Chan and Chow - Accounting Policies and Accounting Standards - Accounting and Finance Assignment Help

Assignment Task:

Week 1 Question (10 mark)
Chan and chow offer their clients a range of professional service including:
a) Providing advice on accounting policies and accounting standards.
b) Auditing annual financial report.
c) Providing assistant to and the board in the strengthening internal controls and corporate
d) Providing assistance with the establishment and training of internal audit firms.
e) Checking compliance with company policies and legislative regulation.
f) Reviewing half yearly financial reported lodged with ASIC.

Required: For each of the five services listed above, determine whether it is an assurance engagement or not and explain your answer.

Week 2 Question
Shelly, Kelly and Mark are the auditors of Mass. SKM’s IT consulting division has undertaken a number of accounts receivable management system implementation projects and is actively looking for opportunities to perform more of this work. As a result, SKM’s IT consulting division is planning to submit a proposal to implement an accounts receivable management system at Mass.

a) Identify and explain the two primary threats of independence for SKM.
b) Outline an appropriate safeguard to address each of the threats identified above.

Week 3 Question
You are the audit senior responsible for the audit of Sampson Limited. You are currently planning the audit for the year ended 31 Dec 2017.During your initial planning meeting held with the financial controller, he told you of the following changes in company’s operations.

i) Due to the financial controller workload, the company has employed a treasurer. The financial controller is excited about the appointment because in the two months that the treasurer has been with the company he has realized a small profit for the company through foreign transaction in Yen.

ii) Samson has planned to close an inefficient factory in country NSW before the end of 2017. It is expected that the redeployment and disposal of the factory’s asset will not be be completed until the end of the following year. However, the financial controller is confident that he will be able to determine reasonably accurate closure provisions.

Detection risk because the factory’s asset was nor completed until the end of the following year but the financial controller was confident to determine reasonably accurate closure provisions which means there might be misstatement while preparing report.

iii) To help achieve the budgeted sales for the year, Samson is about to introduce bonuses for its sale staff. The bonus will be an increasing% of the gross sales made, by each salesperson, above certain monthly targets.
The inherent risk might occur because the bonuses given to staffs may not be recorded or there will be omission of that transaction.

iv) The company is using a new general ledger software package. This financial controller is impressed with the new system because managements accounts are easily produced and allow detail comparisons with budgets and prior-period figures as across product lines and geographical areas. The conversion to the new system occurred with a minimum of fuss. As it is a popular computer package, it required only minor modifications.
Control risk because it is a new system there might be some problem while transferring data from one system to another.

v) As part of the conversion, the position of the systems administration was created. This position is responsible for all system maintenance, including data backups and modification. These talks were the responsibility of the accountant.

vi) The managing director has returned from the USA, where he signed a contract to import a line of clothing that has become the latest fad in the USA. The company has not been previously engaged in the clothing industry.
Control Risk as manager is not familiar with clothing industry, it would be hard to control the entity and financial statement as well.

Required:
For each of the five scenarios above, explain how the components of audit risk (inherent, control and detection) risk are affected.

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