Auditing: Concepts and Procedures

Auditing

Table of Contents
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
a. Explanation of meaning of sufficient appropriate audit evidence...........................................1
b. Explanation of whether sufficient appropriate audit evidence has been obtained for each of
the situations................................................................................................................................1
QUESTION 2...................................................................................................................................2
a. Four possible explanations for the results of various ratios for Nova Ltd and explanation of
their implications for the audit.....................................................................................................2
QUESTION 3...................................................................................................................................3
a. Description of internal control weaknesses in Everyday Supplies internal control for cash
receipts and billing functions.......................................................................................................3
b. Reasons for two of the weaknesses why they are weaknesses................................................3
QUESTION 4...................................................................................................................................4
Determination of whether John has arrived at the appropriate conclusion or not.......................4
QUESTION 5...................................................................................................................................4
Description of the procedures that could be used to audit Sun Construction’s revenues............4
QUESTION 6...................................................................................................................................5
Differences and similarities of the following features of internal and external auditors.............5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Auditing could be defined as the process of verification of the financial statements that
are generated during the year. If the businesses will not be able to conduct audit of final accounts
then it may leave negative impact upon mind set of the stakeholders who analyse the financial
position of business for the purpose of making investment, providing credit or supplying goods.
Present report is based upon assessment of different auditing concepts (Groomer and Murthy,
2018). This assignment covers various topics such as explanation of sufficient appropriate audit
evidence, assessment of ratios, definition of internal control weaknesses, risk associates with
related party etc. Apart from this, assertions of occurrence, completeness and accuracy and notes
regarding differences and similarities of independence, reporting responsibilities etc.
QUESTION 1
a. Explanation of meaning of sufficient appropriate audit evidence
Sufficient appropriate audit evidence could be defined as the aspects that are required to
be focused by the auditors for the purpose of writing conclusion and support for the stakeholders.
There are various aspects that are focused while conducting auditing are relevancy, reliability,
accuracy, transparency etc. The auditors evaluate all the elements that are recorded in the
financial statements so that they can analyse that accurate information is recorded in the books in
context of all the receipts, payments, assets, liabilities, incomes and expenses.
b. Explanation of whether sufficient appropriate audit evidence has been obtained for each of the
situations
By analysing the two different situations it has been analysed that in the first situation
appropriate audit evidences are not been obtained. All the perceptual documents were not
provided by the entity in the case. On the other hand, in the second scenario t has been analysed
that appropriate and sufficient audit evidences were there (Minnis and Shroff, 2017). While
conducting the physical examination it was analysed by the auditor that the lucent has found five
variations between the perceptual records and the real amount which was involved were around
50000 dollars. Apart from this, it was deemed immaterial.
1