User Account

All Pages

Explain how the components of audit risk are affected

Assignment Help Accounting Basics
Reference no: EM132696209

Question - You are the audit senior responsible for the audit of Oriental Limited. You are currently planning the audit for the year ended 31 December 20X9. During your initial planning meeting held with the financial controller, he told you of the following changes in the company's operations.

(i) Due to the financial controller's workload, the company has employed a treasurer. The financial controller is excited about the appointment because in the two months that the treasurer has been with the company he has realised a small profit for the company through foreign-exchange transactions in yen.

(ii) Oriental has planned to close an inefficient factory in country New South Wales before the end of 20X9. It is expected that the redeployment and disposal of the factory's assets will not be completed until the end of the following year. However, the financial controller is confident that he will be able to determine reasonably accurate closure provisions.

(iii) To help achieve the budgeted sales for the year, Oriental is about to introduce bonuses for its sales staff. The bonuses will be an increasing percentage of the gross sales made, by each salesperson, above certain monthly targets.

(iv) The company is using a new general ledger software package. The financial controller is impressed with the new system, because management accounts are easily produced and allow detailed comparisons with budgets and prior-period figures across product lines and geographical areas. The conversion to the new system occurred with a minimum of fuss. As it is a popular computer package, it required only minor modifications.

(v) As part of the conversion, the position of systems administrator was created. This position is responsible for all systems maintenance, including data backups and modifications. These tasks were the responsibility of the accountant.

(vi) The managing director has returned from the USA, where he signed a contract to import a line of clothing that has become the latest fashion fad in the USA. The company has not previously been engaged in the clothing industry.

For each of the scenarios above, explain how the components of audit risk (inherent, control or detection risk) are affected.

Reference no: EM132696209

Questions Cloud

Which of the types of payment scenarios : QuickBooks can handle which of the types of payment scenarios? Down payment towards a product or service. / Overpayments from a customer
Why would uncheck the bill received checkbox : Why would uncheck the 'Bill Received' checkbox when entering a bill on the 'Enter Bills' Screen? When you do not want the bill to be printed
Developed your public speaking skills : During the previous weeks, you have developed your public speaking skills.
Discuss the topic related to web analytics : You are to select a topic that is related directly to Web Analytics, the topic must be related to Web Analytics or Digital Analytics. DO NOT USE Wikipedia as.
Explain how the components of audit risk are affected : For each of the scenarios above, explain how the components of audit risk (inherent, control or detection risk) are affected
What rate of return is built into the annuity : 20-year annuity of $250,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes
Sony pictures collapse overall rating : What access and data protection controls would you recommend Sony use to provide better security for unreleased digital films and e-mails?
Identify security controls that you would recommend : For this discussion, find an example of a security breach which compromised data records at a company in the same industry as you will be using in your final.
Which cannot do automatically when exporting a quickbooks : Which cannot do automatically when exporting a QuickBooks report to Excel? Update QuickBooks with the changes entered in Excel

Reviews

Write a Review

Accounting Basics Questions & Answers

  Why do you say that marie

I was not aware that our managers are unhappy about the allocation of our indirect costs. I'll have to look into this.Marie Walters has approached you for some advice. What advice would you give her?

  Find the internal rate of return on the machine

Krauth Company purchased a machine for $119,000. The internal rate of return (IRR) on the machine is closest to

  What is the maximum amount mohad is allowed to deduct

Mortgage principal payments $30,000 Mortgage interest $20,000 What is the maximum amount Mohad is allowed to deduct from his business income?

  Explain which entity is in a more favourable position

From your calculations in part A, explain which entity is in more favourable position. Discuss two limitations of ratio analysis as fundamental analysis tool

  Macrs depreciation schedule

The project has an initial cost of $1,000,000 (machine: $800,000, insurance: $40,000, shipping $60,000, modification: $100,000) --this is also the amount which can be depreciated using the following 3 year MACRS depreciation schedule:

  Explain general principles of disclosure and communication

Explain the general principles of disclosure and communication which the board of MegaMart should follow when it briefs its shareholders

  Question - Prepare Bank Reconciliation

Question - Prepare Bank Reconciliation. Company ABC's bank statement dated Dec 31, 2011 shows a balance of $24,594.72

  Add a new employee to the payroll

Which of the following forms is used to notify the Payroll Department to add a new employee to the payroll?

  Calculate the net present value of the new hotel

Calculate the net present value of the new hotel. Use 7.003 for the present value of an annuityof $1 at 14% for 30 periods. Round to the nearest million dollars

  Hotels and airline companies often sell their rooms

Hotels and airline companies often sell their rooms and seats at deep discounts on sites like www.priceline.com andwww.hotwire.com. The prices for these hotel rooms and airline seats are often way below what the company needs to make to cover i..

  Contrast variable and absorption costing and identify the

contrast variable and absorption costing and identify the advantages and disadvantages of each. if the units produced

  How do i record the givben entries for an adjusted journal

How do I record the given entries for an adjusted journal on acct 220. A physical count of inventory shows a value of $219,100. The periodic inventory method.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd