ACC621 Substantive audit procedures

ACC621 Task 2, ATMC Semester 2, 2020 Substantive audit procedures

Background:

You are part of the audit team assigned to the audit of Maidenhair Enterprises for the year ended 30 June 2020. This is the third year that your firm has been engaged for the audit of Maidenhair. Notes from last year’s audit file indicated that internal controls around revenue and current assets are strong, while controls around other accounts are generally weak. Tests of controls confirmed this is also the case for the current year. The preliminary assessment of materiality has been set at $5,000. The unaudited trial balance for the client is shown below.

The senior auditor in your team has asked each team member to substantively test a different account. Refer to the following  to identify the account that has been allocated to you.

Your task:

Your task is to prepare a working paper/s to be included in the audit file, for your allocated account. The working paper/s must address the six points below.

1. Consider which assertions are likely to be most at risk for this account. Identify 3 relevant
2. Explain why these assertions are likely to be at-risk. In doing so, you should consider fluctuations in the account balance (e.g. compared with the prior year) and consider the key risks generally applicable to this type of
3. Identify and describe an audit procedure/s which would provide sufficient appropriate evidence for the identified assertions.

⇛ Ensure that your working paper clearly identifies the account being tested, a relevant audit objective, relevant assertions, and the procedure/s to be used. It is recommended that you prepare your audit working paper using either Microsoft Excel or Microsoft Word and use the  feature to add additional notes/justification for your choices. The comments feature should also be used to record your references to information sources.

4. The senior auditor has asked you to select a sample of 5 transactions from your general ledger account for vouching. Access the general ledger detail for your account and identify 5 specific entries to make up your sample. Describe/illustrate your sample selection
5. Provide a brief statement justifying your sample selection approach with reference to the Australian auditing standards and the international auditing standards. Identify the benefits of your chosen approach compared to alternative
6. Comment on whether vouching these 5 transactions is likely to provide sufficient appropriate evidence for this account. In doing so, consider how material the account is and the level of detection risk that would be appropriate for this account. Also, consider the direction of testing, and whether it is appropriate for your

⇛ You may like to address points 4 to 6 on a separate working paper, or include this on your existing working paper. You do not have the documents required to complete the audit testing for this account. As such, your working paper/s will be incomplete. There should be a section at the bottom which says “Conclusion:” but this will remain blank. It would likely be completed during a site visit to the client.

Criteria

Your assignment will be graded based on the criteria below. Please pay due regard to these criteria.