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Auditing Assignment Solution (Doc)

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Added on  2020-10-05

Auditing Assignment Solution (Doc)

   Added on 2020-10-05

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AUDITING
Auditing Assignment Solution (Doc)_1
Table of ContentsINTRODUCTION...........................................................................................................................1QUESTION 1...................................................................................................................................1a) Key assertion at risk in relation to property land and equipment...........................................1b) Substantive audit procedure in response to risk identified.....................................................2c) Requirement of ASA 701 Communicating Key Audit Matters in the Auditor’s Report.......3QUESTION 2...................................................................................................................................5a) Key assertion at risk in relation to property land and equipment...........................................5b) Substantive audit procedure in response to risk identified.....................................................5c) Requirement of ASA 701 Communicating Key Audit Matters in the Auditor’s Report.......6CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8
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INTRODUCTIONAuditing is a process of evaluating the financial records of the organisation to assess theauthenticity of records. This process is performed by auditors to evaluate the financial records ifthese records are maintained as per Accepted Accounting standards, provisions and accuratelegislations (Barrett, 2012). This report discuss the legal and professional issues appointing inindependent auditors report. Duties and responsibilities of independent auditor, current auditingstandards and the major concepts are illustrated in practical based scenario. There are key auditmatter and treatments regarding the material misstatement and identified risk also addressed inthis report.QUESTION 1ASA 501 – Audit evidence - Specific consideration for inventory and segmentinformation contains the rules related to application and other explanatory matters subject tospecific inventory and segment data in an audit of financial report. This standards mainlycentralised around the following areas such as;a) Procedure to be performed by the auditor while preparing financial report to attain theadequate audit evidence for the existence and state of stock (Carey, Monroe and Shailer, 2014).b) Responsibilities of auditor in terms of appearance of at physical inventory counting.c) Responsibilities of auditor while undertaking the control of third party if it is material to thefinancial reports.d) Requirements to attain adequate presentation and disclosure of section data with the relevantfinancial reporting. a) Key assertion at risk in relation to property land and equipmentAudit assertion: It is considered as a procedure that refers to the assessment of financialstatements according to company's policies, guidelines, financial reporting and internal controls.A declaration upon measurement, presentation and disclosure of financial and non financial dataof business are considered in audit assertion (Carson, Simnett and Wright, 2012). Advanced Computer Solutions is a computer software solution providing company.There is an audit program organised and performed by independent auditors. While assessing therisk of material misstatement and evaluating the proper response to the inventory of company at30th June 2018 following Key assertions come across;1
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1. Assertion in terms of high level of returns owing to suspected software problem that mayresult less returns and high inventory turnover ratio2. Threat of breaching of going concern accounting conceptb) Substantive audit procedure in response to risk identifiedAudit procedureAn Audit procedure is a formation of analysing the quality and standards of financialinformation of organisation provided by the clients (Carey and Tanewski, 2013). Auditors useaudit procedures to clarify and prove their audit assertions. It remain based upon the auditassertions through which auditors analyse that whether the accounting standard are divided inproperly in accounting records or not. Risk 1In first assessed risk, scenario indicates towards the problem of managing the inventorylevels and management in near future. The produced regarding the assessment of identifying therisk of having less returns and high turnover ration and evaluation process regarding the changesin different forms. As the return may lead organisation to entertain hight inventory level that willindirectly increase the inventory level. Physical inventory count audit procedureThe above case is mainly associated with inventory retention and management. Byconsidering this the nature of the scenario is covered in inventory auditing procedure of observethe physical inventory count (Chalmers, Godfrey and Lynch, 2012). This inventory proceduremainly associated with physical verification of inventories that are counted in normal businessflow. Auditors analyse the level of inventory in physical form. All the related documents andassessments are and counted according to proper accounting procedures and rules. It will help toanalyse the inventory account of organisation that fluctuates during a particular time span. As per the above case of Advanced Computer Solutions the auditing standard would becentralised around physical verification of returns owing to suspected software problems.Auditors have to analyse the books of accounts of Advanced Computer Solutions of last financialyear (from 1st July 2017 to 30th June 2018). the physical verification will be done one the basis ofphysical check of inventories retained by company for the current financial year. This will alsoconsidered in key audit matters in independent auditors report.Risk 22
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