Auditing and Assurance Assignment
Requirements:
You are audit senior in the audit firm Greentick, in charge of the audit of Soundworld Ltd for the year ended June 30, 2016. Prepare a report dated February 1, 2016 for the audit manager outlining the audit plan for the year ended 30 June, 2016. As it is the beginning of the audit do not prepare a final audit report/opinion. The report should cover the following areas under the suggested headings:
Planning Materiality
Calculate the planning materiality and provide two reasons justifying the base you have chosen for your calculation. Refer to additional information.
Risk Assessment
The audit team has gained an understanding of Soundworld Ltd's structure and business environment as a part of the risk assessment phase of the audit. From researching the retail and wholesale electronics/entertainment product industry, a number of inherent risks have been documented and recorded in the additional information provided with the assignment.
In your report include the documented 'Risk Description' with an additional heading 'Risk Assessment'.
Under this heading for each of the inherent risks documented, consider Soundworld Ltd's operations with reference to the information provided in the assignment and identify the associated financial accounts that would be affected.
For each of the financial accounts identified provide an assessment of 'high', 'medium', or 'low' in relation to the likelihood and materiality of the risk of misstatement of the account balance occurring in Soundworld with reasons for your assessment
Identify the relevant 'assertion/s' which could be affected. Assertions as per text pages 164-165.
For example-"the sales account balance has a 'high' inherent risk of being misstated as the company needs to generate sales to meet published profit forecasts. The relevant assertion is 'occurrence' to ensure that sales are real and have not been overstated."
Analytical Procedures
In undertaking the risk assessment of Soundworld Ltd the analytical procedure using ratio analysis has also been completed and documented in the additional information provided with the assignment.
Discuss the results of the analytical procedures outlining potential problem areas (that is, where possible material misstatements in the financial report exist) and any other special concerns (for example, going concern). Specify the account balances and related assertions that would require particular attention in the audit.
Conclusion
Include a final conclusion recommending the areas of audit focus based on the risk assessment processes undertaken in the previous sections.
Attachment:- Assignment.rar