Accounting for Management

Running head: AUDIT AND ASSURANCE
Audit and Assurance
Name of the Student
Name of the University
Author Note

AUDIT AND ASSURANCE1
Table of Contents
Answer to case 1........................................................................................................................2
Answer to case 2........................................................................................................................2
Answer to case 3........................................................................................................................3
Answer to case 4........................................................................................................................4
Reference....................................................................................................................................5

AUDIT AND ASSURANCE2
Answer to case 1
In the case of Beast Ltd which is in the business of wholesaling of the goods, there
should be issue of qualified audit report by the auditor. The auditor will issue such type of
audit report since there are material misstatements in the report but they are not pervasive.
The inventory recorded by Breast Ltd has been done by using the Last-in-first-out method
thus doing breach of the standard AASB102. The accounting standard AASB102 is applied to
the inventory accounting system (Aasb.gov.au 2020). Paragraph 25 of this accounting
standard has been used which states that the inventory cost except that of the items stated in
paragraph number 23 will be calculated with either FIFO ( first-in-first-out) method or
weighted average cost method. It also states that this costing method will be used by every
entity having inventories with similar use and nature. If the inventories do not have similar
use and nature, other type of cost method will be applied. Since Beast Ltd is using LIFO (last
in first out) it leads to the breach or violation of the accounting standard stated above. Since
there is material misstatement which is taken into account so it leads to disagreement with the
management. In case of the time period in which the cost rises significantly, LIFO (Last-in-
first-out) method will have an impact on balance sheet by stating less inventory cost and also
impact the income statement by stating higher COGS ( cost of goods sold) as compared with
the FIFO (First-in-first-out) system (Bragg and Bragg 2018)
Answer to case 2
Unqualified audit report has to be issued by the auditor in the case of Second Bite
Foundation which is non-reporting organisation along with being non-for-profit entity. This
type of audit report is being issued since the auditor is well satisfied that the income recorded
by the organisation is accounted for in an accurate manner in the audit report. There is
unqualified opinion which has been obtained from the auditor and presented in the report as it