Explain the audit manager concern

Assignment Help Accounting Basics
Reference no: EM133102456

Question - You are the audit senior on the audit of Action Games Ltd (AGL), a large retailer of computer games. Although each sale is relatively low value, the company has a very high sales volume. You have just completed your review of AGL's internal controls over the sales for your audit for the year ended 30 June 2020. Based on your review, you have concluded that AGL's internal control over sales is excellent. As a result, you have suggested an audit strategy for sales of extensive testing of the controls and, if they prove to be effective, relying solely on those controls to gain reasonable assurance that the sales information is fairly stated. However, your audit manager has asked you whether you have considered the inherent limitations of internal control in designing your audit strategy.

Required -

a) Explain the audit manager's concern.

b) What would be a more appropriate audit strategy? Justify your answer.

Reference no: EM133102456

Questions Cloud

Digital culture and computational techniques : Understanding of the impact that digital culture and computational techniques had in architecture over the past 30 years
Prepare the necessary adjusting entries on december : Salaries for the year that had been earned by employees but not paid to them or recorded is $15,500. Prepare the necessary adjusting entries on December
High-performing organization : Can you discuss how diagnosis, treatment plan, and population are relate to a high-performing organization?
How would increased productivity actually decrease : 1. List & explain 2 factors you must consider for your company to be successful/continue being successful in the international market.
Explain the audit manager concern : You are the audit senior on the audit of Action Games Ltd (AGL), a large retailer of computer games. Explain the audit manager concern
What the amount of share premium reported on the december : Retained earnings was £3,316,000 at December 31, 2020. What the amount of Share Premium reported on the December 31, 2020 statement of financial position
Calculate the operating profit margin for the firm : The following table shows selected financial data, in millions, for Edi's Electronics Stores. The company's s tax rate is 35%.
Discuss and describe the behavior of direct material cost : Question - Discuss and describe the behavior of direct material cost in total and per unit as production volume changes
Prepare an income statement for the year ended december : Accumulated depreciation-equipment 21,680. Prepare an income statement for the year ended December 31, 2022

Reviews

Write a Review

Accounting Basics Questions & Answers

  Compute the predetermined overhead rate for each department

Agassi Manufacturing Company uses a job order cost system in each of its three manufacturing departments. Compute the predetermined overhead rate for each department

  Gain on sale of debt investements

Tolan co. purchased 30,6% irick company bonds for 60,000 cash plus brokerage fees of $600. Interest is payable seminannualy on july 1 and january 1. if 15 of the securities are sold on july 1 from $31,000 less $300 brokerage fees, the entry would ..

  Create closing entries and post to the accounts

Furniture and equipment is depreciated based on a 6-year life (no salvage value). Prepare closing entries and post to the accounts.

  Calculate depreciation expense on machine for fifth year

The residual value was unchanged. Calculate depreciation expense on the machine for the fifth year, assuming that Helm uses the straight-line method.

  How much of the expected proceeds from insurance coverage

a. How much of the expected proceeds from insurance coverage, if any, should Friendly include in its June 30 financial statements? Justify your answer with relevant accounting pronouncements.

  Investment trust fund-summarize the collection of interest

Demostrate the entry in the Investment Trust Fund to summarize the collection of interest for six-month period.

  Define requirements of the revenue recognition principle

Expense recognition: Expense is recognized in the period in which related revenue is recognized (this is also known as the Matching Principle).

  What is the price of share of this preferred stock

A corporation is making preferred dividend payments of $ .75 per quarter and the rate of return is 6%. What is the price of share of this preferred stock

  How much tax will he owe on these transactions

Anakin sold stock that he held for 5 years for $40,000. His basis in the stock was $15,000. How much tax will he owe on these transactions

  Find what account should the client classify the apartment

You are an auditor at a public accounting firm. As an auditor, what account should the client classify the apartment and housing / real estate complex be?

  Sec accounting and auditing enforcement releases

Use SEC Accounting and Auditing Enforcement Releases to research a fraud action by the SEC

  Record the pension expenditure in the appropriate fund

Suppose in the following year the city contributed $6 million to its pension fund, Record the pension expenditure in the appropriate fund

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!

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