Understand The Internal Control System - Impacts on Audit Plan - Auditing Assessment Answer

Internal Code: 1AGFDG

Auditing Assessment Answer

TASK: You are required to complete the following Three (3) questions: Q1. Understand the internal control system; identify internal control weaknesses, suggest ways to strengthen internal controls, and plan the audit accordingly. Q2. Use analytical procedures to assess audit risk and its impacts on audit plan, analyze audit evidence and develop substantive tests for accounts at risk Q.3. Understand and analyze the audit opinion issued ? Your assignment should be completed in a group of maximum 4 students. It is recommended but not compulsory to form a group within your enrolled tutorial. Question 1 You are part of the audit team assigned to Excellent furniture. Excellent furniture is a distributor of imported furniture and supplies furniture to retail stores. You are assigned the task of reviewing and evaluating the internal controls over the billings and remittances transaction cycles. You have been provided with the following narrative relating to the internal control system over this area. Sales recording, maintenance of accounts receivable and collection procedures are shared between the accounts receivable clerk, a cashier /secretary and the telephone secretary. Question 2 You are the auditor of Amanda Ltd, a company involved in the assembly, distribution and servicing of television. Amanda Ltd is a wholly-owned subsidiary of a publicly listed company in the UK and has been operational in Australia for seven years. Although Amanda Ltd has been profitable for the last three years and the growth in the company’s revenues has been substantial, liquidity has been a major problem. This has been countered by the non-payment of intercompany debt of $2,000 million to the parent entity which is the major supplier of the components used in the mobile phones. Due to the rapid growth of Amanda Ltd, there has been a great deal of pressure put upon the company’s staff and IT systems. Temporary staffs are often used in the accounting department to ensure that the day-to-day processing is kept-up-to-date whilst full-time employees work on special projects required to ensure the accounting systems are keeping up with the growth in the business. The turnover of staff has been very high in the accounting department in the last two years due to the pressure and long working hours associated with a rapidly expanding business. At present there are eight full-time employees working in the accounting department, with the financial controller and management accountant being the only two who have been in the company for longer than two years. Question 3 Please refer to the annual report of Tikforce Limited 2017. Comment on the type of audit opinion with reference to the Australian Accounting Standards and Australian Assurance and Auditing Standards.

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