Chartered Accountants Program Report Writing - Accounting and Finance Assignment Help

Assignment Task

Task

Question 1.

Part A 

(a) Matters that could pose threat to MYA’s auditor independence

1. If Imprezza purchases a data analytics tool from MYA to use for revenue decision-making purposes, MYA’s use of the same tool to audit revenue during the year-end audit could cause a self-review threat.

2. The audit fees from Imprezza are currently a large proportion (2020: 25%, 2021: 26%) of
MYA’s total fees and the additional fee from either performing the audit of the 30 June 2020 summary financial statements or selling the data analytics tool will increase fees.

(b) New engagement 

(i) The applicable Standard is ISA 810 (Revised) / ASA 810 / ISA (NZ) 810 (Revised) Engagements to Report on Summary Financial Statements. The work requested is to report on a summary set of annual financial statements derived from the most recently audited set of financial statements (30 June 2020).

(ii) The three parties to the engagement are:

• Assurance practitioner: MY Auditors (MYA).
• Responsible party: Imprezza management or directors.
• Intended user: Federal government.

(c) Changes to the assessment of risk of material misstatement

The changes required are:

• Inventory inherent risk should be changed to ‘high’ – in the current year, the use of poor-quality raw materials has resulted in below-standard finished goods, which impacts the valuation of finished goods and increases the inherent risk for inventory.
• Inventory control risk should be changed to ‘high’ – the below-standard finished goods have not been isolated in the warehouse and poor-quality raw materials and below-standard finished goods have been incorrectly included in the inventory system, indicating a breakdown in controls.
• Revenue control risk should be changed to ‘high’ – the customer service team has not been making the appropriate changes required to the prices in the customer relationship management (CRM) system to reflect the discounted price for products as advertised, indicating a breakdown in controls. 

Part B

(a) Key assertion addressed by each procedure.

(b) Inappropriate procedure for Imprezza’s 30 June 2021 audit Procedure P22 is not appropriate for the 30 June 2021 Imprezza audit. This procedure is a test of controls and as the audit plan for cash indicates a high control risk, a test of controls should not be performed.

Question 2:

Part A 

(a) Procedure AP1

• Use the flowchart contained in the CSG to evaluate the control testing results.
• Apply the facts with reference to the tolerable deviation rate and planned audit approach in your answer.
• Consider the impact of the audit findings on initial audit planning.

(b) Control deficiencies in the new supplier process.

Part B.

(a) Workpaper
(i) The three errors in the work performed are:

1. The amount recorded in the fixed assets register (FAR) should not be compared to the purchase order amount.
2. The acquisition date recorded should not be the purchase order date.
3. The conclusion should not have compared the difference to 10% of performance materiality.

(ii) There is a difference of $20,000, which is above the clearly trivial threshold ($1,000) so an adjustment is required.

(b) Audit procedure P2

Part A:

(a) Revised summary of misstatements

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