Reference no: EM131648644

Assignment

You are planning an audit and have access to the preliminary trial balance for your client. You would like to use the trial balance to identify accounts that are likely to require significant audit attention. To access the trial balance for your client, open the document called 'Trial balances for task 2' and follow the directions to the appropriate worksheet.

Your task:

You must choose 7 accounts from the trial balance for audit testing.  In doing so, you should:

Complete an analytical review using the trial balance,

Make a preliminary judgement of materiality,

Use the analytical review and materiality assessment to identify accounts that are at-risk of material misstatement.

Consider whether there are any accounts that should be selected quantitative materiality, including:

• At least one account that may be at-risk of fraud, and
• At least one account that may require significant audit attention for qualitative reasons other than fraud-risk.

Provide a brief rationale for the selection of each of the 6 accounts.

For each account that you have selected, identify one assertions that is at risk (i.e. identify 7 assertions in total). Please include an explanation as to why the assertions are at risk.

For each account/assertion briefly explain an audit procedure that could provide evidence relevant to the assertion.

Ratios which have to be use in analysis -

Solvency:

1. Quick ratio

2. Current ratio

3. Debt to equity

4. Times interest earned

Efficiency:

1. Account receivable turnover

2. Inventory turnover

3. Asset turnover

Profitability:

1. Return on sales

2. Return on assets

3. Return on shareholder's equity

Attachment:- Assignment Files.rar