Решение задач по аудиту ACCA F8 Pilot paper Q5 EastVale

Пятое задание по аудиту "стоит" 20 марок и должно быть выполнено за 1,8*20 = 36 минут. Традиционно пятое задание - это сценарий, по которому необходимо применить теоретические знания к конкретным специфическим условиям сценария.

Question 5 
Fire in warehouse

(i) Describe the additional audit procedures you will carry out;
(4 marks, 4*1.8 minutes = 7 minutes, 1 mark for each procedure)

1. Discuss the matter with management whether EastVale has sufficient inventory to comply short-term orders of supermarkets.
2. Enquire the directors if EastVale can continue the trading in long-term period. Obtain the written representation to this effect.
3. Estimate the value of inventory destroyed in the fire.
4. Inspect insurance documents for likelihood of compensation being received to replace the damaged stock.
5. Inspect the rental agreement for warehouse for penalty that may be imposed in the case of damage to the warehouse. Consider the need for provision.

(ii) State, with reasons, whether or not the financial statements for the year-end require amendment;
(3 marks, 3*1.8=5 minutes, 1 mark for each reason)

1. The fire in the warehouse is a non-adjusting event as it is evidence of condition arising after the year end. So amendment is not required.
2. Enquire whether the directors consider to disclose this event in the financial statements. It is unlikely disclosed because the inventory didn't existe at the year end (high inventory turn) and insurance can cover the loss.

(iii) Discuss whether or not the audit report should be modified;
(3 marks, 3*1.8=5 minutes, 1 mark for each reason)
1. Consider to modify the audit report with the emphasis of matter paragraph to draw attention to the disclosure of note on the fire in the financial statements.
2. If the going concern of EastVale is in doubt then modify the audit report with the emphasis of matter paragraph on this effect.
3. If diclosure of directors is inadequate then modify the audit report with an "except of" modification.


Food poisoning complaints

(i) Describe the additional audit procedures you will carry out;
(4 marks, 4*1.8 minutes = 7 minutes, 1 mark for each procedure)

1. Discuss with management whether any errors in production process.
2. Obtain a copy of damages claim and  discuss it with directors if there is a possibility of success of the claim.
3. Obtain an independent legal advice on the claim from EastVale's lawyers. If there is a possibility of futher claim that may have to be paid.
4. Discuss the going concern issue with directors. Obtain an additional letter of representation on directors' opinion of EatsValu's going concern status.


(ii) State, with reasons, whether or not the financial statements for the year-end require amendment;
(3 marks, 3*1.8=5 minutes, 1 mark for each reason)
1. The claims are non-adjusting event because the condition giving rise to the claims were created after the year end. The amendment of the financial statements is not required.
2. The claims should be diclosed in a separate note with details of the incident.
3. 115 supermarkets stopped purchasing and another 85 may stop purchasing EastVale's products. It will be a significant impact on the company going concern status. These doubts need to be disclosed in a note to the accounts.


(iii) Discuss whether or not the audit report should be modified;
(3 marks, 3*1.8=5 minutes, 1 mark for each reason)
1. If the financial statements are prepared on going concern basis and auditor agrees with using of this basis, then the auditor modifies the audit report with the emphasis of matter paragraph to draw the attention on the disclosure in the note of the food poisoning complaints.
2. If the going concern is in doubt, then auditor report needs to modify with the emphasis of matter paragraph to draw the attention to the disclosures note on this effect are made by directors.
3. If EastValu is not going concern, but the financial statement were prepared using this assumption, then audit report needs to be qualified with an adverse qualification starting that EastValu is not going concern.