QUESTION TWO [30] In planning an audit, the use of analytical procedures may be used to assist in identifying and assessing the risks of material misstatement. The following information pertaining by Dibango (Pty) Ltd one of your audit clients: 1. Dibango (Pty) Ltd bakes bread products which it supplies to numerous supermarket petrol station shops etc throughout KZN 2. The company operates from one central bakery and uses a fleet of vans to deliver to its customers 3. Minimal inventory is held at anytime 4. The company employs a small number of administration staff and the reasonably large labour force. temporary staff are employed around public holiday periods when bakery products sales increase. 5. The accounts department maintains detailed production and delivery records. Reasonably detailed monthly accounts are prepared 6. there is a detailed annual budget which is broken down into months Al of the above documentation for the current prior year is available to your firm as well as the draft financial statements for the financial year-end 30 October 2021. YOU ARE REQUIRED TO: a) Justify the performance of analytical procedures as a risk assessment procedure. (4) b) Briefly discuss the characteristics which must be present in data if the auditor is to use the data to perform analytical procedures (at any stage of the audit). (4) c) Discuss the factors you would consider in deciding whether analytical procedures will be appropriate substantive tests for a particular account heading when conducting further audit procedures on those account headings. (8) d) Detail the analytical review procedures you might conduct at the planning stage for your audit at the Dibango (Pty) Ltd based on the information provided. (14)
QUESTION TWO [30] In planning an audit, the use of analytical procedures may be used to assist in identifying and assessing the risks of material misstatement. The following information pertaining by Dibango (Pty) Ltd one of your audit clients: 1. Dibango (Pty) Ltd bakes bread products which it supplies to numerous supermarket petrol station shops etc throughout KZN 2. The company operates from one central bakery and uses a fleet of vans to deliver to its customers 3. Minimal inventory is held at anytime 4. The company employs a small number of administration staff and the reasonably large labour force. temporary staff are employed around public holiday periods when bakery products sales increase. 5. The accounts department maintains detailed production and delivery records. Reasonably detailed monthly accounts are prepared 6. there is a detailed annual budget which is broken down into months Al of the above documentation for the current prior year is available to your firm as well as the draft financial statements for the financial year-end 30 October 2021. YOU ARE REQUIRED TO: a) Justify the performance of analytical procedures as a risk assessment procedure. (4) b) Briefly discuss the characteristics which must be present in data if the auditor is to use the data to perform analytical procedures (at any stage of the audit). (4) c) Discuss the factors you would consider in deciding whether analytical procedures will be appropriate substantive tests for a particular account heading when conducting further audit procedures on those account headings. (8) d) Detail the analytical review procedures you might conduct at the planning stage for your audit at the Dibango (Pty) Ltd based on the information provided. (14)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![QUESTION TWO
[30]
In planning an audit, the use of analytical procedures may be used to assist in identifying and
assessing the risks of material misstatement. The following information pertaining by Dibango
(Pty) Ltd one of your audit clients:
1. Dibango (Pty) Ltd bakes bread products which it supplies to numerous supermarket
petrol station shops etc throughout KZN
2. The company operates from one central bakery and uses a fleet of vans to deliver to its
customers
3. Minimal inventory is held at anytime
4. The company employs a small number of administration staff and the reasonably large
labour force. temporary staff are employed around public holiday periods when bakery
products sales increase.
5. The accounts department maintains detailed production and delivery records.
Reasonably detailed monthly accounts are prepared
6. there is a detailed annual budget which is broken down into months
Al of the above documentation for the current prior year is available to your firm as well as
the draft financial statements for the financial year-end 30 October 2021.
YOU ARE REQUIRED TO:
a) Justify the performance of analytical procedures as a risk assessment procedure. (4)
b) Briefly discuss the characteristics which must be present in data if the auditor is to
use the data to perform analytical procedures (at any stage of the audit).
(4)
c) Discuss the factors you would consider in deciding whether analytical procedures will
be appropriate substantive tests for a particular account heading when conducting
further audit procedures on those account headings.
(8)
d) Detail the analytical review procedures you might conduct at the planning stage for
your audit at the Dibango (Pty) Ltd based on the information provided.
(14)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffd1a942a-adfb-4b18-885d-6ac056bbf977%2F930409c2-cb5a-4f0f-914d-212a6bb5855b%2Fkr8n2j_processed.jpeg&w=3840&q=75)
Transcribed Image Text:QUESTION TWO
[30]
In planning an audit, the use of analytical procedures may be used to assist in identifying and
assessing the risks of material misstatement. The following information pertaining by Dibango
(Pty) Ltd one of your audit clients:
1. Dibango (Pty) Ltd bakes bread products which it supplies to numerous supermarket
petrol station shops etc throughout KZN
2. The company operates from one central bakery and uses a fleet of vans to deliver to its
customers
3. Minimal inventory is held at anytime
4. The company employs a small number of administration staff and the reasonably large
labour force. temporary staff are employed around public holiday periods when bakery
products sales increase.
5. The accounts department maintains detailed production and delivery records.
Reasonably detailed monthly accounts are prepared
6. there is a detailed annual budget which is broken down into months
Al of the above documentation for the current prior year is available to your firm as well as
the draft financial statements for the financial year-end 30 October 2021.
YOU ARE REQUIRED TO:
a) Justify the performance of analytical procedures as a risk assessment procedure. (4)
b) Briefly discuss the characteristics which must be present in data if the auditor is to
use the data to perform analytical procedures (at any stage of the audit).
(4)
c) Discuss the factors you would consider in deciding whether analytical procedures will
be appropriate substantive tests for a particular account heading when conducting
further audit procedures on those account headings.
(8)
d) Detail the analytical review procedures you might conduct at the planning stage for
your audit at the Dibango (Pty) Ltd based on the information provided.
(14)
Expert Solution
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 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education