You are planning the audit of Lola Ltd, a company with investments in listedsecurities that you consider to have a low level of inherent risk. What is the mostappropriate level of planning materiality for the 30 June 2022 audit given thefollowing balances: (all amounts are in $'000)Sales: 1500 (2022); 1350 (2021); 1200 (2020)Profit: 18 (2022); 147.6 (2021): -126 (2020)Current assets: 1840 (2022); 1656 (2021); 1472 (2020)а. 18.4b. 15.0С. 0.9d. 1.8

Auditing: Auditing is the process of doing close analysis of financial reports of a company by an…

Answered: You are planning the audit of Lola Ltd,…

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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30. Below Auditors’ Report for Al-Hashaar Company : Independent Auditor’s Report To the Audit Committee of Al-Hashaar Company We have audited the accompanying consolidated balance sheets of Al-Hashaar Company and its subsidiaries, as of December 31, 2020 and 2019, and the related consolidated statements of income, retained earnings, and cash flows for the years then ended. Management's Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the Sultanate of Oman; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit.…
George Company, a CPA firm, conducted an audit for the 2020 financial statements of Simon Corporation. The auditors assessed the audit risk, control risk, and inherent risk to be 4%, 50%, and 80% respectively. Which of the following statements is correct? There is 4% probability that the auditors' own procedures would fail to detect material misstatements There is 50% probability that the client's internal control activities would fail to prevent or detect material misstatements There is 50% probability that, in the absence of internal controls, material errors or frauds could enter the accounting system used to develop financial statements There is 50% probability that the auditors' own procedures would fail to detect material misstatements None of the above
SG Motor Cars Co (PSG) manufactures a range of motor cars, and its year end is 30 June 2020. You are the assistant audit manager of Intermiami & Co and are currently preparing the audit programmes for the year-endaudit of PSG. You have had a meeting with your audit manager, and he has notified you of the following issues identified during the audit risk assessment process:Land and buildingsPSG has a policy of revaluing land and buildings; this is undertaken on a rolling basis over a five-year period. During the year PSG requested an external independent valuer to revalue a number of properties, including awarehouse purchased in January 2020. Depreciation is charged on a straight-line basis.Work in progressPSG undertakes continuous production of cars, 24 hours a day, seven days a week. An inventory count is to be undertaken at the year end and Intermiami & Co will attend. You are responsible for the audit of work inprogress (WIP) and will be part of the team attending the count…
On the audit of Megna Ltd. the audit partner on the engagement set the preliminary level of audit materiality at TK. 10 crore. After the partner reviewed the audit senior’s assessment of inherent risk, he decided that the materiality level should be increase to Tk 15 crore.Required: (hint: Audit Risk)1) What is the relationship between materiality and audit risk?2) How will this new level of materiality affect the nature and extent of auditing procedures?
You are an auditor. Please identify 3 unaudited financial statement items for 2023 that you consider to have the highest risk of material misstatement. Explain in detail why they are higher risk,
The auditors join client stock take at the year end and see whether the way that they count is in the correct procedures or not. This procedure is an example of: * Observation Inquiry Inspection of tangible assets O Inspection of records and documents
Company A's balance sheet and income statement for the fiscal year ending 2021 show the following: - Net Income: $15,000,000 - Total Assets: $75,000,000 - Total Revenue: $200,000,000 - Net Revenue: $50,000,000 You are the associate auditor on this client. Your senior auditor tells you that for Company A, 1.5% is the materiality judgement. Based on the appropriate benchmark identified in Question #1, determine the planning materiality. Show your work. Your work should look like: BENCHMARK AMOUNT x MATERIALITY JUDGEMENT = PLANNING MATERIALITY
Determine the following as a result of your audit: a. How much is the correct total interest income related to notes receivable reported in the 2022 Statement of Comprehensive Income? b. How much is the net understatement (overstatement) of profit reported in the Statement of Comprehensive Income in 2022?
2. An audit firm is required to perform a risk assessment in order to determine whether to accept the new client or continue with repeat clients annually. Question 2 options: a) True b) False

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