Reference no: EM132631993
Question - You are the auditor for Peru Pty Ltd (Lima), a large technological services provider business based in Sydney, for the financial year ending 30 June 2020. During the year, Peru has embarked on a large scale software development project in the current year to internally develop a communication and collaboration platform for its clients. A significant amount ($18m) has been capitalised as software development during the year. Your preliminary review indicates that this amount potentially includes repairs and maintenance costs incurred in relation to a range of Peru's hardware during the year. Required Relying on the information provided above only, in relation to Peru's Intangible asset (Software) account,
a) Identify the key assertion at risk.
b) Explain why this represents a risk to the auditor.
c) Outline a practical, appropriate substantive test that addresses the risk.
d) Outline a specific, practical preventive control that would directly address the risk.
e) Outline how you would test the control recommended in d) above.
f) Outline a specific, practical detective control that would directly address the risk.
g) Outline how you would test the control recommended in f) above.
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