Section A – BOTH questions are compulsory and MUST be attempted
1、You are a manager in Holly & Co, a firm of Chartered Certified Accountants, and you are responsible for the audit of the Laurel Group (the Group), with a financial year ending 31 May 2017. The Group produces cosmetics and beauty products sold under various brand names which are globally recognised and which are sold in more than 100 countries.
You have received the following email from the Group audit engagement partner
Points from the permanent audit file
Holly & Co was appointed as Group auditor three years ago, and the firm audits all components of the Group, which is a listed entity.
The Group sells its products under well-known brand names, most of which have been acquired with subsidiary companies. The Group is highly acquisitive, and there are more than 40 subsidiaries and 15 associates within the Group.
Products include cosmetics, hair care products and perfumes for men and women. Research into new products is a significant activity, and the Group aims to bring new products to market on a regular basis.
Extract from projected and actual financial statements and associated notes from meeting with Group finance director
Consolidated statement of financial position
Briefing notes
To: Brigitte Sanders, audit engagement partner
From: Audit manager
Subject: Laurel Group audit planning
Introduction
These briefing notes are intended for use in planning the audit of the Laurel Group (the Group). The notes contain an evaluation of risks of material misstatement, which have been identified using information provided by the client following a meeting with the Group finance director and performing selected analytical procedures. The notes also identify the additional information which should be requested from the Laurel Group to allow for a more detailed preliminary analytical review to be performed.
The notes also recommend the principal audit procedures to be performed in respect of an impaired brand and a planned acquisition which will take place after the reporting date.
(a) Evaluation of risk of material misstatement
(b) Additional information to help in performing analytical review
Selected analytical procedures and associated evaluation of risk of material misstatement
