问答题
Section B – TWO questions ONLY to be attempted<br>(a) You are a manager in Lark & Co, responsible for the audit of Heron Co, an owner-managed business which operates a chain of bars and restaurants. This is your firm’s first year auditing the client and the audit for the year ended 31 March 2012 is underway. The audit senior sends a note for your attention:<br>‘When I was auditing revenue I noticed something strange. Heron Co’s revenue, which is almost entirely cash-based, is recognised at $5·5 million in the draft financial statements. However, the accounting system shows that till receipts for cash paid by customers amount to only $3·5 million. This seemed odd, so I questioned Ava Gull, the financial controller about this. She said that Jack Heron, the company’s owner, deals with cash receipts and posts through journals dealing with cash and revenue. Ava asked Jack the reason for these journals but he refused to give an explanation.<br>‘While auditing cash, I noticed a payment of $2 million made by electronic transfer from the company’s bank account to an overseas financial institution. The bank statement showed that the transfer was authorised by Jack Heron, but no other documentation regarding the transfer was available.<br>‘Alarmed by the size of this transaction, and the lack of evidence to support it, I questioned Jack Heron, asking him about the source of cash receipts and the reason for electronic transfer. He would not give any answers and became quite aggressive.’<br>Required:<br>(i) Discuss the implications of the circumstances described in the audit senior’s note; and (6 marks)<br>(ii) Explain the nature of any reporting that should take place by the audit senior. (3 marks)<br>(b) You are also responsible for the audit of Coot Co, and you are currently reviewing the working papers of the audit for the year ended 28 February 2012. In the working papers dealing with payroll, the audit junior has commented as follows:<br>‘Several new employees have been added to the company’s payroll during the year, with combined payments of $125,000 being made to them. There does not appear to be any authorisation for these additions. When I questioned the payroll supervisor who made the amendments, she said that no authorisation was needed because the new employees are only working for the company on a temporary basis. However, when discussing staffing levels with management, it was stated that no new employees have been taken on this year. Other than the tests of controls planned, no other audit work has been performed.’<br>Required:<br>In relation to the audit of Coot Co’s payroll:<br>Explain the meaning of the term ‘professional skepticism’, and recommend any further actions that should be taken by the auditor. (6 marks)
问答题
Section A – BOTH questions are compulsory and MUST be attempted<br>You are a manager in Magpie & Co, responsible for the audit of the CS Group. An extract from the permanent audit file describing the CS Group’s history and operations is shown below:<br>Permanent file (extract)<br>Crow Co was incorporated 100 years ago. It was founded by Joseph Crow, who established a small pottery making tableware such as dishes, plates and cups. The products quickly grew popular, with one range of products becoming highly sought after when it was used at a royal wedding. The company’s products have retained their popularity over the decades, and the Crow brand enjoys a strong identity and good market share.<br>Ten years ago, Crow Co made its first acquisition by purchasing 100% of the share capital of Starling Co. Both companies benefited from the newly formed CS Group, as Starling Co itself had a strong brand name in the pottery market. The CS Group has a history of steady profitability and stable management.<br>Crow Co and Starling Co have a financial year ending 31 July 2012, and your firm has audited both companies for several years.<br>(a) You have received an email from Jo Daw, the audit engagement partner:<br>Attachment: Notes from meeting with Steve Eagle, finance director of the CS Group<br>Acquisition of Canary Co<br>The most significant event for the CS Group this year was the acquisition of Canary Co, which took place on 1 February 2012. Crow Co purchased all of Canary Co’s equity shares for cash consideration of $125 million, and further contingent consideration of $30 million will be paid on the third anniversary of the acquisition, if the Group’s revenue grows by at least 8% per annum. Crow Co engaged an external provider to perform. due diligence on Canary Co, whose report indicated that the fair value of Canary Co’s net assets was estimated to be $110 million at the date of acquisition. Goodwill arising on the acquisition has been calculated as follows:<br>To help finance the acquisition, Crow Co issued loan stock at par on 31 January 2012, raising cash of $100 million. The loan has a five-year term, and will be repaid at a premium of $20 million. 5% interest is payable annually in arrears. It is Group accounting policy to recognise financial liabilities at amortised cost.<br>Canary Co manufactures pottery figurines and ornaments. The company is considered a good strategic fit to the Group, as its products are luxury items like those of Crow Co and Starling Co, and its acquisition will enable the Group to diversify into a different market. Approximately 30% of its sales are made online, and it is hoped that online sales can soon be introduced for the rest of the Group’s products. Canary Co has only ever operated as a single company, so this is the first year that it is part of a group of companies.<br>Financial performance and position<br>The Group has performed well this year, with forecast consolidated revenue for the year to 31 July 2012 of $135 million (2011 – $125 million), and profit before tax of $8·5 million (2011 – $8·4 million). A breakdown of the Group’s forecast revenue and profit is shown below:<br>Note: Canary Co’s results have been included from 1 February 2012 (date of acquisition), and forecast up to 31 July 2012, the CS Group’s financial year end.<br>The forecast consolidated statement of financial position at 31 July 2012 recognises total assets of $550 million.<br>Other matters<br>Starling Co received a grant of $35 million on 1 March 2012 in relation to redevelopment of its main manufacturing site. The government is providing grants to companies for capital expenditure on environmentally friendly assets. Starling Co has spent $25 million of the amount received on solar panels which generate electricity, and intends to spend the remaining $10 million on upgrading its production and packaging lines.<br>On 1 January 2012, a new IT system was introduced to Crow Co and Starling Co, with the aim of improving financial reporting controls and to standardise processes across the two companies. Unfortunately, Starling Co’s finance director left the company last week.<br>Required:<br>Respond to the email from the partner. (31 marks)<br>Note: the split of the mark allocation is shown within the email.<br>(b) Magpie & Co’s ethics partner, Robin Finch, leaves a note on your desk:<br>‘I have just had a conversation with Steve Eagle concerning the CS Group. He would like the audit engagement partner to attend the CS Group’s board meetings on a monthly basis so that our firm can be made aware of any issues relating to the audit as soon as possible. Also, Steve asked if one of our audit managers could be seconded to Starling Co in temporary replacement of its finance director who recently left, and asked for our help in recruiting a permanent replacement. Please provide me with a response to Steve which evaluates the ethical implications of his requests.’<br>Required:<br>Respond to the note from the partner. (6 marks)
问答题
(a) You are the manager responsible for the audit of Yew Co, a company which designs and develops aircraft engines. The audit for the year ended 31 July 2011 is nearing completion and the audit senior has left the following file note for your attention:<br>‘I have just returned from a meeting with the management of Yew Co, and there is a matter I want to bring to your attention. Yew Co’s statement of financial position recognises an intangible asset of $12·5 million in respect of capitalised research and development costs relating to new aircraft engine designs. However, market research conducted by Yew Co in relation to these new designs indicated that there would be little demand in the near future for such designs. Management has provided written representation that they agree with the results of the market research.<br>Currently, Yew Co has a cash balance of only $125,000 and members of the management team have expressed concerns that the company is finding it difficult to raise additional finance.<br>The new aircraft designs have been discussed in the chairman’s statement which is to be published with the financial statements. The discussion states that ‘developments of new engine designs are underway, and we believe that these new designs will become a significant source of income for Yew Co in the next 12 months.’<br>Yew Co’s draft financial statements include profit before tax of $23 million, and total assets of $210 million.<br>Yew Co is due to publish its annual report next week, so we need to consider the impact of this matter urgently.’<br>Required:<br>Discuss the implications of the audit senior’s file note on the completion of the audit and on the auditor’s report, recommending any further actions that should be taken by the auditor. (12 marks)<br>(b) You are responsible for answering technical queries from other managers and partners of your firm. An audit partner left the following note on your desk this morning:<br>(i) ‘I am about to draft the audit report for my client, Sycamore Co. I am going on holiday tomorrow and want to have the audit report signed and dated before I leave. The only thing outstanding is the written representation from management – I have verbally confirmed the contents with the finance director who agreed to send the representations to the audit manager within the next few days. I presume this is acceptable？’ (3 marks)<br>(ii) ‘We are auditing Sycamore Co for the first time. The prior period financial statements were audited by another firm. We are aware that the auditor’s report on the prior period was qualified due to a material misstatement of trade receivables. We have obtained sufficient appropriate evidence that the matter giving rise to the misstatement has been resolved and I am happy to issue an unmodified opinion. But should I refer to the prior year modification in this year’s auditor’s report？’ (3 marks)<br>Required:<br>Respond to the audit partner’s comments.<br>Note: the split of the mark allocation is shown within the question. (18 marks)
问答题
You are an audit manager in Cedar & Co, responsible for the audit of Chestnut Co, a large company which provides information technology services to business customers. The finance director of Chestnut Co, Jack Privet, contacted you this morning, saying:<br>‘I was alerted yesterday to a fraud being conducted by members of our sales team. It appears that several sales representatives have been claiming reimbursement for fictitious travel and client entertaining expenses and inflating actual expenses incurred. Specifically, it has been alleged that the sales representatives have claimed on expenses for items such as gifts for clients and office supplies which were never actually purchased, claimed for business-class airline tickets but in reality had purchased economy tickets, claimed for non-existent business mileage and used the company credit card to purchase items for personal use.<br>I am very worried about the scale of this fraud, as travel and client entertainment is one of our biggest expenses. All of the alleged fraudsters have been suspended pending an investigation, which I would like your firm to conduct. We will prosecute these employees to attempt to recoup our losses if evidence shows that a fraud has indeed occurred, so your firm would need to provide an expert witness in the event of a court case. Can we meet tomorrow to discuss this potential assignment？’<br>Chestnut Co has a small internal audit department and in previous years the evidence obtained by Cedar & Co as part of the external audit has indicated that the control environment of the company is generally good. The audit opinion on the financial statements for the year ended 31 March 2011 was unmodified.<br>Required:<br>(a) Assess the ethical and professional issues raised by the request for your firm to investigate the alleged fraudulent activity. (6 marks)<br>(b) Explain the matters that should be discussed in the meeting with Jack Privet in respect of planning the investigation into the alleged fraudulent activity. (6 marks)<br>(c) Evaluate the arguments for and against the prohibition of auditors providing non-audit services to audit clients. (6 marks)
问答题
Section B – TWO questions ONLY to be attempted<br>You are a manager in the audit department of Beech & Co, responsible for the audits of Fir Co, Spruce Co and Pine Co. Each company has a financial year ended 31 July 2011, and the audits of all companies are nearing completion. The following issues have arisen in relation to the audit of accounting estimates and fair values:<br>(a) Fir Co<br>Fir Co is a company involved in energy production. It owns several nuclear power stations, which have a remaining estimated useful life of 20 years. Fir Co intends to decommission the power stations at the end of their useful life and the statement of financial position at 31 July 2011 recognises a material provision in respect of decommissioning costs of $97 million (2010 – $110 million). A brief note to the financial statements discloses the opening and closing value of the provision but no other information is provided.<br>Required: Comment on the matters that should be considered, and explain the audit evidence you should expect to find in your file review in respect of the decommissioning provision. (8 marks)<br>(b) Spruce Co<br>Spruce Co is also involved in energy production. It has a trading division which manages a portfolio of complex financial instruments such as derivatives. The portfolio is material to the financial statements. Due to the specialist nature of these financial instruments, an auditor’s expert was engaged to assist in obtaining sufficient appropriate audit evidence relating to the fair value of the financial instruments. The objectivity, capabilities and competence of the expert were confirmed prior to their engagement.<br>Required:<br>Explain the procedures that should be performed in evaluating the adequacy of the auditor’s expert’s work. (5 marks)<br>(c) Pine Co<br>Pine Co operates a warehousing and distribution service, and owns 120 properties. During the year ended 31 July 2011, management changed its estimate of the useful life of all properties, extending the life on average by 10 years. The financial statements contain a retrospective adjustment, which increases opening non-current assets and equity by a material amount. Information in respect of the change in estimate has not been disclosed in the notes to the financial statements.<br>Required:<br>Identify and explain the potential implications for the auditor’s report of the accounting treatment of the change in accounting estimates. (5 marks)
问答题
Willow Co is a print supplier to businesses, printing catalogues, leaflets, training manuals and stationery to order. It specialises in using 100% recycled paper in its printing, a fact which is promoted heavily in its advertising.<br>You are a senior audit manager in Bark & Co, and you have just been placed in charge of the audit of Willow Co. The audit for the year ended 31 August 2011 is nearing completion, and the audit engagement partner, Jasmine Berry, has sent you an email:<br>Summary of issues for manager’s attention, prepared by audit senior<br>Materiality has been determined as follows:<br>$800,000 for assets and liabilities<br>$250,000 for income and expenses<br>Issues related to audit work performed:<br>(i) Audit work on inventory<br>Audit procedures performed at the inventory count indicated that printed inventory items with a value of $130,000 were potentially obsolete. These items were mainly out of date training manuals. The finance director, Cherry Laurel, has not written off this inventory as she argues that the paper on which the items are printed can be recycled and used again in future printing orders. However, the items appear not to be recyclable as they are coated in plastic. The junior who performed the audit work on inventory has requested a written representation from management to confirm that the items can be recycled and no further procedures relevant to these items have been performed.<br>(ii) Audit work on provisions<br>Willow Co is involved in a court case with a competitor, Aspen Co, which alleges that a design used in Willow Co’s printed material copies one of Aspen Co’s designs which are protected under copyright. Our evidence obtained is a verbal confirmation from Willow Co’s lawyers that a claim of $125,000 has been made against Willow Co, which is probable to be paid. Cherry Laurel has not made a provision, arguing that it is immaterial. Cherry refused our request to ask the lawyers to confirm their opinion on the matter in writing, saying it is not worth bothering the lawyers again on such a trivial matter.<br>(iii) Audit work on current assets<br>Willow Co made a loan of $6,000 to Cherry Laurel, the finance director, on 30 June 2011. The amount is recognised as a current asset. The loan carries an interest rate of 4% which we have confirmed to be the market rate for short-term loans and we have concluded that the loan is an arm’s length transaction. Cherry has provided written confirmation that she intends to repay the loan by 31 March 2012. The only other audit work performed was to agree the cash payment to the cash book. Details of the loan made to Cherry have not been separately disclosed in the financial statements.<br>Other issues for your attention:<br>Property revaluations<br>Willow Co currently adopts an accounting policy of recognising properties at cost. During the audit of non-current assets Willow Co’s property manager said that the company is considering a change of accounting policy so that properties would be recognised at fair value from 1 January 2012.<br>Non-current asset register<br>The audit of non-current assets was delayed by a week. We had asked for the non-current asset register reconciliation to be completed by the client prior to commencement of our audit procedures on non-current assets, but it seems that the person responsible for the reconciliation went on holiday having forgotten to prepare the reconciliation. This happened on last year’s audit as well, and the issue was discussed with the audit committee at that time.<br>Procurement procedures<br>We found during our testing of trade payables that an approved supplier list is not maintained, and invoices received are not always matched back to goods received notes. This was mentioned to the procurement manager, who said that suppliers are switched fairly often, depending on which supplier is the cheapest, so it would be difficult to maintain an up-to-date approved supplier list.<br>Financial controller<br>Mia Fern, Willow Co’s financial controller, owns a holiday home overseas. It appears that she offered the audit team free use of the holiday home for three weeks after the audit, as a reward for the team’s hard work. She also bought lunch for the audit team on most days.<br>Required:<br>Respond to the partner’s email. (23 marks)<br>Note: the split of the mark allocation is shown within the email.<br>Professional marks will be awarded for the format and clarity of your answer. (2 marks)
问答题
Section A – BOTH questions are compulsory and MUST be attempted<br>(a) You are a manager in Maple & Co, responsible for the audit of Oak Co, a listed company. Oak Co manufactures electrical appliances such as televisions and radios, which are then sold to retail outlets. You are aware that during the last year, Oak Co lost several customer contracts to overseas competitors. However, a new division has been created to sell its products directly to individual customers via a new website, which was launched on 1 November 2011.<br>You are about to commence planning the audit for the year ending 31 December 2011, and you have received an email from Holly Elm, the audit engagement partner.<br>Financial information provided by Rowan Birch:<br>Statement of comprehensive income (extract from management accounts)<br>Statement of financial position<br>Notes:<br>1. Oak Co established an equity-settled share-based payment plan for its executives on 1 January 2011. 250 executives and senior managers have received 100 share options each, which vest on 31 December 2013 if the executive remains in employment at that date, and if Oak Co’s share price increases by 10% per annum. No expense has been recognised this year as Oak Co’s share price has fallen by 5% in the last six months, and so it is felt that the condition relating to the share price will not be met this year end.<br>2. On 1 July 2011, Oak Co entered into a lease which has been accounted for as a finance lease and capitalised at $5 million. The leased property is used as the head office for Oak Co’s new website development and sales division. The lease term is for five years and the fair value of the property at the inception of the lease was $20 million.<br>3. On 30 June 2011 Oak Co’s properties were revalued by an independent expert.<br>4. A significant amount has been invested in the new website, which is seen as a major strategic development for the company. The website has generated minimal sales since its launch last month, and advertising campaigns are currently being conducted to promote the site.<br>5. The long-term borrowings are due to be repaid in two equal instalments on 30 September 2012 and 2013. Oak Co is in the process of renegotiating the loan, to extend the repayment dates, and to increase the amount of the loan.<br>6. The provision relates to product warranties offered by the company.<br>7. The overdraft limit agreed with Oak Co’s bank is $1·5 million.<br>Required:<br>Respond to the email from the audit partner. (31 marks)<br>Note: the split of the mark allocation is shown within the partner’s email.<br>Professional marks will be awarded for the presentation and clarity of your answer. (2 marks)<br>(b) Maple & Co is suffering from declining revenue, and as a result of this, another audit manager has been asked to consider how to improve the firm’s profitability. In a conversation with you this morning he mentioned the following:<br>‘We really need to make our audits more efficient. I think we should fix materiality at the planning stage at the maximum possible materiality level for all audits, as this would reduce the work we need to do.<br>I also think we can cut the firm’s overheads by reducing our spending on training. We spend a lot on expensive training courses for junior members of the audit team, and on Continuing Professional Development for our qualified members of staff.<br>We could also guarantee our clients that all audits will be completed quicker than last year. Reducing the time spent on each assignment will improve the firm’s efficiency and enable us to take on more audit clients.’<br>Required:<br>Comment on the practice management and quality control issues raised by the audit manager’s suggestions to improve the audit firm’s profitability. (6 marks)
问答题
You are a manager at Chennai & Co, a firm of Chartered Certified Accountants. One of the partners has asked you to investigate and respond to a number of issues which have arisen with two different companies.<br>(a) Delhi Co, a potential new client, is a privately owned and rapidly expanding company which currently operates below the audit threshold in the country in which it is based. The company’s management is currently considering having either a full audit or a limited assurance review of their financial statements. The partner would like you to assist the management of Delhi Co by writing a response to them in which you:<br>(i) Explain the difference between an audit of historical financial statements and a limited assurance review. (4 marks)<br>(ii) Discuss the relative advantages and disadvantages to Delhi Co of having an audit of their historical financial statements as opposed to a limited assurance review. (8 marks)<br>Delhi Co was incorporated in 2005, with founder and chief executive Mr Nimesh Dattani as the sole shareholder. After a period of rapid growth, Delhi Co took out a ten-year bank loan facility in June 2007 to finance Mr Dattani’s ambitious expansion plans. This was supported by a further injection of financial capital in 2014 through a new issue of shares in the company. The shares were sold to Mr Robert Hyland, an ex-business partner of Mr Dattani. The sale gave Mr Hyland a 40% shareholding in Delhi Co. He has no involvement in the management of the company.<br>Until recently Delhi Co operated with a small accounting department, comprising one full-time member of staff and one part-time employee. Due to the expansion of the company and Mr Dattani’s plans to expand the customer base internationally, it has been necessary to increase the size of the accounting function to include two new full-time members of staff. Both of the new recruits are part-qualified accountants and Mr Dattani has committed to sponsoring them through their remaining training and ACCA examinations.<br>Required:<br>Prepare the response to the management of Delhi Co as requested by the partner.<br>Note: The split of the mark allocation is shown against each of the issues above.<br>(b) The audit committee of another client, Mumbai Co, has asked the partner to consider whether it would be possible for the audit team to perform. a review of the company’s internal control system. A number of recent incidents have raised concerns amongst the management team that controls have deteriorated and that this has increased the risk of fraud, as well as inefficient commercial practices. The audit report for the audit of the financial statements of Mumbai Co for the year ended 31 March 2016 was signed a few weeks ago. Mumbai Co is a listed company.<br>Required:<br>In respect of the request for Chennai & Co to review Mumbai Co’s internal control systems: Identify and discuss the relevant ethical and professional issues raised, and recommend any actions necessary. (8 marks)
套餐购买该问题答案仅对会员开放，欢迎开通会员 ¥ 19.9
0.64/天
1个月(不限次)
¥ 19.9
1000次
(不限时)
¥ 29.9
0.32/天
3个月(不限次)
¥ 59.9
0.16/天
1年(不限次)
立即支付
微信支付 
支付宝支付