Instruction to students: This is an individual assignment.
All questions are compulsory.
Task: ACC707 Auditing And Assurance Services Assignment
Question 1
While assessing the risk of material misstatement and determining the appropriate response with regard to the inventory of Advanced Computer Solutions Limited (Advanced Computer Solutions) for the 30 June 2018 audit, you become aware of the following information:
(i) The best-selling computer presentation package has been experiencing a high level of
returns owing to suspected software problems
(ii) Based on closing inventory, inventory turned over an average of 5.4 times in 2017 and 3.8 times in 2018
(iii) Advanced Computer Solutions moved its inventory from a central warehouse to six new regional warehouses in March 2018
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Required
(a) Identify and explain the two key assertions at risk in relation to inventory
(b) Identify and describe two substantive audit procedures that you could perform in response to each risk identified above
Question 2: ACC707 Auditing And Assurance Services Assignment-King’s Own Institute Australia
You are the auditor of Green Machine Ltd, a manufacturer. You have obtained a summary of
the property, plant and equipment for the year ended 30 June 2018, which identifies cost and accumulated depreciation brought forward, additions and disposals in the year and
depreciation charges.
Required
(a) Identify and explain the two key assertions at risk in relation to property, plant and
equipment
(b) Identify and describe two substantive audit procedures that you could perform in response to each risk identified above
(c) Explain the requirement of ASA 701 Communicating Key Audit Matters in the Auditor’s Report and the rationale for this auditing standard. Determine if the above matters are key
audit matters, providing full rationale for the determination. If it is determined that they
are Key Audit Matters, provide the disclosures which are required in Key Audit Matters
Section of the Auditor’s report as required under ASA 701.
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