Bright Star (Pty) Ltd is considering issuing corporate bonds and must have their financial statements auditedas part of the process.You are required to:a) Describe the steps an auditor would take to give Bright Star (Pty) Ltds' prospective investors confidencethat the financial statements are without significant inaccuracies. Focus on describing what processes willtake place in the following steps:Initial PlanningRisk EvaluationCollection of Audit EvidenceConducting Audit ProceduresEvidence AssessmentAudit Reportingb) Define 'reasonable assurance' in the context of an audit.c) In what ways does an auditor's assessment in Bright Star (Pty) Ltds' situation assist potential investors inreducing their investment risk?

a) Steps an Auditor Would Take to Give Bright Star (Pty) Ltd's Prospective Investors…

Answered: Bright Star (Pty) Ltd is considering…

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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Critically evaluate the importance of auditor independence in adding value to the financial statements. With reference to a real case where auditor independence has been questioned, critically discuss the challenges to achieving auditor independence
Audited financial statements are prepared by: Management O Company Salesmen O Directors Auditors
Management's assertions in the financial statements are of relevance to the audit process because a. they are the procedures that will be performed by the audit team. b. they are utilized by auditors in developing proper tests and procedures c. they are direct evidence that management has prepared financial statements in accordance with GAAS. d. they relate more to the audit while the financial statenent belong to the author.
The CPA's role in performing audits is important to our society because: O an audit of financial statements helps investors and others know that they can rely on the information presented in the financial statements. O auditors have the primary responsibility for the information contained in the financial statements. auditors issue reports on the accuracy of each financial transaction. auditors provide direct financial advice to potential investors.
Business risk must be assessed in performing an audit. a) Define business risk in association with an audit and describe several sources of such risk. b) How does business risk relate to the performance of preliminary analytical procedures in an audit? c) There are four major areas in planning an audit engagement and there are sub-parts to each of the four major areas. Please identify the four major areas and the sub-parts that are associated with the major areas.
which of the following areas would an internal audit be required to have proficiency when carrying out an audit of corporate governance processes? a. management and financial accounting b. computerized management information systems c. internal auditing standards, procedures, and techniques d. Fundamentals of commercial law
Identify audit risk area of listed public company from the ASX200 that is Mirvac Group. Explain the potential impact of the audit risk on the company’s financial statements.
Bright Star (Pty) Ltd is considering issuing corporate bonds and must have their financial statements audited as part of the process. You are required to: a) Describe the steps an auditor would take to give Bright Star (Pty) Ltds' prospective investors confidence that the financial statements are without significant inaccuracies. Focus on describing what processes will take place in the following steps: Initial Planning Risk Evaluation Collection of Audit Evidence Conducting Audit Procedures Evidence Assessment Audit Reporting b) Define 'reasonable assurance' in the context of an audit. c) In what ways does an auditor's assessment in Bright Star (Pty) Ltds' situation assist potential investors in reducing their investment risk?
Explain the content of each section of the audit report and describe the types of opinions that an auditor can issue. Evaluate the importance of each section with respect to the users of financial reports.
Financial audit Q&A What risks that may occur during assertion testing, but cannot be prevented due to the lack of time? What reports that need to be prepared to find out if there are significant changes in the client? What is the parties reported by the auditor that are related to the results of the audit reports made? What terms that must be included in the document prepared by the client? What is the inspection activities to ensure the shipping or Destination Point in the recording of the financial statements is correct in accordance with the fragments? The auditor needs to know that the ending balance recorded in the financial statements is appropriate based on evidence of transactions in the company. What is the audit assertion underlying the vouching procedure? What is the audit assertion underlying the tracing procedure? What is the risk that caused by the sample taken by the Auditor does not describe the characteristics of the data from the entire data population?…
What are key audit matters? How do these affect the format of the audit report? b) Stewart Jones is reviewing the results of the subsequent events audit procedures. Stewart iswriting a report for his audit partner based on these results and will be attending a meetingtomorrow with the partner and representatives of the company to discuss them. The issue will bewhether the financial report should be amended, or additional notes included for thesesubsequent events.Many of the items are not material and Stewart will recommend that no action be taken withrespect to these. However, there are several items that Stewart believes are material and shouldbe discussed at the meeting. These are as follows.(a) The board is planning to issue shares in a private placement on 15 August. (b) The share issue is to fund the purchase of a 60 per cent stake in another company. Thenegotiations are in the final stages and although the contract is not yet signed it will be signedby 15 August. (c) A writ was…
a) What are key audit matters? How do these affect the format of the audit report? b) Stewart Jones is reviewing the results of the subsequent events audit procedures. Stewart is writing a report for his audit partner based on these results and will be attending a meeting tomorrow with the partner and representatives of the company to discuss them. The issue will be whether the financial report should be amended, or additional notes included for these subsequent events.Many of the items are not material and Stewart will recommend that no action be taken with respect to these. However, there are several items that Stewart believes are material and should be discussed at the meeting. These are as follows.(i) The board is planning to issue shares in a private placement on 15 August. (ii) The share issue is to fund the purchase of a 60 per cent stake in another company. The negotiations are in the final stages and although the contract is not yet signed it will be signedby 15 August.(iii)…

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