- 1. You have recently been appointed external auditor of the entity. You are assisting
your Audit Manager in planning for the audit of the entity’s financial statements.
2. You are required to download the 2013 annual report published by the following
entity:
- Advanced Braking Technology Ltd (www.advancedbraking.com.au)
3. Using information from chapters 3 and 4 of the textbook, prepare a report for your
Audit Manager. Your report must include key information set out below.
4. You have accepted and communicated your decision to the client in the
engagement letter. The audit fee is $42,000.
Required
With reference to Chapters 3 and 4 of the textbook, prepare a report for your Audit
Manager. Your report must include the followings:
1. Executive summary
2. Introduction
3. Key information:
a) Gain an understanding the client
b) Identify five significant accounts and transactions (use analytical procedures)
c) Set planning materiality
d) Identify what can go wrong for each of the 5 accounts selected in (b)
e) Gain an understanding of key internal controls
4. Conclusion
5. Appendix
6. References
Additional information
For the purposes of the assignment, the following auditing standards are relevant:
- ASA210 Terms of Audit Engagements
- ASA220 Quality Control for Audits of Historical Financial Information
- ASA230 Audit Documentation
- ASA250 Consideration of Laws and Regulations in an Audit of a Financial Report
- ASA300 Planning an Audit of a Financial Report
- ASA315 Understanding the Entity and its Environment and Assessing the Risks of -
Material Misstatement
- ASA320 Materiality and Audit Adjustments
- ASA330 The Auditor’s Procedures in Response to Assessed Risks
- ASA520 Analytical Procedures
