StudyHub

Questions:

Case One:

The following facts relate to Sporty Pty Ltd:

1. Sporty operates fitness centres across Australia.

2. The company is owned by the five directors who have financed the purchase of shares by      taking out personal loans, which are secured on their homes.

3. The directors aim to expand the business and then float the company on the ASX.

4. The strategy involves charging lower prices than their competitors in order to attract new  members.

5. The directors are expanding by buying out small independent fitness clubs.

6. The purchase and refurbishment of the new clubs is financed by bank loans.

The managing director wants to maintain good corporate governance and business practices and therefore would like to carry out a review of business risks but does not know anything about it.

Required:

Question 1:

Explain the benefits of carrying out a business risk assessment and describe the steps involved in risk management. In your comments, give examples of specific business risks faced by Sporty Pty Ltd.

Case Two: 

ZERO is a listed limited-liability company with a year-end of 30 June. ZERO’s main activity is selling home improvement or ‘do-it-yourself’ (DIY) products to the public. Products sold range from nails, paint and tools to doors and showers; some stores also sell garden tools and furniture. Products are purchased from approximately 200 different suppliers. ZERO has 103 stores in 8 different countries.

ZERO has a well-staffed internal audit department, who report on a regular basis to the audit committee. Areas where the internal and external auditors may carry out work include:

1. Attending the year-end inventory count in 30 stores annually. All stores are visited on a rotational basis.

2. Checking the internal controls over the procurement systems (e.g. ensuring a liability is only recorded when the inventory has been received)

3. Reviewing the operations of the marketing department.

Required:

For each of the above three areas, discuss:

(a) The objectives of the internal auditor.

(b) The objectives of the external auditor.

(c) Whether the external auditor will rely on the internal auditor and, if reliance is required, the extent of that reliance.

Case Three: 

You are currently auditing Kool Ltd, a wholesaler and manufacturer of gardening tools sold in hardware stores. Kool has branch offices in Sydney, Melbourne and Adelaide; and head office is located in Sydney. The company’s only factory is also located in Sydney. The audit is administered out of your Sydney office with some work performed by your firm’s branch offices.

Your manager has asked you to complete the audit programs for various audit file sections by inserting detailed instructions on sample selection. In order to maintain tight control over costs, the audit manager wants all samples to be selected by the Sydney head office auditors. Branch offices will then simply be given details of the items they are to test.

You have the following information about various account balances of Kool.

1. Kool’s fixed assets consist of office furniture and equipment (held at all branches) and factory machinery (held in Sydney). Factory machinery comprises around 50 items totalling 80% of the value of fixed assets. Each branch maintains its own fixed asset register on an off-the-shelf software package.

You need to select a sample of fixed assets for existence testing.

2.  Payable are handled centrally in Sydney. Branches send in authorised invoices with related supporting documents for processing on a weekly basis. Each month, an alphabetical list of creditors is produced showing the invoices outstanding and the total balance owing. Kool uses a wide range of suppliers and accordingly there are no individually significant creditors.

You need to select a sample of creditors for valuation testing.

3. Each branch processes its own sales invoices using a unique series of invoice numbers (i.e. each branch has a different sequence). A sales listing is produced monthly by each branch, and gives a sequential listing of the invoices used, the customer name and code, date and amount.

You need to select a sample of sales invoices on which to perform tests of controls to ensure credit limits are complied with.

4. Debtor collections are handled centrally at head office. A consolidated monthly alphabetical debtors listing is produced showing the invoices making up each debtor’s balance, the amounts paid that month and the amount outstanding. Ageing details are also provided (current, >30 days, >60 days and >90 days).

You need to select a sample of debtors for existence testing.

5. To meet reporting deadlines at year-end, each branch handles its own accruals. Once the creditors ledger is closed off, branches track year-end related invoices using a manual listing showing creditor name and cost, invoice amount and accrual amount.

You need to select a sample of accruals for valuation testing.About 200 of Kool’s inventory lines carry 12-month ‘free replacement’ warranties. When a customer in a particular state makes a warranty claim, the item is returned to that branch office. Each branch keeps a list of items returned in product number order, so that trends in warranty claims can be identified by product. At year-end, the warranty provision is calculated by determining the return percentages of major sales items, plus a general allowance for other items. You need to select a sample of items to test valuation of the warranty provision.

Required:

For each independent situation above:

Question 2:

Describe the steps you would follow to select a sample for testing. Include details of any information you might require from the client’s branch offices and assume only manual selection techniques will be used. 

Question 3:

Briefly describe the analytical procedures that could help corroborate the evidence gained from detailed testing of the sampled items. 

Question 4:

What action would you take if:

(i) A sales invoice you selected was subsequently found to be cancelled?

(ii) Your sampling plan for debtors resulted in no debtors from the Melbourne branch being selected? 

Question 5:

Give examples of situations where sampling from the recorded population might not be appropriate. 

Answer in Detail

i
Solved by qualified expert

34 More Pages to Come in This Document. Get access to the complete answer.

Marketing

Assignment: 4 Pages, Deadline:
1 day

Healthcare

Assignment: 4 Pages, Deadline:
11 days

Biology

Home Work: 1 Page, Deadline:
21 days

Electronics

Programming: 0 Pages, Deadline:
2 days

Accounting

Course Work: 3 Pages, Deadline:
12 days

Finance

Programming: 2 Pages, Deadline:
4 days

Accounting

Course Work: 2 Pages, Deadline:
5 days

Psychology

Assignment: 6 Pages, Deadline:
13 days

English

Home Work: 3 Pages, Deadline:
5 days

Management

Essay: 6 Pages, Deadline:
8 days

Management

Essay: 3 Pages, Deadline:
2 days

It Write Up

Assignment: 2 Pages, Deadline:
17 hours

HRM

Home Work: 1.5 Pages, Deadline:
5 days

Management

Home Work: 18 Pages, Deadline:
9 days

Finance

Course Work: 8 Pages, Deadline:
20 hours

Management

Home Work: 1 Page, Deadline:
14 hours

Project Management

Thesis: 20 Pages, Deadline:
7 days

Management

Assignment: 10 Pages, Deadline:
5 days

HRM

Essay: 1 Page, Deadline:
2 days

Marketing

Assignment: 10 Pages, Deadline:
4 days

well written and organized in a proper structure, however, more focus should be on the core subject

User ID: 6***69 United Arab Emirates

The writing is really good and went beyond my expectation. All the requirements are met and the sources were used in the essay are a reliable and good …

User ID: 5***30 Canada

great staff, nice people they submitted my work onetime and I had passed my unit

User ID: 4***37 Sydney, Australia

excellent! very fast speed and good work. i appreciate the hard work from your team. will use again

User ID: 7***68 Sydney, Canada

Hi! Thanks, again for your help! Very professional writer and finished on time! Quality is the best

User ID: 3***99 Ottawa, Canada

The best work! Thanks, again for your help! I got the grade that I wanted! Very professional and well-organized

User ID: 3***99 Ottawa, Canada

I got the mark that I wanted. Thank you, again for your help. Well-developed and organized.

User ID: 3***99 Ottawa, Canada

cant complain happy by the look of the assignment! I will give more feedback once grade received

User ID: 8***95 Ottawa, Ireland

Thanks to reaching out before the due date. it’s well searched and well organized. thanks.

User ID: 6***55 Ottawa, Canada

It was good and received before the deadline, the content of essay is upto the mark

User ID: 8***22 United Kingdom, Great Britain

Wonderful original work. I was so impressed and thankful for all of the help. This made my assignment so easy to submit.

User ID: 8***72 Washington Court House, United States

I need an clear an rich picture with details and the event table with type external,temporal,state in events type and trigger,action,condition respone …

User ID: 7***16 Washington Court House, Australia

great score on this assignment, feedback was on time. the assignment was submitted within the stipulated time frame.

User ID: 6***66 Washington Court House, Saint LUCIA

Excellent but a lot of Citation was needed. got passing marks but it was critically analyzed.

User ID: 8***44 United Kingdom, Great Britain

The writer did an excellent job writing the APA research paper and this individual met my requirements. Thank you for doing extraordinary work!

User ID: 8***35 Saint Louis, United States

great work but now i did not get marks from professor. I like your work.Great great great great great…….

User ID: 8***10 Surrey, Canada

It was a pretty good assignment I hope that and the others will be like this one

User ID: 6***39 Surrey, Greece

i always go back for the assignment !! they are the best amazing work so fast and on time !!

User ID: 7***36 Riyadh, Saudi Arabia

well-written discussion and completed before deadline. Excellent service by customer care team.

User ID: 7***17 Riyadh, Australia

Thank you for this excellent and valuable fileI thank the expert for his professional efforts in preparing the fileI would also like to thank the team …

User ID: 9***3 Riyadh, Kuwait