Auditing Free Essays

Required Through a memorandum, explain to the directors (a ) Why Is the need for an audit. (5 marks) (b) how the auditor off public company may be appointed under the companies Act (5 marks) (c) What are the rights and powers of an auditor under the Companies Act (10 marks ) (d) The responsibilities of the directors in relation to the accounting ,fraud and internal controls functions of Brian Ltd. (10 marks ) QUESTION 2 The maintenance of auditor Independence Is vital to the credibility of the audit In the minds of the users of the financial statements . We will write a custom essay sample on Auditing or any similar topic only for you Order Now Professional regulations has been seen as being one of the more acceptable methods of acceptable methods of achieving auditor independence than state regulations although certain sections of the Companies ‘s Act have a bearing on such independence. (a ) state and explain the two sides of auditor independence (8 marks ) (b ) Explain the circumstance that may threaten auditor ‘ Independence and objectivity(10 marks ) ( c) Explain mom the measures that auditors may Implement In order to deal with the threats (12 marks) Question 3 The directors of Mellon Manufacturing have asked your firm to act as their auditors for the year ended 30 September. They will be asking their existing auditors to resign, as they do not provide a cost effective service. The partner proposed for appointment to Mellon Manufacturing holds a membership certificate and a certificate of registration as a registered auditor through the COCA. The proposed partner is scheduled for routine Investigation by the COCA regulation monitoring unit. A) Describe the investigations you would carry out and ethical matters you would consider before you can accept the appointment as the company’s auditor. (8 marks) (b) Explain why it is important that an auditor should send a letter of engagement to the client prior to undertaking an audit. (4 marks) (b) Briefly describe the main contents of a letter of engagement which you would send to the directors of Mellon Manufacturing. (8 marks) How to cite Auditing, Papers Auditing Free Essays Assume that fraud has been discovered In the â€Å"Possible Errors and Fraud† list, shown as A through O In the problem. Select two of the fraud Items from the list and note them here: Fraud Item Invoices for goods sold are posted to incorrect customer accounts. Fraud Item Invoices are sent for shipped goods and are recorded in the sales journal, but are not posted to any customer account. We will write a custom essay sample on Auditing or any similar topic only for you Order Now Following the scientific method, answer the following questions below: a. Do aground research in relationship to the issue to get a more in-depth understanding of the situation. What questions would you ask of management to determine how the fraud Is occurring based on the specific fraud Identified? Fraud Item #1 Are the employees In charge of shipping comparing the product shipped with the sales Invoice to determine that the goods are being shipped to the customer who ordered them? Fraud Item #2 Why are the invoices for shipped goods not being posted to any of the customers’ accounts? B. Construct your hypotheses concerning the issue which we will use to test our data against. Your hypotheses will be the implications on the financial statements because of the fraud Items you Identified. (Which accounts are affected? Will they be overstated or understated? ) Fraud Item #1 If Invoices are checked once a month, then goods would not be sent to wrong customers. Fraud Item #2 If controlled amounts posted to the accounts receivable ledger are compared with control totals of invoices, then invoices would be posted to the customer’s account. C. Test your Hypotheses by doing experiments. To test your hypotheses, you’ll need to list controls that would have to fall for the read to be committed. Then for testing, list what specific audit procedures you â€Å"Controls† from problem 11-38 that apply to your fraud items. Controls that would have to fail to allow fraud Audit procedures to test controls Fraud Item #1 Invoices are going to the wrong customer C. Monthly statements are mailed to all customers with outstanding balances. Fraud Item #2 Invoices are not being posted to the customer’s account K. Control amounts posted to the accounts receivable ledger are compared with control totals of invoices. D. Analyze your data and draw a conclusion concerning the population under study. We are assuming that fraud has been discovered in the two areas you chose, so that’s the conclusion! E. Communicate your results. To communicate your results, list some enhancements or changes to controls that need to be made to keep the fraud from occurring in the future. Fraud Item #1 Statements will be mailed out to the customers that have an outstanding balance every month. Fraud Item #2 The control amounts that are posted to the accounts receivable ledger will be compared with control totals of invoices at least once a month. How to cite Auditing, Papers