You have recently been appointed as the external auditor of Hope-well Limited, a manufacturer of refrigeration and air conditioning units. It is six months until the company's year end. Hope-well Limited had appointed another audit firm at the previous annual general meeting, but that firm has recently resigned. You are the audit senior in the team that will audit Hope-well Limited for the year ended 31 December 2020. A junior member of your audit team has identified a number of issues at Hope-well Limited; however, she is unsure of what impact these will have on the risk based audit approach. The issues are: 1. Hope-well Limited operates in a very competitive market with other ten companies. 2. There has been a high turnover of staff within both the finance and operational departments. 3. Hope-well Limited is hoping to expand the business through acquisition and aggressive sales and marketing targets. 4. The company has been operating close to its overdraft limit for at least two years. 5. The directors are also in the process of preparing an application for a substantial loan. 6. A preliminary analytical review indicates a good year for Hope-well Limited, despite the market for their product, as a whole, dropping.

You have recently been appointed as the external auditor of Hope-well Limited, a manufacturer of refrigeration and air conditioning units. It is six months until the company's year end. Hope-well Limited had appointed another audit firm at the previous annual general meeting, but that firm has recently resigned. You are the audit senior in the team that will audit Hope-well Limited for the year ended 31 December 2020. A junior member of your audit team has identified a number of issues at Hope-well Limited; however, she is unsure of what impact these will have on the risk based audit approach. The issues are: 1. Hope-well Limited operates in a very competitive market with other ten companies. 2. There has been a high turnover of staff within both the finance and operational departments. 3. Hope-well Limited is hoping to expand the business through acquisition and aggressive sales and marketing targets. 4. The company has been operating close to its overdraft limit for at least two years. 5. The directors are also in the process of preparing an application for a substantial loan. 6. A preliminary analytical review indicates a good year for Hope-well Limited, despite the market for their product, as a whole, dropping.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

44 Which one of the following audit objectives is based on the completeness assertion? a. Disclosure b. Classification c. Cutoff d. Valuation Clear my choice
Q3. Auditing involves the following except___ a. Systematic process b. Objectively obtaining evidence c. Assertions and established criteria d. Investment decisions
detail about audit strategy and audit plan along with their importance in audit and assurance assignments
Plz explain in detail
Direction: summarize each step of the risk-based audit process. Testing of ControlsPerforming substantive proceduresOverall review of the financial statementsIssuing audit report
What type of audit opinion is preferred when analyzing fi nancial statements? A . Qualifi ed
Determine whether statement 1 and 2 are true or false 5. S1 -Objectives are the overall plans for the entity, while strategies are the operational approaches by which managements intends to achieve its objectives S2- Not all controls are relevant to the auditor’s risk assessment a. False, False b. True, False c. False, True d. True, True
Question Discuss the objective of analytical procedures used in the overall review stage of the audit.
Numbers, 4,5,6,7,8,9,10 determining risks
APPROACH TO AUDITING IN A CIS ENVIRONMENT Skill & Competence Planning Risk Risk Assessments Documentation explain briefly and illustrate example
14. Which of the following tasks that the auditor may perform in relation to Risk Management without any reservation? Group of answer choices Facilitating identification and evaluation of risks Setting the risk appetite Giving assurance on the risk management process and provide recommendation Taking accountability for risk management