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(ii) Explain THREE strategies that might be adopted in order to improve the future prospects of Diverse
Holdings Plc. (6 marks)
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更多“（ii) Explain THREE strategies that might be adopted in order to improve the future prospec”相关的问题
(a) (i) Identify and explain FOUR financial statement assertions relevant to classes of transactions and events for the year under audit; and
(ii) For each identified assertion, describe a substantive procedure relevant to the audit of REVENUE. (8 marks)
(b) Hawthorn Enterprises Co (Hawthorn) manufactures and distributes fashion clothing to retail stores. Its year end was 31 March 2015. You are the audit manager and the year-end audit is due to commence shortly. The following three matters have been brought to your attention.
(i) Supplier statement reconciliations
Hawthorn receives monthly statements from its main suppliers and although these have been retained, none have been reconciled to the payables ledger as at 31 March 2015. The engagement partner has asked the audit senior to recommend the procedures to be performed on supplier statements. (3 marks)
(ii) Bank reconciliation
During last year’s audit of Hawthorn’s bank and cash, significant cut off errors were discovered with a number of post year-end cheques being processed prior to the year end to reduce payables. The finance director has assured the audit engagement partner that this error has not occurred again this year and that the bank reconciliation has been carefully prepared. The audit engagement partner has asked that the bank reconciliation is comprehensively audited. (4 marks)
(iii) Receivables
Hawthorn’s receivables ledger has increased considerably during the year, and the year-end balance is $2·3 million compared to $1·4 million last year. The finance director of Hawthorn has requested that a receivables circularisation is not carried out as a number of their customers complained last year about the inconvenience involved in responding. The engagement partner has agreed to this request, and tasked you with identifying alternative procedures to confirm the existence and valuation of receivables. (5 marks)
Required:
Describe substantive procedures you would perform. to obtain sufficient and appropriate audit evidence in relation to the above three matters.
Note: The mark allocation is shown against each of the three matters above.
(a) Identify and explain each of the FIVE fundamental principles contained within ACCA’s Code of Ethics and Conduct.
(b) Rose Leisure Club Co (Rose) operates a chain of health and fitness clubs. Its year end was 31 October 2012. You are the audit manager and the year-end audit is due to commence shortly. The following three matters have been brought to your attention.
(i) Trade payables and accruals
Rose’s finance director has notified you that an error occurred in the closing of the purchase ledger at the year end. Rather than it closing on 1 November, it accidentally closed one week earlier on 25 October. All purchase invoices received between 25 October and the year end have been posted to the 2013 year-end purchase ledger.
(ii) Receivables
Rose’s trade receivables have historically been low as most members pay monthly in advance. However, during the year a number of companies have taken up group memberships at Rose and hence the receivables balance is now material. The audit senior has undertaken a receivables circularisation for the balances at the year end; however, there are a number who have not responded and a number of responses with differences.
(iii) Reorganisation
The company recently announced its plans to reorganise its health and fitness clubs. This will involve closing some clubs for refurbishment, retraining some existing staff and disposing of some surplus assets. These plans were agreed at a board meeting in October and announced to their shareholders on 29 October. Rose is proposing to make a reorganisation provision in the financial statements.
Required:
Describe substantive procedures you would perform. to obtain sufficient and appropriate audit evidence in relation to the above three matters.
Note: The mark allocation is shown against each of the three matters above.
(ii) Can we entertain our clients as a gesture of goodwill or is corporate hospitality ruled out？ (3 marks)
Required:
For EACH of the three FAQs, explain the threats to objectivity that may arise and the safeguards that should
be available to manage them to an acceptable level.
NOTE: The mark allocation is shown against each of the three questions.
(ii) If a partner, who is an actuary, provides valuation services to an audit client, can we continue with the audit？
(3 marks)
Required:
For each of the three questions, explain the threats to objectivity that may arise and the safeguards that
should be available to manage them to an acceptable level.
NOTE: The mark allocation is shown against each of the three questions above.
(b) Explain Kohlberg’s three levels of moral development and identify the levels of moral development
demonstrated by the contributions of Gary Howells, Vanda Monroe and Martin Chan. (12 marks)
Bethan Oak was the audit engagement partner for Willow and as she had completed seven years as the audit engagement partner, she has recently been rotated off the audit engagement. The current audit partner, Sandeep Pine, has suggested that in order to maintain a close relationship with Willow, Bethan should undertake the role of independent review partner this year. In addition Willow has requested that Bethan assist them by attending their audit committee meetings, as a non-executive director has recently left the company.
Willow has also asked Sandeep and the other partners at Beech & Co to help them in recruiting a new non-executive director.
The total fees received by Beech & Co for last year equated to 16% of the firm’s total fee income. The current year’s audit fee has not yet been confirmed, but along with taxation and other possible non-audit fees the total income from Willow this year could be greater than for last year. Last year’s audit fee was being paid monthly by Willow but no payments have been made for the last three months.
The audit manager for Willow has just announced that he is leaving Beech & Co to join Willow as the financial controller.
Required:
Using the information above:
(i) Identify and explain FIVE ethical threats which may affect the independence of Beech & Co’s audit of Willow Wands Co; and
(ii) For each threat explain how it might be reduced to an acceptable level.
Note: The total marks will be split equally between each part.
Section A暂缺
Section B – ALL SIX questions are compulsory and MUST be attempted
You are an audit manager of Pink Partners & Co (Pink) and are planning the audit of Golden Finance Co (Golden), a banking institution which provides a range of financial services including loans. Your firm has audited Golden for four years and the company’s year end is 30 September 2015.
At the end of August, Golden’s financial controller left and the new replacement is not due to start until approximately two months after the year end. The finance director, who is the sister-in-law of the audit engagement partner, has asked if a member of the audit team can be seconded to Golden for three months to act as the temporary financial controller.
You are aware that a number of the audit team members currently bank with Golden and two team members have significant loans owing to the company.
Pink’s taxation department also provides services to Golden. They have been approached by Golden to represent them in negotiations to resolve some outstanding issues with the taxation authorities, for which the fees quoted are substantial.
The finance director has informed the audit engagement partner that when the audit is complete, she would like the whole team to attend an evening watching the national football team play a match followed by a luxury meal.
Required:
Using the information above:
(i) Identify and explain FIVE ethical threats which may affect the independence of Pink Partners & Co’s audit of Golden Finance Co; and
(ii) For each threat, explain how it might be reduced to an acceptable level.
Note: The total marks will be split equally between each part.
A.hundred-year anniversary.
B.two hundred-year anniversary
C.three hundred year- anniversary
D.thousand-year anniversary
(ii) Explain why the disclosure of voluntary information in annual reports can enhance the company’s
accountability to equity investors. (4 marks)
(a) (i) Defi ne a ‘test of control’ and a ‘substantive procedure’; (2 marks)
(ii) State ONE test of control and ONE substantive procedure in relation to sales invoicing. (2 marks)
(b) Shiny Happy Windows Co (SHW) is a window cleaning company. Customers’ windows are cleaned monthly, the window cleaner then posts a stamped addressed envelope for payment through the customer’s front door.
SHW has a large number of receivable balances and these customers pay by cheque or cash, which is received in the stamped addressed envelopes in the post. The following procedures are applied to the cash received cycle:
1. A junior clerk from the accounts department opens the post and if any cheques or cash have been sent, she records the receipts in the cash received log and then places all the monies into the locked small cash box.
2. The contents of the cash box are counted each day and every few days these sums are banked by which ever member of the fi nance team is available.
3. The cashier records the details of the cash received log into the cash receipts day book and also updates the sales ledger.
4. Usually on a monthly basis the cashier performs a bank reconciliation, which he then fi les, if he misses a month then he catches this up in the following month’s reconciliation.
Required:
For the cash cycle of SHW:
(i) Identify and explain THREE defi ciencies in the system; (3 marks)
(ii) Suggest controls to address each of these defi ciencies; and (3 marks)
(iii) List tests of controls the auditor of SHW would perform. to assess if the controls are operating effectively. (3 marks)
(c) Describe substantive procedures an auditor would perform. in verifying a company’s bank balance. (7 marks)
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