Reference no: EM132499445
You have reviewed the work performed by your assistant, Raymond Snow, on the audit of Tin Ltd for the year ended 30 June 2018 and have noted the following two independent matters:
Point (i) In testing investments in listed securities, Raymond selected all shareholdings with a market value above $200,000 and checked them to the closing market value reported by the Australian Stock Exchange to determine the net realisable value of each shareholding. The items tested totalled $5,500,000 or 60% of the total balance. Of the items tested, only one error of $110,000 was discovered. Raymond concluded that the error was not itself material, as it was only 2% of the balance tested. He extrapolated this error to the total population and estimated that the error for the total population would be $185,000, which was also immaterial. Therefore, he concluded that the investments in listed securities were fairly stated at the lower of cost or net realisable value.
Point (ii) Tin Ltd has 1,000 stock lines that are maintained on a perpetual inventory system. Stock is counted on a cyclical basis so that all lines are covered at least once per year. Raymond attended the March stocktake to observe the counting procedures and conducted 20 test counts from the floor to the client's count sheets and 20 from the client's count sheets to the floor. He uncovered two minor discrepancies of one item each, which he considered to be immaterial. The client also uncovered five minor discrepancies between the perpetual records and the actual quantity on hand. None of these discrepancies were adjusted on the perpetual records, as the amounts involved only totalled $50,000 and were considered to be immaterial. Raymond concluded that no further work was considered necessary on stock quantities at year end.
REQUIRED:
Question (a) Explain what is meant by sufficient appropriate audit evidence.
Question (b) Explain whether sufficient appropriate audit evidence has been obtained for each of the above situations. Give reasons for your answer.
|
Analyze the articles based on what you have learned
: Analyze the articles based on what you have learned so far in this class and write a short reaction essay for each one. Each essay must be at least one page.
|
|
What is a good justification to hold shares
: What is a good justification to hold shares and investment thesis for Westpac shares? Including numbers and ratios
|
|
Pretax cost of debt-garnet inc
: Garnet, Inc., has a target debt-equity ratio of 0.51. Its WACC is 11.9%, and the tax rate is 31%. If Garnet's cost of equity is 14%
|
|
Describe what the outcome would be
: Describe what the outcome would be. If your proposal were implemented, how would things be different? In particularly, how would they be better than they.
|
|
What is meant by sufficient appropriate audit evidence
: Explain whether sufficient appropriate audit evidence has been obtained for each of the above situations. Give reasons for your answer.
|
|
What is maverick wacc
: Maverick Manufacturing has a target debt-equity ratio of 0.53. Its cost of equity is 11%, and its cost of debt is 7%. If the tax rate is 31%, what is Maverick's
|
|
Calculate western investment group share price
: Using the constant dividend growth model, calculate Western Investment Group's share price (P). Give your answer in dollars and cents to the nearest cent.
|
|
Identify six weaknesses in the internal controls described
: Identify six (6) weaknesses in the internal controls described. Discuss the implications of each of the weaknesses you have identified.
|
|
Identify both the strengths and needs of the family
: The family is in an enduring social institution, and today, many families are being impacted by the needs of their aging members. The family, as a unit.
|