### Year-End Audit Process for Jack MotorsJack Motors manufactures a range of motor cars and its financial year ends on 31st January 2019. As the audit supervisor from Ayeyi & Partners, you are preparing the audit programs for the year-end audit of Jack Motors, taking into account several key issues identified during the audit risk assessment process.#### Land and BuildingsJack Motors has a policy of revaluing land and buildings on a rolling basis over a five-year period. In the past year, Jack Motors engaged an external valuer to revalue several properties, including a warehouse acquired in May 2018. Depreciation is charged on a pro-rata basis.#### Work in ProgressJack Motors operates 24/7, continuously producing cars. An inventory count will be conducted at the year-end, which Ayeyi & Partners will attend. You are responsible for auditing the work in progress (WIP) and will be part of the team attending the count and the final audit. WIP includes partly assembled cars, and this balance is likely to be material. Jack Motors values WIP based on the percentage of completion, with standard costs applied to these percentages.### Required Audit Procedures:i. **Factors for Ayeyi & Partners to Consider for Independent Valuer Reliance:** - **Qualifications and Expertise:** Verify the valuer's credentials, experience, and reputation. - **Scope of Work:** Assess the extent and clarity of the valuer’s work and whether it aligns with the audit requirements. - **Methodology:** Evaluate the valuation methods used and ensure they are accepted and relevant to the industry. - **Independence and Objectivity:** Ensure the valuer is unbiased and independent from Jack Motors. - **Consistency:** Check if the valuation is consistent with previous valuations or if discrepancies are justified and reasonable.ii. **Substantive Procedures to Obtain Sufficient Evidence:** **a. Revaluation of Land and Buildings:** - **Valuation Report Examination:** Review the report provided by the external valuer for thoroughness and appropriateness. - **Recalculation of Depreciation:** Verify the accuracy of depreciation calculations based on the revalued amounts. - **Market Data Comparison:** Compare the valuation with current market prices and benchmarks. - **Physical Inspection:** Conduct site visits to verify the existence and condition of the properties. **b. Recently Purchased Warehouse:** - **Purchase Documentation:** Inspect purchase

The certain factors to be considered by the company are: Expert’s Qualification- The person should…

Jack Motors manufactures a range of motor cars and its year end is 31* January 2019. You are the audit supervisor of Ayeyi & Partners and are currently preparing the audit programmes for the year-end audit of Jack Motors. You have had a meeting with your audit manager and he has notified you of a number of issues identified during the audit risk assessment process. Land and buildings Jack Motors have a policy of revaluing land and buildings, this is undertaken on a rolling basis over a five-year period. During the year Jack Motors requested an external valuer to revalue a number of properties, including a warehouse purchased in May 2018. Depreciation is charged on a pro rata basis. Work in progress Jack Motors undertakes continuous production of cars, 24 hours a day, and seven days a week. An inventory count is to be undertaken at the year end and Ayeyi & Partners will attend. You are responsible for the audit of work in progress (WIP) and will be part of the team attending the count as well as the final audit. WIP constitutes the partly assembled cars at the year end and this balance is likely to be material. Jack Motors values WIP according to percentage of completion, and standard costs are then applied to these percentages. Required: i. Explain the factors Ayeyi & Partners should consider when placing reliance on the work of the independent valuer. ii. Describe the substantive procedures the auditor should perform to obtain sufficient and appropriate audit evidence in relation to: a. The revaluation of land and buildings b. The recently purchased warehouse.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q