Accounting
8.21
(1) MA, I/P
(2) FFR, O
(3) FFR, I/P
(4) MA, O
(5) MA, R
(6) FFR, I/P
(7) FFR/ O
(8) FFR, R
(9) FFR, R
(10) MA, I/P
(11) MA, R
(12) FFR, O
8.27 Fraud risk
(a) Fraud risk factors ASA 240
- high degree of competition in the market
- Domination by Rob Bigbucks (CEO&chairman)
- Threatened employees with no pay rises
- Significant portion of sales managers salaries are paid in bonuses - The industry is in a recession and it is starting to affect the company – Potentially leading to obsolete stock and overstatement of assets
6.27 Corporate governance and the audit role
(1) AC is comprised of independent non-executive directors.
(2) Chair of the audit committee is a fellow of the ICAA
(3) All members of the AC will be financially literate.
(4) The responsibilities of the audit committee include: integrity of financial reporting; risk management & internal control framework; &oversight of independence of external & internal auditors.
(5) Qantas rotates the lead audit partner every five years and imposes restrictions on the ex-employees of the external auditor
Additional Question
1. Related party transactions
(a) - May be conducted with the related parties & treated like normal transactions
- May contain special terms that are not disclosed that inflate revenue & assets
- Used in round –tripping revenue recognition where one item such as a piece of land has been sold to related parties, the back to the entity, & then back to the related party
(b) FR
(c) Contracts should be examined to indicate the existence/terms of related party dealings & ensure proper note disclosure
2. Industry dominance
(a)-Client has the opportunity to generate ‘special deals’with customers
- Revenue may be recognised when a number of ‘side deals’ exist that allow the customer to return the goods after the auditor leaves.
(b)FR
(c) – Sample all sales made during an unusually high quarter for sales
- Examine a random sample of transactions during the
(1) MA, I/P
(2) FFR, O
(3) FFR, I/P
(4) MA, O
(5) MA, R
(6) FFR, I/P
(7) FFR/ O
(8) FFR, R
(9) FFR, R
(10) MA, I/P
(11) MA, R
(12) FFR, O
8.27 Fraud risk
(a) Fraud risk factors ASA 240
- high degree of competition in the market
- Domination by Rob Bigbucks (CEO&chairman)
- Threatened employees with no pay rises
- Significant portion of sales managers salaries are paid in bonuses - The industry is in a recession and it is starting to affect the company – Potentially leading to obsolete stock and overstatement of assets
6.27 Corporate governance and the audit role
(1) AC is comprised of independent non-executive directors.
(2) Chair of the audit committee is a fellow of the ICAA
(3) All members of the AC will be financially literate.
(4) The responsibilities of the audit committee include: integrity of financial reporting; risk management & internal control framework; &oversight of independence of external & internal auditors.
(5) Qantas rotates the lead audit partner every five years and imposes restrictions on the ex-employees of the external auditor
Additional Question
1. Related party transactions
(a) - May be conducted with the related parties & treated like normal transactions
- May contain special terms that are not disclosed that inflate revenue & assets
- Used in round –tripping revenue recognition where one item such as a piece of land has been sold to related parties, the back to the entity, & then back to the related party
(b) FR
(c) Contracts should be examined to indicate the existence/terms of related party dealings & ensure proper note disclosure
2. Industry dominance
(a)-Client has the opportunity to generate ‘special deals’with customers
- Revenue may be recognised when a number of ‘side deals’ exist that allow the customer to return the goods after the auditor leaves.
(b)FR
(c) – Sample all sales made during an unusually high quarter for sales
- Examine a random sample of transactions during the