Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Auditing Expert

AUDIT PLANNING AND RISK ASSESSMENTS

1. The Financial Controller (FC) of Management Consolidated Systems Ltd (MCS), a public company, has approached your audit firm to provide audit services. The FC has given permission to you and the previous audit firm, Anderson & Price, to communicate. In your discussion with RandelMudge, the partner of Anderson & Price who supervised the MCS audit, you learnt the following:

a) Mudge has no reason to problem the integrity of MCS management.

b) Mudge understands that the reason for the change in auditors was to obtain a lower audit fee. Anderson & Price charged $80,000 for the prior-year audit, of which $50,000 has not yet been paid by MCS.

c) Mudge indicated that he had no disagreement with MCS management concerning accounting principles or auditing procedures. He did note that management had not informed the audit team of several cancelled customer sales contracts for which revenue has been recorded. The auditors learnt of the cancellations from their audit procedures,and management agreed to reduce revenue only when problemed about the matter.

d) Mudge stated that MCS management was very conscious of a perceived need to increase earnings per share each year. To do this, they would provide a minimum amount for doubtful debts and warranty expenses. Where alternative accounting principles existed, MCS management always selected the principle that resulted in the highest current net income.

e) Mudge said that, because of significant losses in the last two years, he had seriously considered modifying the audit report last year to indicate substantial doubt about MCS’s ability to continue as a going concern. He discussed this matter with management, who was adamant that the company would continue as a going concern. Mudge agreed not to modify the report for last year, but he told management that a modified audit report might be necessary in the future.

Required:

describe (with reasons) how each of the above items will impact on material misstatement in financial reporting for the company and on your decision whether to accept MCS as an audit client

Impact on material misstatement in Financial reporting

You need to prepare relate to inherent risk, Control risk, detection risk under IAS 200 13(n) From New Zealandstandard
Impact on your acceptance of MCS as audit client

You need to prepare relate to client evaluation, identify special circumstance and unusual risk, evaluate independence, ethical and legal consideration, determine ability to use due care, assess competence to perform audit.

Auditing, Accounting

  • Category:- Auditing
  • Reference No.:- M92812

Have any Question? 


Related Questions in Auditing

Requirementsyou are audit senior in the audit firm

Requirements: You are audit senior in the audit firm Greentick, in charge of the audit of Soundworld Ltd for the year ended June 30, 2016. Prepare a report dated February 1, 2016 for the audit manager outlining the audit ...

The following are specific transaction-related audit

The following are specific transaction-related audit objectives applied to the audit of cash disbursement transactions (a through f), management assertions about classes of transactions (1 through 5), and general transac ...

Topic fraud auditingyour assignment should answer the

Topic: "Fraud auditing" Your assignment should answer the following questions: 1. Provide a brief overview of the nature of the auditing/ethical issue/s involved with Fraud Auditing. 2. How does auditing promote common g ...

Assignmentinstructions- the front style for your answer

Assignment Instructions: - The front style for your answer should be set to "Time New Roman" size 12 with 1.5 line spacing, 2.5cm margin & A4 page layout. - The assignment should be typed and show the student's name and ...

Onetel casestrategic business risk assessment inherent risk

One.Tel Case Strategic Business Risk Assessment, Inherent Risk Assessment and Preliminary Going Concern Assessment Nature of the Entity's Business One.Tel was launched in Sydney, Australia in May 1995. They were describe ...

Auditing amp assurance services assignment-question 1 -

Auditing & Assurance Services Assignment- Question 1 - Enquiries into very many received tenets and commonly presumed truths, also known simply as Pseudodoxia Epidemica or Vulgar Errors, is a work by Thomas Browne challe ...

Assignment lasa- preliminary strategy auditthe end result

Assignment: LASA- Preliminary Strategy Audit The end result of this course is developing a strategy audit. In this module, you will outline and draft a preliminary framework for your final product. This provides you with ...

Auditing and assurance services assignment- onetel

AUDITING AND ASSURANCE SERVICES ASSIGNMENT- One.Tel Case Strategic Business Risk Assessment, Inherent Risk Assessment and Preliminary Going Concern Assessment Nature of the Entity's Business One.Tel was launched in Sydne ...

How to compute the translational rotational vibrational

How to compute the translational rotational vibrational electronic

Question beauty ltd sells cosmetics and markets itself on

Question: Beauty Ltd sells cosmetics and markets itself on the basis that its products have not been tested on animals. it has ethical policies towards its staff and suppliers, and that it takes corporate responsibility ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate