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Assignment - Auditing Theory and Practices

   

Added on  2019-10-30

14 Pages2912 Words162 Views
Running head: AUDITING THEORY AND PRACTICEAuditing Theory and PracticeUniversity NameStudent NameAuthors’ Note

2AUDITING THEORY AND PRACTICETable of ContentsAnswer to Question 1A:.............................................................................................................3Answer to Question 1B:.............................................................................................................6Answer to Question 2A:.............................................................................................................8Answer to Question 2B:...........................................................................................................11References................................................................................................................................13

3AUDITING THEORY AND PRACTICEAnswer to Question 1A:Evaluation of different heads of accountingAccounts Receivable-Accounts receivable refers to the entire amount that the company is expected toreceive pertaining to the delivery of specific products as well as services. Beasley(2015) opines that the accounts receivable is enumerated by analysing the credit saleswith the mean receivable time. Thus, the account related to the account receivable isthe account of credit sales (Beasley, 2015).-Evaluation: based on the case study it can be mentioned that all the actions related toreceivables are undertaken by the trade receivable official. For example, the consumerreturns the medical instrument, after documenting the reason behind the return as wellas completion of documents, specific credit notes drawn in favour of customer isnecessarily raised by the trade receivable clerk. Furthermore, the journal postingalong with receipts from different debtors are sent to the one who prepares the depositslip of the bank. Thus, in this case risk can be regarded to be high. -Risk of audit: All the actions associated to the receivables are essentially undertakenby the trade receivable official. Essentially, there subsists a risk that the receivablemight possibly be misappropriated by this official else wise lesser amount ofreceivable might be recorded (DeFond & Zhang, 2014).-Audit steps that can diminish the risk- In a bid to reduce the risk related to accountsreceivable of GPSA, different actions connected to the receivables need to beseparated out among different members of the staff. Investment

4AUDITING THEORY AND PRACTICE-Account- In essence, it is particularly the investment that can be converted to cash withinthe period of 3 months to nearly 12 months. As such, it is registered under the currentassets and are considered as cash or else equivalents of cash. () asserts that accountslinked to this is referred to as the investment account. -Evaluation- As such, investments are basically susceptible to diverse system ofaccounting and the treatment might also be different. Therefore, the risk related to thecurrent investment can be ascertained to be medium level (Jia, 2016). -Risk of audit- Fundamentally, the inherent assessment risk that might possibly be relatedto the current investment include investment done without taking into considerationdifferent risk as well as return factors.-Audit steps for diminishing risk- The return earned from the investment need to beexamined regularly. Additionally, the precedent growth trends observed in investmentneed to be analysed before undertaking investment by firm (Jia, 2016). Property assets/resources-Accounts: The accounts associated to property resources are essentially the account offixed assets as well as the depreciation amount (Jia, 2016).-Evaluation- In case if the property resources are not registered appropriately or else if thedepreciation is not mentioned appropriately, the this can exert huge influence on thefinancial assertions. Thus, the risk associated with property resources can be regarded tobe high. -Risk of audit- The assessor might possibly not differentiate the resources that wereutilized for over 180 days and for less than specifically 180 days during the particularyear if the resources were not recorded appropriately (Jia, 2016).

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