a) Describe the risks associated with the audit of Ajio under the headings inherent risk, control risk and detection risk and explain the implications of these risks for overall audit risk. b) List and explain the audit tests to be performed on income and expenditure from fundraising events.
a) Describe the risks associated with the audit of Ajio under the headings inherent risk, control risk and detection risk and explain the implications of these risks for overall audit risk. b) List and explain the audit tests to be performed on income and expenditure from fundraising events.
Business Its Legal Ethical & Global Environment
10th Edition
ISBN:9781305224414
Author:JENNINGS
Publisher:JENNINGS
Chapter8: Business Crime
Section: Chapter Questions
Problem 2QAP
Related questions
Question
![Ajio is a charity whose constitution requires that it raises funds
for educational projects. These projects seek to educate children
and support teachers in certain countries. Charities in the country
from which Ajio operates have recently become subject to new
audit and accounting regulations. Charity income consists of cash
collections at fund raising events, telephone appeals, and
bequests (money left to the charity by deceased persons). The
charity is small and the trustees do not consider that the charity
can afford to employ a qualified accountant. The charity employs
a part-time bookkeeper and relies on volunteers for fund raising.
Your firm has been appointed as accountants and auditors to this
charity because of the new regulations. Accounts have been
prepared (but not audited) in the past by a volunteer who is a
recently retired Chartered Certified Accountant.
Required;
a) Describe the risks associated with the audit of Ajio under the
headings inherent risk, control risk and detection risk and
explain the implications of these risks for overall audit risk.
b) List and explain the audit tests to be performed on income and
expenditure from fundraising events.
Note. In part (a) you may deal with inherent risk and control risk
together. You are not
required to deal with the detail of accounting for charities in
either part of the question.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb981d062-e37a-4948-8e55-8805f9ea7bae%2F8d105fdd-d5d4-45db-947a-1ab8db58a8de%2F7pir1r_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Ajio is a charity whose constitution requires that it raises funds
for educational projects. These projects seek to educate children
and support teachers in certain countries. Charities in the country
from which Ajio operates have recently become subject to new
audit and accounting regulations. Charity income consists of cash
collections at fund raising events, telephone appeals, and
bequests (money left to the charity by deceased persons). The
charity is small and the trustees do not consider that the charity
can afford to employ a qualified accountant. The charity employs
a part-time bookkeeper and relies on volunteers for fund raising.
Your firm has been appointed as accountants and auditors to this
charity because of the new regulations. Accounts have been
prepared (but not audited) in the past by a volunteer who is a
recently retired Chartered Certified Accountant.
Required;
a) Describe the risks associated with the audit of Ajio under the
headings inherent risk, control risk and detection risk and
explain the implications of these risks for overall audit risk.
b) List and explain the audit tests to be performed on income and
expenditure from fundraising events.
Note. In part (a) you may deal with inherent risk and control risk
together. You are not
required to deal with the detail of accounting for charities in
either part of the question.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Business Its Legal Ethical & Global Environment
Accounting
ISBN:
9781305224414
Author:
JENNINGS
Publisher:
Cengage
![Individual Income Taxes](https://www.bartleby.com/isbn_cover_images/9780357109731/9780357109731_smallCoverImage.gif)
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Business Its Legal Ethical & Global Environment
Accounting
ISBN:
9781305224414
Author:
JENNINGS
Publisher:
Cengage
![Individual Income Taxes](https://www.bartleby.com/isbn_cover_images/9780357109731/9780357109731_smallCoverImage.gif)
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT