You have been appointed as an external auditor of XYZ Textile Limited and completed the audit. You did not find any material misstatement in financial statements of the XYZ Textile Ltd. You are required to write audit report.
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You have been appointed as an external auditor of XYZ Textile Limited and completed the audit. You did not find any material misstatement in financial statements of the XYZ Textile Ltd. You are required to write audit report.
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- Evaluate the following quotation: “If a CPA firm completes a nonpublic company audit of Adam Company’s financial statements following AICPA generally accepted auditing standards and is satisfied with the results of the audit, an unmodified audit report may be issued. On the other hand, if no audit is performed of the current year’s financial statements, but the CPA firm has performed satisfactory audits in prior years, has confidence in the management of the company, and make a quick review of the current year’s financial statements, a qualified report may be issued.” Do you agree? Give reasons to support your answer.The auditor is required to prepare audit documentation sufficient to enable an experienced auditor, having no previous connection with the audit, to understand the _________________ in reaching conclusions on significant matters arising during the audit. Select one: a. Confirmation letters b. The interviews conducted with employees and management c. The total evidence gathered d. Significant professional judgements made(a) You are an audit engagement manager of a public listed client of Walter & Co. The audit senior has informed you that they have completed significant audit procedures for the final audit of this client. However, after your review of the currnt audit files, you noticed that they have not performed the audit procedures for searching contingent liabilities. Required: (i) Define contingent liability and state the THREE (3) conditions that are required for a contingent liability to exist. (ii) Elaborate any FOUR (4) audit procedures commonly used to search for contingent liabilities.
- action which can be taken by SAICA against the external auditor if he/she applied negligence in auditing the financial statements of the company1. Which of the following is a principle underlying an audit conducted in accordance with generally accepted auditing standards? Select one:a. Auditors are responsible for, among other things, maintaining professional objectivism, exercising professional engagement, and obtaining appropriate documentation.b. The audit report expresses an opinion on whether the financial statements are free of material and immaterial misstatement.c. The audit provides reasonable assurance the client will remain in business for at least one year.d. An auditor's opinion enhances the degree of confidence that intended users can place in the financial statements.a) What are key audit matters? How do these affect the format of the audit report? b) Stewart Jones is reviewing the results of the subsequent events audit procedures. Stewart is writing a report for his audit partner based on these results and will be attending a meeting tomorrow with the partner and representatives of the company to discuss them. The issue will be whether the financial report should be amended, or additional notes included for these subsequent events.Many of the items are not material and Stewart will recommend that no action be taken with respect to these. However, there are several items that Stewart believes are material and should be discussed at the meeting. These are as follows.(i) The board is planning to issue shares in a private placement on 15 August. (ii) The share issue is to fund the purchase of a 60 per cent stake in another company. The negotiations are in the final stages and although the contract is not yet signed it will be signedby 15 August.(iii)…
- Assume that items 1–8 are situations that Blas, CPA, has encountered during his audit of GELAY, Inc., a private company. List A represents the types of opinions the auditor ordinarily would issue, and List B represents a portion of the needed report modifications — whether an additional paragraph will be included. For each situation, select one response from List A and one (1) from List B. Select the best answers for each item the action the auditor would normally The types of opinions in List A and the report modifications in List B may be selected once, more than once, or not at all. Assume the following: The auditor is independent The auditor previously expressed an unmodified opinion on the prior year’s financial Only single-year (not comparative) statements are presented for the current The conditions for an unmodified opinion exist unless contradicted by the The conditions stated in the items to be answered are material, unless otherwise Each item to be answered is…Assume that items 1–8 are situations that Blas, CPA, has encountered during his audit of GELAY, Inc., a private company. List A represents the types of opinions the auditor ordinarily would issue, and List B represents a portion of the needed report modifications — whether an additional paragraph will be included. For each situation, select one response from List A and one (1) from List B. Select the best answers for each item the action the auditor would normally take. The types of opinions in List A and the report modifications in List B may be selected once, more than once, or not at all. Assume the following: The auditor is The auditor previously expressed an unmodified opinion on the prior year’s financial Only single-year (not comparative) statements are presented for the current The conditions for an unmodified opinion exist unless contradicted by the The conditions stated in the items to be answered are material, unless otherwise Each item to be answered is independent of the…What are key audit matters? How do these affect the format of the audit report? b) Stewart Jones is reviewing the results of the subsequent events audit procedures. Stewart iswriting a report for his audit partner based on these results and will be attending a meetingtomorrow with the partner and representatives of the company to discuss them. The issue will bewhether the financial report should be amended, or additional notes included for thesesubsequent events.Many of the items are not material and Stewart will recommend that no action be taken withrespect to these. However, there are several items that Stewart believes are material and shouldbe discussed at the meeting. These are as follows.(a) The board is planning to issue shares in a private placement on 15 August. (b) The share issue is to fund the purchase of a 60 per cent stake in another company. Thenegotiations are in the final stages and although the contract is not yet signed it will be signedby 15 August. (c) A writ was…
- (a) Auditors are required to obtain sufficient appropriate audit evidence. Tests of control and substantive procedures can be used to obtain such evidence. Required: Define a ‘test of control’ and a ‘substantive procedure’. (b) Balotelli Beach Hotel Co (Balotelli) operates a hotel providing accommodation, leisure facilities and restaurants. Its year end was 31 October 2014. You are the audit senior of Mario & Co and are currently preparing the audit programmes for the year end audit of Balotelli. You are reviewing the notes of last week’s meeting between the audit manager and finance director where two material issues were discussed. Depreciation: Balotelli incurred significant capital expenditure during the year on updating the leisure facilities for the hotel. The finance director has proposed that the new leisure equipment should be depreciated over 10 years using the straight-line method. Food poisoning: Balotelli’s directors received correspondence in September from a group…You are the training manager at Guava & Co., Chartered Accountants. Some trainees in the firm have requested you to clarify the following issues: a) Can the auditor discard any audit document, forming part of his opinion, after the issuance of the auditor’s report? b) The changes that can be incorporated during the final the assembly process citing three such examples. c) The circumstances under which it becomes necessary to modify the existing audit documents or add new audit documents after the issuance of the auditor’s report and the matters that should be documented in such a situation. Required: Offer appropriate explanations for each of the above issues.Select the necessary words from the list of possibilities to complete the following statements. 1. Working papers of audit interest over an extended period of time should be filed in the is a type of documentary evidence transmitted directly to the auditors by a third party (e.g., a customer or a vender). 2 A 3. A letter signed by officers of the client company at the auditors' request which sets forth certain assertions about the company's financial position and operations is known as a Statements 4 The audit approach of evaluating financial statement information by a study of relationships among financial and nonfinancial data is 5. The term relates to the quantity of evidence that the auditors should obtain. 6. The risk of material misstatement is composed of two risks that the auditor assesses, those risks are inherent risk and risk. 7. The auditors develop client's accounting records. to recommend to management to correct the effects of errors or fraud in the 8. The amount of…
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