Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented. The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

Question

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Answer 1

Question

Chapter 6, Problem 6.27P

a

To determine

Introduction:

Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

b

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors should be considered if the auditor is considering to engage an IT specialist, the information required to be asked to the specialist to provide.

c

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The effect on components of the entity’s internal control when the entity changes to an IT-based accounting system.

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a) What are key audit matters? How do these affect the format of the audit report? b) Stewart Jones is reviewing the results of the subsequent events audit procedures. Stewart is writing a report for his audit partner based on these results and will be attending a meeting tomorrow with the partner and representatives of the company to discuss them. The issue will be whether the financial report should be amended, or additional notes included for these subsequent events.Many of the items are not material and Stewart will recommend that no action be taken with respect to these. However, there are several items that Stewart believes are material and should be discussed at the meeting. These are as follows.(i) The board is planning to issue shares in a private placement on 15 August. (ii) The share issue is to fund the purchase of a 60 per cent stake in another company. The negotiations are in the final stages and although the contract is not yet signed it will be signedby 15 August.(iii)…

You are the training manager at Guava & Co., Chartered Accountants. Some trainees in the firm have requested you to clarify the following issues: a) Can the auditor discard any audit document, forming part of his opinion, after the issuance of the auditor’s report? b) The changes that can be incorporated during the final the assembly process citing three such examples. c) The circumstances under which it becomes necessary to modify the existing audit documents or add new audit documents after the issuance of the auditor’s report and the matters that should be documented in such a situation. Required: Offer appropriate explanations for each of the above issues.

What are key audit matters? How do these affect the format of the audit report? b) Stewart Jones is reviewing the results of the subsequent events audit procedures. Stewart iswriting a report for his audit partner based on these results and will be attending a meetingtomorrow with the partner and representatives of the company to discuss them. The issue will bewhether the financial report should be amended, or additional notes included for thesesubsequent events.Many of the items are not material and Stewart will recommend that no action be taken withrespect to these. However, there are several items that Stewart believes are material and shouldbe discussed at the meeting. These are as follows.(a) The board is planning to issue shares in a private placement on 15 August. (b) The share issue is to fund the purchase of a 60 per cent stake in another company. Thenegotiations are in the final stages and although the contract is not yet signed it will be signedby 15 August. (c) A writ was…

Answer 2

Question

Chapter 6, Problem 6.27P

a

To determine

Introduction:

Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

b

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors should be considered if the auditor is considering to engage an IT specialist, the information required to be asked to the specialist to provide.

c

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The effect on components of the entity’s internal control when the entity changes to an IT-based accounting system.

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Answer 3

Question

Chapter 6, Problem 6.27P

a

To determine

Introduction:

Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

b

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors should be considered if the auditor is considering to engage an IT specialist, the information required to be asked to the specialist to provide.

c

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The effect on components of the entity’s internal control when the entity changes to an IT-based accounting system.

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Answer 4

Question

Chapter 6, Problem 6.27P

a

To determine

Introduction:

Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

b

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors should be considered if the auditor is considering to engage an IT specialist, the information required to be asked to the specialist to provide.

c

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The effect on components of the entity’s internal control when the entity changes to an IT-based accounting system.

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Answer 5

Chapter 6, Problem 6.27P

a

To determine

Introduction:

Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

b

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors should be considered if the auditor is considering to engage an IT specialist, the information required to be asked to the specialist to provide.

c

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The effect on components of the entity’s internal control when the entity changes to an IT-based accounting system.

Answer 6

Chapter 6, Problem 6.27P

a

To determine

Introduction:

Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

Answer 7

Chapter 6, Problem 6.27P

a

To determine

Introduction:

Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

Answer 8

b

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors should be considered if the auditor is considering to engage an IT specialist, the information required to be asked to the specialist to provide.

Answer 9

b

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors should be considered if the auditor is considering to engage an IT specialist, the information required to be asked to the specialist to provide.

Answer 10

c

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The effect on components of the entity’s internal control when the entity changes to an IT-based accounting system.

Answer 11

c

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The effect on components of the entity’s internal control when the entity changes to an IT-based accounting system.

Answer 12

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Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 6 - Prob. 6.1RQ Ch. 6 - Prob. 6.2RQ Ch. 6 - Prob. 6.3RQ Ch. 6 - Prob. 6.4RQ Ch. 6 - Prob. 6.5RQ Ch. 6 - Prob. 6.6RQ Ch. 6 - Prob. 6.7RQ Ch. 6 - Prob. 6.8RQ Ch. 6 - Prob. 6.9RQ Ch. 6 - Prob. 6.10RQ

Solution Summary: The author analyzes the factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence.

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Chapter 6 Solutions