Ajio is a charity whose constitution requires that it raises fundsfor educational projects. These projects seek to educate childrenand support teachers in certain countries. Charities in the countryfrom which Ajio operates have recently become subject to newaudit and accounting regulations. Charity income consists of cashcollections at fund raising events, telephone appeals, andbequests (money left to the charity by deceased persons). Thecharity is small and the trustees do not consider that the charitycan afford to employ a qualified accountant. The charity employsa part-time bookkeeper and relies on volunteers for fund raising.Your firm has been appointed as accountants and auditors to thischarity because of the new regulations. Accounts have beenprepared (but not audited) in the past by a volunteer who is arecently retired Chartered Certified Accountant.Required;a) Describe the risks associated with the audit of Ajio under theheadings inherent risk, control risk and detection risk andexplain the implications of these risks for overall audit risk.b) List and explain the audit tests to be performed on income andexpenditure from fundraising events.Note. In part (a) you may deal with inherent risk and control risktogether. You are notrequired to deal with the detail of accounting for charities ineither part of the question.

Introduction: There are several forms of risks that arise from various conditions. We have liquidity…

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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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