Auditing

Auditing
Hay and Davis (2004) explored "The voluntary choice of an auditor of any level of quality". Using this and other research published in scholarly accounting and business journals available through Business Source Complete, discuss why an organisation would voluntarily subject their accounts to audit in the absence of a mandated requirement.

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Auditing

Auditing
Hay and Davis (2004) explored "The voluntary choice of an auditor of any level of quality". Using this and other research published in scholarly accounting and business journals available through Business Source Complete, discuss why an organisation would voluntarily subject their accounts to audit in the absence of a mandated requirement.

Leave a Reply

Your email address will not be published. Required fields are marked *

Auditing

1a) What is the objective of the analytical review at any stage of the audit. Give reasons which would make the auditor’s expectations to differ from the actual amounts presented by the client.
                                                                                                                  (9 marks)                                                            
b)The following information for the year to 30 April 2010 has been extracted from accounting records of Kothari Limited, a manufacturing concern, together with  comparative figures for 2009.

2010
£000           £000                       
2009
£000                 £000
Turnover
Raw material: Opening stock
                        Purchases
Closing stock
Material used
Labour & overheads
Production cost
Work in progress: Opening
                              Closing
Factory cost: finished goods
Finished goods: Opening stock
                           Closing stock
Cost of sales
Gross profit
Selling expenses
Administrative expense
Depreciation not yet allocated
Net Profit
Non-current assets
Current assets
  Stock of raw materials
 Work in progress
  Finished goods
Trade receivables
Trade payables
Net current assets
Net assets employed
Financed by
 Share capital and reserves
Long term borrowings
Net capital employed
  400
3,000
3,400
(800)
2,600
1,550
4,150
   300
(1,000)
3,450
   500
  (150)
  150
  100
  300
800
1,000
   150
1,950
1,650
(700)
   4,600
3,800
   800
550
250
3,050
2,900
5,950
3,500
2,450
5,950
   350
1,500
1,850
 (400)
1,450
   750
2,200
   400
  (300)
2,300
   550
  (500)
     70
     90
    150
  400
  300
  500
1,200
   750
  (340)
3,000
2,350
   650
  310
  340
1,840
1,610
3,450
3,000
   450
3,450
b) Examine the financial statements of Kothari Limited and without calculating any ratios, note matters of significance in the context of planning the final audit.                                                   Select ratios that would support or refute your observations before you seek explanations from the chief accountant. Give possible reasons that you hope can explain the observed changes.                                                                                                         
                                                                                                                          (14 marks)
c) What are the limitations of depending too much on ratio analysis during the analytical review process for Kothari Limited.
                                                                                                                                                                 (7marks)
d) Trade payables have increased to £ 700 from £340- generate substantive audit procedures for trade payables and explain your reason for each procedure.
                                     Total:                                                                              40 marks                                                                                                                                    

Leave a Reply

Your email address will not be published. Required fields are marked *

Auditing

1a) What is the objective of the analytical review at any stage of the audit. Give reasons which would make the auditor’s expectations to differ from the actual amounts presented by the client.
                                                                                                                  (9 marks)                                                            
b)The following information for the year to 30 April 2010 has been extracted from accounting records of Kothari Limited, a manufacturing concern, together with  comparative figures for 2009.

2010
£000           £000                       
2009
£000                 £000
Turnover
Raw material: Opening stock
                        Purchases
Closing stock
Material used
Labour & overheads
Production cost
Work in progress: Opening
                              Closing
Factory cost: finished goods
Finished goods: Opening stock
                           Closing stock
Cost of sales
Gross profit
Selling expenses
Administrative expense
Depreciation not yet allocated
Net Profit
Non-current assets
Current assets
  Stock of raw materials
 Work in progress
  Finished goods
Trade receivables
Trade payables
Net current assets
Net assets employed
Financed by
 Share capital and reserves
Long term borrowings
Net capital employed
  400
3,000
3,400
(800)
2,600
1,550
4,150
   300
(1,000)
3,450
   500
  (150)
  150
  100
  300
800
1,000
   150
1,950
1,650
(700)
   4,600
3,800
   800
550
250
3,050
2,900
5,950
3,500
2,450
5,950
   350
1,500
1,850
 (400)
1,450
   750
2,200
   400
  (300)
2,300
   550
  (500)
     70
     90
    150
  400
  300
  500
1,200
   750
  (340)
3,000
2,350
   650
  310
  340
1,840
1,610
3,450
3,000
   450
3,450
b) Examine the financial statements of Kothari Limited and without calculating any ratios, note matters of significance in the context of planning the final audit.                                                   Select ratios that would support or refute your observations before you seek explanations from the chief accountant. Give possible reasons that you hope can explain the observed changes.                                                                                                         
                                                                                                                          (14 marks)
c) What are the limitations of depending too much on ratio analysis during the analytical review process for Kothari Limited.
                                                                                                                                                                 (7marks)
d) Trade payables have increased to £ 700 from £340- generate substantive audit procedures for trade payables and explain your reason for each procedure.
                                     Total:                                                                              40 marks                                                                                                                                    

Leave a Reply

Your email address will not be published. Required fields are marked *

Auditing

1a) What is the objective of the analytical review at any stage of the audit. Give reasons which would make the auditor’s expectations to differ from the actual amounts presented by the client.
                                                                                                                  (9 marks)                                                            
b)The following information for the year to 30 April 2010 has been extracted from accounting records of Kothari Limited, a manufacturing concern, together with  comparative figures for 2009.

2010
£000           £000                       
2009
£000                 £000
Turnover
Raw material: Opening stock
                        Purchases
Closing stock
Material used
Labour & overheads
Production cost
Work in progress: Opening
                              Closing
Factory cost: finished goods
Finished goods: Opening stock
                           Closing stock
Cost of sales
Gross profit
Selling expenses
Administrative expense
Depreciation not yet allocated
Net Profit
Non-current assets
Current assets
  Stock of raw materials
 Work in progress
  Finished goods
Trade receivables
Trade payables
Net current assets
Net assets employed
Financed by
 Share capital and reserves
Long term borrowings
Net capital employed
  400
3,000
3,400
(800)
2,600
1,550
4,150
   300
(1,000)
3,450
   500
  (150)
  150
  100
  300
800
1,000
   150
1,950
1,650
(700)
   4,600
3,800
   800
550
250
3,050
2,900
5,950
3,500
2,450
5,950
   350
1,500
1,850
 (400)
1,450
   750
2,200
   400
  (300)
2,300
   550
  (500)
     70
     90
    150
  400
  300
  500
1,200
   750
  (340)
3,000
2,350
   650
  310
  340
1,840
1,610
3,450
3,000
   450
3,450
b) Examine the financial statements of Kothari Limited and without calculating any ratios, note matters of significance in the context of planning the final audit.                                                   Select ratios that would support or refute your observations before you seek explanations from the chief accountant. Give possible reasons that you hope can explain the observed changes.                                                                                                         
                                                                                                                          (14 marks)
c) What are the limitations of depending too much on ratio analysis during the analytical review process for Kothari Limited.
                                                                                                                                                                 (7marks)
d) Trade payables have increased to £ 700 from £340- generate substantive audit procedures for trade payables and explain your reason for each procedure.
                                     Total:                                                                              40 marks                                                                                                                                    

Leave a Reply

Your email address will not be published. Required fields are marked *