.

Required:

(i) State the external auditor’s responsibilities regarding the detection of fraud; (4 marks)

(ii) Discuss to which groups the auditors of Tye Co could report the ‘fictitious’ aviation fuel inventory;

(6 marks)

(iii) Discuss the safeguards that the auditors of Tye Co can use in an attempt to overcome the intimidation

threat from the directors of Tye Co. (4 marks)

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第6题

（ii) State the principal audit procedures to be performed on the consolidation schedule of

(ii) State the principal audit procedures to be performed on the consolidation schedule of the Rosie Group.

(4 marks)

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第7题

（ii) Explain the organisational factors that determine the need for internal audit in publ

(ii) Explain the organisational factors that determine the need for internal audit in public listed companies.

(5 marks)

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第8题

（ii) Recommend further audit procedures that should be carried out. （4 marks)

(ii) Recommend further audit procedures that should be carried out. (4 marks)

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第9题

（b) Describe the audit work to be performed in respect of the carrying amount of the follo

(b) Describe the audit work to be performed in respect of the carrying amount of the following items in the

balance sheet of GVF as at 30 September 2005:

(i) goat herd; (4 marks)

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