You are an audit assistant in the firm Rogers and Smith. You have been asked to plan the audit of 'Tap!' for the year ended 30 June 20X4. It is the first tme your audit firm has audited the charity, which has not been audited previously. The trustees have expressed interest in receiving a 'value added' audit and are particularly interested in business advice, especially in the area of systems controls. 'Tap!' is a registered charity that raises money for projects building wells in Africa through musical entertainment. The group consists of volunteers who travel around the country, puƫng on variety shows of music and dance, the proceeds of which are put towards building the wells. The main show is a tap dance production, acyng out the difficulties many people face when they are not near a clean water supply. The administrative offices of 'Tap!' are located in a large provincial town. It owns a house, donated by legacy in the past, where the administration is carried out and where the volunteers stay during off periods. A large proportion of 'Tap!'s income comes from box office receipts which are taken by the theatre at which they are performing. The theatres usually waive their standard terms for use of the premises and merely take a 10% commission on ticket receipts to cover light and heat and other such expenses. Income usually comes in aŌer every booking in the form of a lump sum cheque from the theatre, together with a breakdown of takings and commission. 'Tap!' also receives donations towards the work. These come from a variety of sources: Cash donations from buckets passed around at the interval of each performance. Cash donations on the (rare) occasion that the team does street performances. Cash donations made over the phone or by post by interested donors. The troupe consists largely of volunteers so they are only paid expenses for their work. The cost of housing the group while they are on the road is borne by the charity. The charity employs an administrator who organises bookings, handles publicity and co-ordinates all the finances. Required:As an auditor following the International Auditing Standards, justify as a case the following requirements: (a) The risks arising for the audit of the year ending 30 June 20X4. (b) State the audit procedures you would undertake in respect of cash income in the financial statements. (c) List some controls over cash which the charity should implement.
You are an audit assistant in the firm Rogers and Smith. You have been asked to plan the audit of 'Tap!' for the year ended 30 June 20X4. It is the first tme your audit firm has audited the charity, which has not been audited previously. The trustees have expressed interest in receiving a 'value added' audit and are particularly interested in business advice, especially in the area of systems controls. 'Tap!' is a registered charity that raises money for projects building wells in Africa through musical entertainment. The group consists of volunteers who travel around the country, puƫng on variety shows of music and dance, the proceeds of which are put towards building the wells. The main show is a tap dance production, acyng out the difficulties many people face when they are not near a clean water supply. The administrative offices of 'Tap!' are located in a large provincial town. It owns a house, donated by legacy in the past, where the administration is carried out and where the volunteers stay during off periods.
A large proportion of 'Tap!'s income comes from box office receipts which are taken by the theatre at which they are performing. The theatres usually waive their standard terms for use of the premises and merely take a 10% commission on ticket receipts to cover light and heat and other such expenses. Income usually comes in aŌer every booking in the form of a lump sum cheque from the theatre, together with a breakdown of takings and commission.
'Tap!' also receives donations towards the work. These come from a variety of sources:
Cash donations from buckets passed around at the interval of each performance.
Cash donations on the (rare) occasion that the team does street performances.
Cash donations made over the phone or by post by interested donors.
The troupe consists largely of volunteers so they are only paid expenses for their work. The cost of housing the group while they are on the road is borne by the charity. The charity employs an administrator who organises bookings, handles publicity and co-ordinates all the finances.
Required:
As an auditor following the International Auditing Standards, justify as a case the following requirements:
(a) The risks arising for the audit of the year ending 30 June 20X4.
(b) State the audit procedures you would undertake in respect of cash income in the financial statements.
(c) List some controls over cash which the charity should implement.
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