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Practical Assignment For Audit

The document outlines an individual assignment with a submission date of October 21, 2024, consisting of various questions related to auditing practices, professional skepticism, and corporate governance. It requires explanations of key concepts, responsibilities regarding fraud detection, and recommendations for improving corporate governance compliance. The assignment includes specific scenarios involving companies and their financial practices, emphasizing the importance of ethical standards and professional judgment in auditing.

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6 views3 pages

Practical Assignment For Audit

The document outlines an individual assignment with a submission date of October 21, 2024, consisting of various questions related to auditing practices, professional skepticism, and corporate governance. It requires explanations of key concepts, responsibilities regarding fraud detection, and recommendations for improving corporate governance compliance. The assignment includes specific scenarios involving companies and their financial practices, emphasizing the importance of ethical standards and professional judgment in auditing.

Uploaded by

cadeyare1201
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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INDIVIDUAL ASSIGNMENT

SUBMISSION DATE: 21st October, 2024


IT’S 10 MARKS ASSIGNMENT
QUESTION 1:
Auditors are required to plan and perform an audit with professional skepticism, to exercise
Professional judgment and to comply with ethical standards.
REQUIREMENT:
(ii) Explain what is meant by 'professional skepticism' and why it is so important that the
auditor maintains professional skepticism throughout the audit. (3marks)
(ii) Define 'professional judgment' and describe TWO areas where professional
judgement is applied when planning an audit of financial statements. (3 marks)

QUESTION 2:
You are the audit supervisor of ABC Co and are currently planning the audit of an existing
client, Socdaal Co, whose year-end was 30 April 20X5. Socdaal Co is a
pharmaceutical company that manufactures and supplies a wide range of medical supplies.
The draft financial statements show revenue of $35.6 million and profit before tax of $5.9
million.
Socdaal's previous finance director left the company in December 20X4 after it was discovered.
that he had been claiming fraudulent expenses from the company for a significant period.
A new finance director was appointed in January 20X5 who was previously a financial controller
of a bank, and she has expressed surprise that ABC Co had not uncovered the fraud during
last year's audit.

Socdaal's new finance director has read about review engagements and is interested in
the possibility of ABC Co undertaking these in the future. However, she is unsure how
these engagements differ from an external audit and how much assurance would be gained from
this type of engagement

REQUIREMENT:

(i) State ABC Co's responsibilities in relation to the prevention and detection of fraud
and error. (3 marks)
(ii) Explain the purpose of review engagements and how these differ from external
audits. (5marks)
(iii) Describe the level of assurance provided by external audits and review
engagements. (3 marks)

QUESTION 3:
Amiira, the finance (executive) director of Rasumaal Co, recently attended a course on
corporate governance and has now decided that the setup at Rasumaal needs to be improved, in
order to comply voluntarily with the provisions of the UK Corporate Governance Code.
Amiira herself provides the main point of contact between dhaqala bile Co(audit firm) and the
Board of Directors, and acts as the company’s audit committee, on the oral agreement of the
Board.

Amiira is also responsible for the final sign off Rasumaal’s financial statements.

REQUIREMENT:
Describe TWO corporate governance deficiencies faced by Recorder and provide a
recommendation to address each deficiency to ensure compliance with corporate governance
principles.(6marks)
Note: Prepare your answer using two columns headed Deficiency and Recommendation
respectivel

QUESTION 4:
During the audit of a new client, you listed the following corporate governance practices used by
your client.
Deficiency Yes/No Recommendation:

1. The entity has a six-member


board of directors, including
executive and non-executive
directors.

2. The CEO serves as the


chairman of the board of
directors.

3. The board includes two


independent NEDs.
4. New board members are
selected by a nominations
committee headed by the
chairman/CEO.

5. The audit committee


comprises two executive
directors and the two NEDs.

6. One of the independent non-


executive audit committee
members recently retired after
serving for ten years as the CFO
of a major corporation.

7. The remuneration committee


comprises one executive director
and one NED, and they decide
the remuneration of all board
members.

8. Management is required to
assess the effectiveness of
internal controls on an annual
basis.

Required:
Select yes or no to indicate whether each corporate governance practice is a corporate
governance deficiency. If the practice is a deficiency, recommend how it should be
corrected. If there is no deficiency, leave the recommendation box blank. (16 marks)

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