Audit Assurance and Compliance

This solved assignment addresses questions related to audit assurance and compliance. Question 1 focuses on the need for an expert in conducting an error-free audit for company DIPL, highlighting the importance of considering inherent and control risks in proper audit planning. Question 2 delves into factors to consider when auditing financial information, including print-on-demand costs, stock depreciation, loan interest, electronic sales receipts, and buyer credit limits. The solution emphasizes how analyzing these factors helps determine the overall materiality figure and provides insights into the company's financial health. The assignment utilizes references from Accorsi, Sato, and Kai (2008), Whittington and Pany (2010), and Woodroof and Searcy (2001) to support its analysis.

AUDIT ASSURANCE AND COMPLIANCE

Table of contents
Question 1:.................................................................................................................................3
Question 2:.................................................................................................................................3
Reference list..............................................................................................................................4

Question 1:
In case of the company DIPL, an expert is needed to conduct an error free audit which would
help in proper planning. The audit expert would be able to consider various audit risks and
conduct the audit properly. Risks like inherent risks and the control risks can be looked at and
then error free audit can be conducted which is very necessary for planning (Woodroof &
Searcy, 2001, p.169).
Question 2:
a. While conducting the process of audit the auditors would have to consider certain
factors based on the financial information. Factors such as the print on demand,
depreciation of stocks, amount of loans and interests, electronic sale receipts and the
credit limits of the buyers should be considered while making an assessment of the
overall materiality figure (Whittington & Pany, 2010).
b. Print on demand is necessary to find out the cost of books per order because sales are
increasing and cost of sales is decreasing. Secondly the depreciation of stock is
necessary to find out the actual value of stock. In the statement of position there is no
obsolescing for stock (Accorsi, Sato MSc & Kai MSc, 2008, p.375). The interests on
loans is increasing in the income statement but decreasing in the statement of
financial position. The bad debts and sales are increasing so it is essential to
determine the amounts actually received from electronic sale. Value of debtors and
bad debts are increasing so the credit limits of the buyers are important.
c. Print on demand will help to determine the actual production cost of producing
various orders. The depreciation of stock would help to determine a proper material
value of the previous year’s stock. The value of interest will help to get a proper
material value of the loan and determine the solvency. The amount of money receipts
from eBooks would help to get a material value of actual sale and eBook sale and the
cost and the profit (Whittington & Pany, 2010). The credit limit of the debtors would
help to find the proper value solvency of the debtor and sale.

Reference list
Accorsi, R., Sato MSc, Y., & Kai MSc, S. (2008). Compliance-monitor zur frühwarnung vor
risiken. Wirtschaftsinformatik, 50(5), 375-382.
Whittington, R. & Pany, K., (2010). Principles of auditing and other assurance services.
Woodroof, J., & Searcy, D. (2001). Continuous audit: model development and
implementation within a debt covenant compliance domain. International Journal of
Accounting Information Systems, 2(3), 169-191.