Upstar Case Summary
5-30 The assertions for items 1-11 are as listed below:
1. Valuation or allocation
2. Completeness
3. Existence and occurrence
4. Completeness
5. Rights and obligations
6. Completeness
7. Valuation and allocation
8. Existence and occurrence
9. Presentation and disclosure
10 Valuation or allocation
11. Presentation and disclosure
6-22 Audit evidence
Bank statement sent directly to the auditor by the bank
1) directly from outsiders
Creditor monthly statement obtained from client’s files.
2) indirectly from outsiders
Vouchers in client’s unpaid voucher file.
4) entirely internal
Duplicate sales invoices in filled order file.
4) entirely internal
Time tickets filed in payroll department.
4) entirely internal …show more content…
4) entirely internal
In general, evidence obtained directly from outsiders is more reliable than internal documents prepared by the Management or their staff. Internally generated documents that are not circulated externally are the least reliable sources.
7-22
Key Categories Describe the knowledge used to develop a knowledgeable perspective about HipStar Identify how the knowledge might assist in assessing the risk of material misstatement
1. Industry Conditions Is the music industry demand for on line music growing?
Who are the competitors?
Is the model easily replicated? This will help determine value of intangible assets such as goodwill.
2. Regulatory Environment What accounting principles or specific practices are relevant specifically to the online music industry?
What legislation (Sabranes Oxley Act, Companies Act) is applicable to HipStar? This will help to determine if the company is following latest regulations in accounting and the financial statements are in compliance with industry specific rules for eg. Valuation of inventory.
3. Other external forces affecting the business Who are HipStar's
1. Valuation or allocation
2. Completeness
3. Existence and occurrence
4. Completeness
5. Rights and obligations
6. Completeness
7. Valuation and allocation
8. Existence and occurrence
9. Presentation and disclosure
10 Valuation or allocation
11. Presentation and disclosure
6-22 Audit evidence
Bank statement sent directly to the auditor by the bank
1) directly from outsiders
Creditor monthly statement obtained from client’s files.
2) indirectly from outsiders
Vouchers in client’s unpaid voucher file.
4) entirely internal
Duplicate sales invoices in filled order file.
4) entirely internal
Time tickets filed in payroll department.
4) entirely internal …show more content…
4) entirely internal
In general, evidence obtained directly from outsiders is more reliable than internal documents prepared by the Management or their staff. Internally generated documents that are not circulated externally are the least reliable sources.
7-22
Key Categories Describe the knowledge used to develop a knowledgeable perspective about HipStar Identify how the knowledge might assist in assessing the risk of material misstatement
1. Industry Conditions Is the music industry demand for on line music growing?
Who are the competitors?
Is the model easily replicated? This will help determine value of intangible assets such as goodwill.
2. Regulatory Environment What accounting principles or specific practices are relevant specifically to the online music industry?
What legislation (Sabranes Oxley Act, Companies Act) is applicable to HipStar? This will help to determine if the company is following latest regulations in accounting and the financial statements are in compliance with industry specific rules for eg. Valuation of inventory.
3. Other external forces affecting the business Who are HipStar's