Preview

Audit Planning

Good Essays
Open Document
Open Document
604 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Audit Planning
MEMORANDUM FOR : SEALANT COMPANY PTY LTD.
FROM : EDDIE P. IRINCO & ALINE TEXTEIRA Audit Seniors
SUBJECT : AUDIT PLAN
We have conducted an efficient and effective audit through adequate planning. Under ASA 300.5 (ISA 300.02) our audit team had thoroughly plan the work to enable the audit performed in an effective manner. Sealant Company Pty Ltd was assessed on two risks aspects, Business Risk and the level of Inherent Risk.
BUSINESS RISK ASSESSMENT
The audit team had assessed Sealant Company Pty. Ltd on the basis of understanding its business and industry. Further, the audit team had identified and assessed risks of material misstatement based on the following factors;
Account Type Action Taken
The organization (Sealant Pty Ltd) and its business environment Obtained comprehensive information through;
• Thorough knowledge of the business
• Methodological understanding of the audit team’s in terms of internal control.
Audit Analysis • SWOT Analysis – The audit team had used SWOT Analysis in order to determined Sealant’s competitive situation by assessing its Strengths, Weaknesses, Environmental Opportunities, and Threats (Gay & Smith 2007).
• PEST Analysis – The audit team had identified relevant factors on the business engagement of Sealant. The company’s relationship between the industry and the broad economic and its business environment.
Assessment Classification • The Audit focus on high risk as the major determination of the business risk.

1. Credit sales cycle and trade receivables
It is considered a high inherent risk at assertion level for the fact that the processing errors are only partially mitigated by the sales manager and credit controller.
2. Cash receipts and payments
Sealant Ltd shows low inherent risk in terms of staff integrity when it comes to cash receipts and payments, however when the exchanged currency is put into analysis, inherent risk is increased because of the rate gains and losses resulting from this

You May Also Find These Documents Helpful

  • Best Essays

    Jet2 stakeholders

    • 2343 Words
    • 10 Pages

    SWOT analysis: this will help to identify the strength and weaknesses together with the company’s environmental opportunities and threats.…

    • 2343 Words
    • 10 Pages
    Best Essays
  • Satisfactory Essays

    The acceptable audit risks, inherent risk, the preliminary judgment about materiality and performance materiality have significant impact on the whole process of the audit and therefore they should be made in the planning phase. The acceptable audit risk helps the auditor to determine the scope and how much evidence to gather during the audit. Inherent risk is the risk of material misstatement in an account before considering the effectiveness of internal control. The assessment of inherent risk in the planning phase is to help the auditor plan the audit by deciding which parts of the audit to emphasize and the extent of testing. The performance materiality and preliminary judgment about materiality determine the nature, timing and extent of further audit procedures. Therefore, to better perform further audit procedures, these should be made in the early phase of the audit.…

    • 327 Words
    • 1 Page
    Satisfactory Essays
  • Powerful Essays

    Asa Tut8

    • 2637 Words
    • 11 Pages

    You are an assurance services senior and your client is Antique Collectibles Pty Ltd (AC), a small company that specialises in buying and selling antique Australian-made bush furniture. AC purchases pieces at auction, cleans and repairs them, then sells them to the general public. This is the first year that your firm has conducted AC’s audit.…

    • 2637 Words
    • 11 Pages
    Powerful Essays
  • Better Essays

    After performing preliminary analytical procedures and planning activities for Pinnacle Manufacturing, I have found several factors influencing inherent risks and acceptable audit risk. I have categorized the determinants of acceptable audit risk into three different factors: external users’ reliance on financial statements, likelihood of financial difficulties, and management integrity. All the calculations in detail are listed at the end of this report.…

    • 1251 Words
    • 5 Pages
    Better Essays
  • Powerful Essays

    Audit Checklist

    • 2781 Words
    • 12 Pages

    This Appendix includes guidance for reviewing the Office of Inspector General’s (OIG’s) attestation engagements conducted in accordance with Government Auditing Standards (GAS), Chapter 6, and the American Institute of Certified Public Accountants’ (AICPA’s) Statements on Standards for Attestation Engagements (SSAE). When an auditor conducts an attestation engagement under generally accepted government auditing standards (GAGAS), the engagement must be conducted in accordance with the SSAEs and additional GAGAS standards. This appendix is not intended to replace auditor judgment, and while comprehensive, the peer review team may also wish to consult with other guidance as warranted. That guidance includes the SSAE and the AICPA’s peer review checklists for attestation engagements (aicpa.org/members/div/practmon/systemreview.asp). In this regard, there are three AICPA checklists covering AICPA requirements and GAGAS: (1) Agreed-Upon Procedures Engagement Checklist – PRP §20,900; (2) Other Attestation Engagement Checklist – PRP §21,000; and (3) Supplemental Checklist for Review of Agreed Upon Procedures and Other Attestation Engagements Performed in Accordance With Government Auditing Standards (Yellow Book) July 2007 Revision – PRP §21,120A.…

    • 2781 Words
    • 12 Pages
    Powerful Essays
  • Powerful Essays

    1. In the first part were inspected mostly the records of OH&S Policy following, company regulations, different procedures and plans of actions. The omissions have not been discovered. This part of audit can be obtained as acceptable.…

    • 1169 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    Audit 1

    • 1365 Words
    • 5 Pages

    An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of risk of material misstatement of financial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting principles used by management, as well as evaluating the overall presentation of the financial statements. The purpose of the audit is to verify the validity of the financial statements through an independent process. Therefore, our audit team will be comprised of auditors that are not tied to Oceanview Marine Company and have not been for at least a year.…

    • 1365 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Materiality is assigned on a company by company basis when the company is audited. In this paper the subject to explain will be why certain accounts have to be audited 100% and why is materiality allocated only to the accounts that are sampled. Also this paper will answer if any component of the audit risk is within the auditors control and how the three risks that make up audit risk inter-relate.…

    • 396 Words
    • 2 Pages
    Good Essays
  • Good Essays

    The objective of the audit of financial statements is to enable the auditor to express an opinion if the financial statements are prepared in accordance with an identified financial reporting framework. The reason that materiality is allocated to those accounts sampled because materiality represents the magnitude of an omission or misstatement of an item in a financial report. The three function of the audit risk are inherent risk (IR), control risk (CR), and detection risk (DR). Every level of audit risk has an opposite connection that exists between assessed levels of controls, inherent risk, and level of detection risk…

    • 804 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Billy S Beats Inc

    • 1267 Words
    • 4 Pages

    However, the above procedures taken by auditors were not adequate to determine the appropriateness of the management’s estimates. First, Billy’s was a new client to the audit teams, which meant the engagement team should take some actions to obtain some understandings towards the new client. The engagement team should contact the predecessor auditors to obtain knowledge of Billy’s. If the engagement team failed to gather enough information about the client, the control risk of Billy’s should be automatically set at maximum. In this situation, the engagement team would choose to use substantive tests of details at year-end to test controls. Large sample size would be adopted as well. However, in the case, auditors did not get contact with the predecessor auditors. The only audit evidence the engagement team gathered was the inquiries of…

    • 1267 Words
    • 4 Pages
    Good Essays
  • Better Essays

    Audit Proposal

    • 1321 Words
    • 6 Pages

    Team C analyzed the accounts payable, accounts receivable, payroll, and inventory systems for Kudler Fine Foods. Kudler would now like to see a proposed audit schedule for these systems. The team will distinguish between the types of audits that may use for each process. The team will also recommend the most appropriate audit for each process and explain how to conduct the audits. Identifying events that may prevent reliance on auditing through the computer will also be presented to Kudler for review (Apollo Group, 2009).…

    • 1321 Words
    • 6 Pages
    Better Essays
  • Satisfactory Essays

    Auditing

    • 6093 Words
    • 25 Pages

    While performing a substantive test of details during an audit, the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated. It was, in fact, not materially misstated. The situation illustrates the risk of A. Incorrect rejection. B. Incorrect acceptance. C. Assessing control risk too high. D. Assessing control risk too low.…

    • 6093 Words
    • 25 Pages
    Satisfactory Essays
  • Better Essays

    When all data is gathered we will complete a risk assessment of the company so that the best audit approach may be…

    • 1183 Words
    • 5 Pages
    Better Essays
  • Powerful Essays

    Audit and Assurance

    • 929 Words
    • 4 Pages

    You are required to research and prepare a report based on one of the following topics. Please seek the assistance of the module leader Ivor Pingue and your seminar tutors for help and guidance with your coursework. Do not leave the research too late!!…

    • 929 Words
    • 4 Pages
    Powerful Essays
  • Satisfactory Essays

    Template

    • 669 Words
    • 3 Pages

    ← Review working papers to ensure accuracy and completion in a timely manner; adequately address the risks and controls highlighted in the audit planning document…

    • 669 Words
    • 3 Pages
    Satisfactory Essays