Auditing and Assurance Name of the University Author's Name

Running head: AUDITING AND ASSURANCE
Auditing and Assurance
Name of the Student
Name of the University
Author’s note

AUDITING AND ASSURANCE1
Table of Contents
Memorandum.............................................................................................................................1
Introduction................................................................................................................................1
Discussion..................................................................................................................................1
Business risk impact and the accounts most likely affected by the fraud at Pellegrino Shores.1
Additional audit work to be undertaken in relation to the switchover of the new patient
revenue system at St Neville......................................................................................................2
Associated audit risks.................................................................................................................2
Two key questions to ask the internal audit...............................................................................3
Justification for the audit strategy to be adopted for the audit of patient revenue at St.
Neville’s.....................................................................................................................................4
Key account balances and associated risk assertions to Acuity Vision’s arrangements for
paying its sales team...................................................................................................................5
Effectiveness of the customer payments testing........................................................................6
Key assertion at risk in relation to the payment of overtimes at Pellegrino Shores...................7
Conclusion..................................................................................................................................7
References..................................................................................................................................8

AUDITING AND ASSURANCE2
Memorandum
To: Audit Senior of Dudley Health Limited assignment
From: Audit Manager at Samway Baker Fitzgerald
Date: 03 August 2019
Subject: Advise on Audit Functions
Introduction
The primary objective of this memorandum is to bring about to the notice of the audit
senior of the assignment of Dudley Health Limited regarding the financial material
misstatements that have taken place in the company. The important incidents highlighted in
the memorandum are related to the three different fraud cases at Pellegrino Shores, St.
Neville and at Acuity Vison. The different risks that are posed to the auditors are highlighted
for all the cases and the way the auditors are going to control the situation are also evaluated.
Suitable recommendations are provided to the auditors regarding the implementation of an
effective audit strategy for handling the different cases.
Discussion
Business risk impact and the accounts most likely affected by the fraud at Pellegrino
Shores
The fraud at Pellegrino Shores took place due to a kind of misconduct by a senior
staff member of the company. It was reported that the senior staff was working with the
residents for reducing their fees and also received secret payments from them (Asare, Wright
and Zimbelman 2015). The staff was supposed to work on the resident database only for
updating changes in the room location of them. However, the staff took advantage of the

AUDITING AND ASSURANCE3
opportunity to reduce the period of staying of the resident and also the value of the different
services provided to them.
Due to the fraudulent activity of the senior staff the, there would be downfall of the
business of the Pellegrino Shores (Anderson 2014). There would huge losses in the
investments and significant amount of legal costs to be incurred by the organisation. Along
with this, there would be erosion of confidence of the organisation in the capital markets.
The different kinds of audit assertions that are likely to be impacted due to the fraud
case would be assertions related to the disclosure of financial information. This is also related
to the assertions related to the recognition, measurement and the presentation of the financial
information (Fortvingler 2016). In this case, the most significant assertions to be affected
would be accuracy and completeness of the information contained in the financial statements.
Another assertion that will be highly affected is existence assertion. This assertion assumes
that every information recorded in the financial statements actually took place during the year
(Fortvingler 2016). Out of these assertions, accuracy is highlighted in the income statement
of the company, completeness and existence are reflected in the ending balances of accounts
and primarily in the balance sheet. All these assertions are categorised in the financial as well
as in the management assertion of the audit process. These are mostly affected due to the
fraud case of Pellegrino Shores.
Additional audit work to be undertaken in relation to the switchover of the new patient
revenue system at St Neville
Associated audit risks
An audit risk can be defined as the risk occurs due to an inaccurate audit opinion of
the auditor when the financial statements are misstated. Therefore, audit risk generally is a
function of misstatement of financial materials as well as detection risk (Vovchenko et al.