ACC00130 – Auditing: Assessment Task in lieu of scheduled invigilated SE 2022

ACC00130 – Auditing: Assessment Task in lieu of scheduled invigilated SE.
DATE & TIME: 15th April, 2020; 1pm – 5pm (1300 – 1700 hours)
THIS IS AN OPEN BOOK EXAM – it is OK to refer to your prescribed texts: text,
Handbook and Lakeside Company case study & any notes you may have compiled.
Please write your answers on this question document as directed in the
questions.
You are expected to attempt ALL 7 questions, and all parts within each question –
there are no choices within or between questions.
Maximum marks per question are set out below:
Question 1: 15 marks
Question 2: 20 marks
Question 3: 10 marks
Question 4: 15 marks
Question 5: 12 marks
Question 6: 13 marks
Question 7: 15 marks
TOTAL: 100 marks
PLEASE ADD YOUR NAME & STUDENT ID HERE:
For your attempts at the questions, you simply need to type your
answer attempts into this Word document as instructed by each
question.
You do NOT need to create a new document for any of the
questions.
You do NOT need to be concerned about formatting ...
just type your answers and make sure you SAVE the document
regularly.
You need to email your completed attempt by 5pm (1700 hours).
BEFORE YOU BEGIN: please make sure you email me to acknowledge receipt of
this paper.
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QUESTIONS BEGIN ON THE NEXT PAGE.
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Question 1. – Responsibility, Quality Control, Ethics & applicable
professional requirements. (15 marks)
Please type your answer in the tables or as instructed below for
each part
(a) Indicate whether each of the following activities are the responsibility
of those charged with governance or of the auditor (consider “those
charged with governance” to include directors, senior executives &
management).
(5 marks)
1. Obtain external confirmations from banks and
debtors (accounts receivable).
Auditor
2. Designing internal control procedures
suitable for the preparation of the financial
reports.
Those Charged with
governance
3. Verify financial statements are presented in
accordance with applicable accounting
standards.
Auditor
4. Prepare and distribute the audited financial
report to shareholders.
Those charged with
governance
5. Selecting & applying appropriate accounting
policies that ensure the financial report presents
a true and fair view.
Those Charged with
Governance
(b) APES 110 presents examples of potential types of threats to members
in public practice being able to comply with fundamental ethical
principles. Indicate in the right hand column which type of threat is
illustrated by each example.
NOTE: A type of threat may be applicable to more than one example.
(5 marks)
1. Our largest client, also our fastest growing
audit client, has not paid their fees for the last
two years.
Self-Interest Threat
2. Our audit engagement partner has agreed to
decide on a new computer system for one of
Advocacy Threat
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our clients.
3. An audit client has raised the potential of
commencing legal action for negligence by our
audit firm if we do not agree with specific
accounting policy interpretations.
(Table continued next page)
Intimidation Threat
4. The Chief Financial Officer (CFO) of a client
threatens to change auditors unless our firm
reduces the extent of the work performed to
reduce the audit fee.
Intimidation Threat
5. Our audit engagement manager has
commenced discussions about potential
employment with an audit client company as a
director.
Advocacy Threat
(c) Wang Ying is the audit partner in the small, four partner CPA firm you
work with. A potential new client comes into the firm and says she needs
a financial report audit done immediately and is willing to pay the agreed
fee up front. The potential new client operates a small business. Wang
accepts the audit without hesitation or delay.
You are aware all audit staff are currently engaged working with existing
clients. The need to complete the new engagement immediately requires
Wang to draw a recent graduate from the accounting services division to
do the audit work. The recent graduate has no previous audit experience
and receives a two hour briefing on basic auditing tasks before being sent
out to the new client. The recent graduate is also provided with the audit
program for another small client as the basis for the engagement. She is
instructed to complete the required work papers documenting the work
completed and return them to Wang.
(5 marks)
Required:
Briefly explain which facts above indicate a potential breach of
each of the following quality control guidelines set out in ASA220:
1. Client Evaluation (1 mark)
Accepting the audit without any hesitation or delay is an indicator of the
lack of proper client evaluation on the part of the auditor.
2. Assignment of personnel to engagements (1 mark)
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