ACC707 Auditing And Assurance Major Assignment Questions

ACC707 Questions 1.

SOL Furniture Ltd sell a range of home furniture by recycling and refurbishing old furniture and other wood, metal glass and plastic products obtained from a variety of sources such as auctions. 

Revenue comes from sales to the public and business such as hotels and restaurants. Some small items are collected by customers but generally goods are delivered by SOL Furniture Ltd. 

The directors have reported that it has been another good year for the organisation and that they expect the coming year to be successful. 

The draft income statement for 2020 together with audited figures for 2019 are given below.

Required

You are planning the audit of SOL Furniture Ltd for the year ended 30June 2020, discuss the issues (3 issues) to be considered in your audit planning from the information contained in the income statements. 

You may use analytical procedures in your audit planning stage. (15 marks)

2. Wantok Audit Firm was planning the audit for its existing client, AB corporation. 

The audit partner was trying to determine the best audit strategy to use. AB Corporation is a small retailing company that does not have any warehouse facilities as all stock is kept on the premises. Being small, they only have a small team of staff, which makes the separation of duties principle difficult to achieve. The preliminary tests of control found that the internal control procedures are well designed, but not always observed due to the small number of staffs. Previous experience with this client also shows that controls were not always observed. Despite this, Wantok Audit Firm has never discovered a material misstatement in the accounts. 

Required 

Determine what audit strategy should be used and justify your answer. (5 marks) 

3.Preparation of the auditor's report Nicky Brady, a registered company auditor, has completed the audit of the financial report of Trueline Ltd for the year ended 30 June 2022. Nicky also audited the financial report for Trueline for the previous financial year. He drafted the following report for 30 June 2022. 

We have audited the statement of financial position, income statement, statement of cash flows and statement of changes in equity for Trueline Ltd as of 30 June 2022. Our audit was made in accordance with an applicable financial reporting framework. 

In our opinion, the above-mentioned financial statements are accurately and fairly presented in accordance with generally accepted accounting principle in effect at 30 June 2022. Nick Brady, CPA 25th August 2022 

Required Consider all the above facts and the pertinent requirements of ASA 700 (ISA 700), and then rewrite the auditor's report in an acceptable and complete format. Assume that Trueline Ltd is a resident company in Solomon Islands, have adopted International Financial Reporting Standards (IFRS).

Nick Brady conducted his audit in accordance with Australian Auditing Standard. (10 marks)