assignment(包括67章答案及8-12章的任務(wù)).doc

Chapter 41.Words and phrases2. Please illustrate the figure in page 98.3. Please translate following sentences.（1）資產(chǎn)負(fù)債表反映了企業(yè)的財(cái)務(wù)狀況，利潤(rùn)表反映了企業(yè)的經(jīng)營(yíng)成果，現(xiàn)金流量表反映了企業(yè)的現(xiàn)金流量情況。（2）內(nèi)部審計(jì)人員的責(zé)任是幫助管理層有效運(yùn)營(yíng)企業(yè)，外審人員的責(zé)任是出具合適的審計(jì)意見。（3）管理層要保護(hù)企業(yè)資產(chǎn)的安全、編制真實(shí)公允的財(cái)務(wù)報(bào)表，并且要設(shè)計(jì)、執(zhí)行和維護(hù)有效的內(nèi)部控制。4. when external auditors intend to rely on the work performed by the internal auditors, they should consider four factors.（1）whether the work is being performed by staff with the relevant level of technical training and proficiency and whether the work of assistants is properly supervised, reviewed and documented.（2）whether sufficient, appropriate evidence is being obtained to be able to draw reasonable conclusions.（3）whether the conclusions reached are appropriate and whether the reports produced are consistent with the results.（4）whether any exceptions or unusual matters identified by internal auditing are properly resolved.Chapter 51.Words and phrases2. Explain the situations where an auditor may disclose confidential information about a client.Chapter 61.Words and phrases2.Explain the concept of materiality and describe how materiality affects the audit work perform.3. You are the audit manager in charge of the audit of Tempest, a limited liability company. The companys year end is 31 December , and Tempest has been a client for seven years. The company purchases and resells fittings for ships including anchors, compasses, rudders, sails etc. Clients vary in size from small business making yachts to large companies maintaing large luxury cruise ships. No manufacturing taking place in Tempest.Information on the companys financial performance is available as follows:2005 Forecast（in thousands）2004 Actual（in thousands）Revenue4592840825Cost of sales（37998）（31874）Gross profit79308951Administration costs(4994)(4758)Distribution costs(2500)(2500)Net profit4361693Non-current assets(at net book value)36004500Current assetsInventory2001278Receivables60004052Cash and bank5001590Total assets1030011420Capital and reservesShare capital10001000Accumulated profits53005764Total shareholders funds63006764Non-current liabilities10002058Current liabilities30002598Total1030011420Other informationThe industry that Tempest trades in has seen moderate growth of 7% over the last year.(1) non-current assets mainly relate to company premises for storing inventory. Ten delivery vehicles are owned with a net book value of $300,000.(2) one of the directors purchased a yacht during the year.(3) inventory is stored in ten different locations across the country, with your firm again having offices close to seven of those locations.(4) A computerised inventory control system was introduced in august 2005. Inventory balances are now obtainable directly from the computer system. The clients does not intend to count inventory at the year end but rely instead on the computerised inventory control system.Required:Using the information provided above, prepare the audit strategy for Tempest for the year ending 31 December 2005. Answer:Client: Tempest Index: C1Subject: overall audit strategy Period:2005.1.1-2005.12.31Prepared by: manager Date: 2005.11.1Reviewed by:partner Date: 2005.11.161. audit universeTempest requires a normal statutory audit-there are no audit or filing exemptions.The financial reporting framework is the International Accounting Standards and there are no industry specific requirements.Tempest buys and then resells all types of fixtures and fittings for ships from yachts through to large cruise ships. The company has ten warehouses, seven of which are located near to branches of our audit firm.2. audit timtableKey dates in the audit timetable are :Interim auditFinal auditMeeting with Audit committeeFinancial statements approved by managementSpecific dates are to be confirmed.3.important factors affecting audit workMateriality determinationCPA reference book P160: 確定重要性水平時(shí)選用的適當(dāng)基準(zhǔn)取決于被審計(jì)單位的具體情況，包括各類報(bào)告收益（如稅前利潤(rùn)、營(yíng)業(yè)收入、毛利和費(fèi)用總額），以及所有者權(quán)益或凈資產(chǎn)。對(duì)于以營(yíng)利為目的的實(shí)體，通常以經(jīng)常性業(yè)務(wù)的稅前利潤(rùn)作為基準(zhǔn)。如果經(jīng)常性業(yè)務(wù)的稅前利潤(rùn)不穩(wěn)定，選用其他基準(zhǔn)可能更加合適，如毛利或營(yíng)業(yè)收入。Materiality will initially be set at 0.5% to 1% of revenue as this figure appears to be more accurate than gross profit.Overall materiality= 45928000*0.5% =229640$Executive materiality =229640 * 50% = 114820$Identification of risk areas with a higher risk of misstatementA review of the draft financial statements for the company shows the following risks(1) sales have increases by 12%but cost of sales increased by 19%. There is a risk of cost of sales being overstated.（收入與成本造假比較）(2) inventory on the balance sheet is down significantly indicating that there may be valuation or quantity errors.(3) trade receivables have increased by about 50%,significantly more than the increase in sales. This indicates that the company may have debt collection problems. Additional testing may be required on after date cash collections to check for bad debts.(4) non-current assets have fallen by $900k, which is significant given that most non-current assets are land and buildings. The reason for sale must be ascertained.(5) non-current liabilities have also fallen by $1million. While not necessarily linked to the fall in non-current assets, there is a possibility that non-current assets have been sold to pay off the liabilities.Extent of control testingAudit testing will focus on the use of compliance testing where possible. Changes have been made to the inventory system, three actions are necessary in respect of this system.(1) audit initial installation of the system including transfer of balances. One of the reasons for the low inventory value could be omission of inventory balances on transfer.(2) perform inventory count at the year-end and agree to the computerised inventory records to test accuracy. Because client doesnt count inventory at the year end but rely instead on the computerised inventory control system.(3) test check booking into and out of inventory from the purchases and sales systems.Other risk areas(1)there is the possibility of related party transactions. One of the directors purchased a yacht during the year. Checks must be made to determine whether this transaction had been recorded, and whether it was in the normal course of business.(2) Three warehouses are located away from our offices.,assistance may be required on the inventory count. 2005 Forecast（in thousands）2004 Actual（in thousands）Increase(amount)Increase(%)Revenue4592840825510312.50Cost of sales（37998）（31874）612419.21Gross profit79308951-1021-11.41Administration costs（4994）（4758）2364.96Distribution costs（2500）（2500）00.00Net profit4361693-1257-74.25Non-current assets(at net book value)36004500-900-20.00Current assetsInventory2001278-1078-84.35Receivables60004052194848.08Cash and bank5001590-1090-68.55Total assets1030011420-1120-9.81Capital and reservesShare capital1000100000.00Accumulated profits53005764-464-8.05Total shareholders funds63006764-464-6.86Non-current liabilities10002058-1058-51.41Current liabilities3000259840215.47Total1030011420-1120-9.812005 Forecast（in thousands）2004 Actual（in thousands）proportion in 2005(%)proportion in 2004(%)increase(%)Revenue4592840825100.00100.00Cost of sales（37998）（31874）82.7378.074.66Gross profit7930895117.2721.93-4.66Administration costs（4994）（4758）10.8711.65-0.78Distribution costs（2500）（2500）5.446.12-0.68Net profit43616930.954.15-3.20Non-current assets(at net book value)360045007.8411.02-3.18Current assetsInventory20012781.9411.19-9.25Receivables6000405258.2535.4822.77Cash and bank50015904.8513.92-9.07Total assets1030011420100.00100.000.00Capital and reservesShare capital100010009.718.760.95Accumulated profits5300576451.4650.470.98Total shareholders funds6300676461.1759.231.94Non-current liabilities100020589.7118.02-8.31Current liabilities3000259829.1322.756.38Total1030011420100.00100.000.00Chapter 71.Words and phrases2. You are the internal auditor of a large private company, Twinkletoes. Twinkletoes manufactures a high volume of reasonably priced shoes for elderly people. The company has a trade receivables ledger that is material to the financial statements containing four different categories of account. The categories of account , and the risk associated with them, are as follows:(1) small retail shoe shops. These accounts represent nearly two thirds of the accounts on the ledger by number, and one third of the receivables by value. Some of these customers pay promptly,others are very slow;(2) Large retail shoe shops(including a number of overseas accounts)that sell a wide range of shoes. Some of these accounts are large and overdue.(3)chains of discount shoe shops that buy their inventory centrally. These accounts are mostly well-established “high street” chains. Again, some of these accounts are large and overdue;(4) mail order companies who sell the companys shoes. There have been a number of large new accounts in this category, although there is no history of bad debts in this category.Receivables listed under (2) to (4) are roughly evenly split by both value and numbers. All receivables are dealt with by the same managers and staff and the same internal controls are applied to each category of receivables. You do not consider that using the same managers and staff, and the same controls, is necessarily the best method of managing the receivables ledger.Twinkletoes has suffered an increasing level of bad debts and slow payer in recent years, mostly as a result of small shoe shops becoming insolvent. The company has also lost several overseas accounts because of a requirment for them to pay in advance. Management wishes to expand the overseas market and has decided that overseas customers will in future be allowed credit terms.Management has asked you to classify the risks associated with the receivables ledger in order to manage trade receivables as a whole more efficiently. You have been asked to classify accounts as high,medium or low risk.Required:Classify the risks relating to the four categories of trade receivables as high,medium or low and explain your classification.Note:more than one risk classification may be appropriate within each account category.categorySpecific itemsRiskSmall retail shoe shops(1) most of these accounts individually are low risk because customers pay promptly and the amounts are small.Low(2) accounts that are significantly overduemedium(3) if a large number of accounts are significantly overdueHighLarge retail shoe shops(1) some of these accounts are large and overdue.High(2) some overseas accounts which have paid in advanceLow(3) other overseas accounts which havent paid in advance till now.HighChains of shoe shops(1) most of these accounts individually are low risk because they are well established “ high street” chains.Low(2) some of these accounts are large and overduemediumMail order company(1) a number of large new accounts are meduim risk because they are new and large.medium(2) other accounts withen this category may be classified as low risk because there is no history of bad debts.lowChapter 81.Words and phrases.2. Please list assertions the auditors should pay much more attention to when auditing the inventory，and tell the reason.Chapter 91.Words and phrases.2. Translate these sentences into english.(1) 注冊(cè)會(huì)計(jì)師應(yīng)當(dāng)獲取充分適當(dāng)?shù)膶徲?jì)證據(jù)。充分性是指審計(jì)證據(jù)的數(shù)量，適當(dāng)性是指審計(jì)證據(jù)的質(zhì)量，適當(dāng)性包括相關(guān)性和可靠性。審計(jì)證據(jù)的質(zhì)量越高，獲取的審計(jì)證據(jù)數(shù)量可以越少，但如果審計(jì)證據(jù)是不可靠的，獲取再多的審計(jì)證據(jù)不足以證實(shí)認(rèn)定。注冊(cè)會(huì)計(jì)師獲取的絕大多數(shù)審計(jì)證據(jù)是說(shuō)服性的，而非結(jié)論性的。(2) 控制測(cè)試是測(cè)試內(nèi)部控制運(yùn)行有效性的審計(jì)程序，實(shí)質(zhì)性程序包括對(duì)交易或事項(xiàng)、賬戶余額以及披露認(rèn)定的細(xì)節(jié)測(cè)試和實(shí)質(zhì)性程序?？刂茰y(cè)試可以選做，但實(shí)質(zhì)性程序必須實(shí)施。(3) 從被審單位外部獨(dú)立第三方獲取的審計(jì)證據(jù)比從被審單位內(nèi)部獲取的審計(jì)證據(jù)可靠，內(nèi)部控制有效時(shí)生成的審計(jì)證據(jù)比內(nèi)部控制薄弱是生成的證據(jù)可靠，書面的證據(jù)比口頭的證據(jù)可靠，原件比復(fù)印件或傳真件可靠。Chapter 101.Words and phrases.2. Please list assertions the auditors should verify when auditing trade receivables and the related audit procedures.3. you have been presented with the following draft financial informaiton about Hivex, a very successful company that develops and licenses specialist computer software and hardware. Its non-current assets mainly consist of property, computer hardware and investments, and there have been additions to these during the year. The company is experiencing increasing competition from rival companies, most of which specialise in hardware or software, but not both. There is pressure to advertise and to cut prices.You are the audit manager. You are planning the audit and you are conducting a preliminary analytical review and associated risk analysis for this client for the year ended 31 May 2010. You have been provided with a summarised draft statement of comprehensive income which has been produced very quickly and certain accounting ratios and percentages. You have been informed that the company accounts for research and development costs in accordance with IAS 38 Intangible Assets.Year ended 31 May20102009$000$000Revenue1520613524Cost of sales30093007Gross profit1219710517Distribution costs30061996Administrative expenses9941768Selling expenses3002274Profit from operations51956479Net interest receivable995395Year ended 31 May20102009$000$000Profit before tax61906874Corporation tax31041452Net profit30865422Dividends paid14691439Retained profits16173983Accounting ratios and percentages20102009Earnings per share 0.431.04Performance ratios include the followingGross margin0.800.78Expenses as a percentage of salesDistribution costs0.200.15Administrative expenses0.070.13Selling expenses0.200.02Operating profit0.340.48Required:(1)using the information above, comment briefly on the performance of the company for the two years.(2) use your answer to part(a) to identify the areas that are subjec to increased audit risk and describe the further audit work you would perform in response to those risks.(1) performance a. the company has increased its sales by 12% and its gross profit by 16% which in a competitive market is very good (if not entirely credible) however, increased operating expenses have resulted in a reduction in operating profits of 20%.b. the gross margin is very high; this is not abnormal in this sector, especially for software( although the margin is high for hardware), but is may also be the result of errors, because the information has been produced very quickly. This is also true of the other figures.c. total expenses as a percentage of sales have increased substantially with the result that operating profit as a percentage of sales has reduced by around a third.d. the increase in the selling expenses as a percentage of sales may reflect the need for the company to spend more on advertising.e. the increase in the distribution costs as a percentage of sales may reflect inefficiencies in the method of distribution in an industry that separates these functionsf. the administrative expenses as a percentage of sales have halved although they do not represent a significant amount in absolute terms.g. the reduction in operating profits has been partially offset by increased net interest receivable but profit before tax is still down 10%.h. the reduction in profit before tax and the increased tax charge have resulted in a reduction in profit after tax of over 40%.i. total dividends have been increased, despite the lower profits, which has meant an overall reduction in retained profits of almost 60%.j. the reduction in earning per share is partly due to the reduction in profits but there is insufficient information to state whether it is also attributable to an increase in the number of shares, although this seems likely.(2) higher risk areas and audit proceduresGross margin and operating expensesa. I would obtain a detailed schedule of revenue and cost of sales showing the opening and closing inventory figures for both software and hardware and I would perform a detailed review of changes on, say, a monthly, quarterly and half-yearly basis.b. I would ascertain the accounting policies for revenue recognition for both software and hardware and ensure that they were in accordance with relevant International Accounting Standards. I would then test the application of these policies to individual transaction. IAS 38 Intangible Assets requires certain development costs to be capitalised in the statement of financial position and requires that research costs and costs that do not meet the criteria for capitalisation be expensed.c. I would seek to establish shy all three categories of operating expenses have changed so dramatically, by enquiry and by obtaining a schedule of operating expenses and a breakdown of the cost of sales figure.d. I would perform detailed analytical procedures on operating expenses and cost of sales/gross margins, on a quarterly and monthly basis and I would also perform detailed testing of transactions in these areas in order to ensure that misclassifications have not occurred.e. audit evidence provided by statement of financial position work on the inventory figures (such as analytical procedures performed on the invento levels and attendance at the inventory count) will provide evidence in relation to cost