MAA705 Corporate Auditing

Q1.

Evaluate the independence of Kellie and MingYan.

Q2.

1.  Identify and explain two (2) inherent risk factors which exist for STL.
2.  State the assertion affected by each risk identified. Only identify one assertion for each risk factor.

1.  Assess inherent risk for STL. Justify your assessment.

Q3.

1. Identify two (2) strengths in internal control in the payroll cycle. (4 marks)
2. Explain a misstatement this control should prevent. (4 marks)
3. State a control test that you could undertake to test the control is operating as expected.

Q4.

1.  Based on your assessment of inherent risk for STL in question 2 above and assuming control risk is LOW, assess detection risk.
2.  Explain how planning materiality is impacted by the assessment of detection risk.
3.  Identify two audit procedures the audit team could have undertaken to identify the subsequent events.

Q5.

Part a

1. On the last page of the case there are details of the substantive test Nisa performed on accounts payable.
2. What assertion is most at risk in the Accounts Payable balance?
3. Did Nisa’s substantive test provide evidence on this assertion? Justify your response
4. Identify another audit procedure you would recommend Nisa performs to provide evidence on the accounts payable balance.

Part b

1. Based on the Financial Reports, identify three (3) accounts, other than accounts payable that require further investigation. Explain why eachof these accounts require further investigation.

Q6.

1. MingYan believes an adverse opinion is appropriate based on the audit findings. Explain whether this is the appropriate opinion.
2. Identify four (4) factors which indicate that STL meets the going concern assumption.