ACC300 : Auditing And Assurance AfterPay Limited - Accounting and Finance Assignment Help

Assignment Task:

Task:

Question 1: Answer both a) and b). [20 marks]
a) You have just been appointed as Auditor of AfterPay Limited. A copy of the Consolidated Statement of Comprehensive Income and Consolidated Statement of Financial Position for the period 30 June 2020 is attached at the end of this Exam paper.
Prior to commencing the audit, you need to undertake a review of the company to assess the inherent risks of a material misstatement in the financial reports.

Required
Set out and describe the inherent risks of a material misstatement in the financial reports of AfterPay Limited and describe the steps you would take to determine these inherent risks. [15 marks]

Include in your answer any calculations supporting your analysis of the inherent risks.

Required
b) Explain the characteristics of a satisfactory system of internal control. [5 marks]

Question 2 - Answer both a) and b). (20 Marks)

a) Describe how are tests of controls are related to the evaluation of control risk? [10 marks]

b) You are the Audit manager on the audit of the University of Eastern Sydney (UES). UES’s accounting IT system for accounts payable includes supplier information which is contained in a supplier master file (SMF). Each supplier has a unique supplier code. You have discussed the purchasing system with UES’s purchasing clerk who has advised that the internal control to prevent unauthorised transactions is that when attempts are made to place an order from a supplier not in the SMF, the order cannot be processed, unless the supplier has been approved by the Purchasing Manager.
One of the audit team has advised you, that while they were reviewing the processing of purchase orders, they observed the purchasing clerk accessing to the Purchasing Manager’s password, which allows the clerk to allocate a supplier code to new suppliers.
Required
Explain what type of control the above information describes. Discuss its strengths and weaknesses. [10 marks]

Question 3. – Answer both a) and b). (20 Marks)
a) You are the manager of the audit of a large electrical goods retailer. The single largest asset of this retailer is inventory.
Explain the purpose of substantive testing for inventory and describe the substantive procedures you will carry out at year end in order to obtain sufficient audit evidence regarding the assertions of valuation and existence and give examples of the main types of substantive tests. [13 marks]
b) Explain what is meant by statistical sampling and what is its purpose. [7 marks]

Question 4. [20 Marks]
You are the audit manager on the audit of WorkWe Limited for the year ended 30 June 2020. WorkWe is an Australian listed company that provides work spaces, desks, conference rooms and facilities for small businesses for different time periods from monthly, quarterly, and annually. WorkWe has locations in Sydney, Melbourne and Brisbane.
On 15 July, 2020, due to outbreaks of COVID 19 in Sydney, Melbourne and Brisbane, the business underwent a lockdown and as a result, no one was allowed to enter and use WorkWe’s premises and facilities. No date has been set for an end to this lockdown.

Required
a) Explain how this event and the subsequent lockdown would impact the going concern assumption for WorkWe Limited. [10 marks]

b) Explain the impact of this event (the lockdown) would have on the Audit Report. [10 marks]

Question 5. Reporting – Answer both parts a) and b). [20 Marks]
a) Under what circumstances would a disclaimer of opinion be issued by an auditor. [10 marks]

b) You have completed the audit of MyJones Ltd, a large retailer, with a number of department stores as well as an online store, for the year ended 30 June 2020. You experienced a number of difficulties during the audit, including significant disagreements over the valuation of inventory. The audit partner had suggested that the inventory value was overstated by $25 million, a figure which was twice the level of materiality set for the audit.

As a result of discussions with the audit committee, the CEO has agreed to revise the valuations downward by $10 million. All other issues were resolved to the satisfaction of the audit partner. The audit partner is now considering the effect of this misstatement on the auditor’s report.

Required
Explain the effect of the misstatement on the auditor’s report for MyJones Limited for the year ended 30 June 2020. [10 marks]

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