案例分析题4、You are the manager responsible for the audit of Osier Co, a jewellery manufacturer and retailer. The final audit for the year ended 31 March 2017 is nearing completion and you are reviewing the audit working papers. The draft financial statements recognise total assets of $1,919 million (2016 $1,889 million), revenue of $1,052 million (2016 $997 million) and profit before tax of $107 million (2016 $110 million). Three issues from the audit working papers are summarised below: (a) Cost of inventory Inventory costs include all purchase costs and the costs of conversion of raw materials into finished goods. Conversion costs include direct labour costs and an allocation of production overheads. Direct labour costs are calculated based on the average production time per unit of inventory, which is estimated by the production manager, multiplied by the estimated labour cost per hour, which is calculated using the forecast annual wages of production staff divided by the annual scheduled hours of production. Production overheads are all fixed and are allocated based upon the forecast annual units of production. At the year end inventory was valued at $21 million (2016 $20 million). (7 marks) (b) Impairment At the year end management performed an impairment review on its retail outlets, which are a cash generating unit for the purpose of conducting an impairment review. While internet sales grew rapidly during the year, sales from retail outlets declined, prompting the review. At 31 March 2017 the carrying amount of the assets directly attributable to the retail outlets totalled $137 million, this includes both tangible assets and goodwill. During the year management received a number of offers from parties interested in purchasing the retail outlets for an average of $125 million. They also estimated the disposal costs to be $15 million, based upon their experience of corporate acquisitions and disposals. Management estimated the value in use to be $128 million. This was based upon the historic cash flows attributable to retail outlets inflated at a general rate of 1% per annum. This, they argued, reflects the poor performance of the retail outlets. Consequently the retail outlets were impaired by $9 million to restate them to their estimated recoverable amount of $128 million. The impairment was allocated against the tangible assets of the outlets on a pro rata basis, based upon the original carrying amount of each asset in the unit. (7 marks) (c) Warranty provision Each year management makes a provision for jewellery returned under warranty. It is based upon an estimate of returns levels for each product type (rings, bracelets, necklaces, watches, earrings, etc) and is calculated on an annual basis by the sales director. The breakdown for the current provision, as extracted from the notes to the financial statements, is as follows: (6 marks) Required: Comment on the matters to be considered, and explain the audit evidence you should expect to find during your file review in respect of each of the issues described above. Note: The split of the mark allocation is shown against each of the issues above. You are not required to discuss any potential implications for the auditors report.

案例分析题Section B TWO questions ONLY to be attempted 3、(a) You are a manager in one of the assurance departments of Leopard Co, a large firm of Chartered Certified Accountants

案例分析题(a) The IAASB has published the Exposure Draft, Proposed ISA 540 (Revised) Auditing Accounting Estimates and Related Disclosures (ED-540) stating The objective of ED-540 is for the auditor to obtain sufficient appropriate audit evidence to evaluate whether accounting estimates and related disclosures are reasonable in the context of the applicable financial reporting framework, or are misstated

案例分析题5、You are an audit manager working for Raven Co, a firm of Chartered Certified Accountants

案例分析题Section B TWO questions ONLY to be attempted 3、(a) According to ISA 240 The Auditors Responsibilities Relating to Fraud in an Audit of Financial Statements: When identifying and assessing the risks of material misstatement due to fraud, the auditor shall, based on a presumption that there are risks of fraud in revenue recognition, evaluate which types of revenue, revenue transactions or assertions give rise to such risks

案例分析题2、You are responsible for performing Engagement Quality Control Reviews on selected audit clients of Crocus Co, and you are currently performing a review on the audit of the Magnolia Group (the Group). The Group manufactures chemicals which are used in a range of industries, with one of the subsidiaries, Daisy Co, specialising in chemical engineering and developing products to be sold by the other Group companies. The Groups products sell in over 50 countries. A group structure is shown below, each of the subsidiaries is wholly owned by Magnolia Co, the parent company of the Group： Crocus Co is engaged to provide the audit of the Group financial statements and also the audit of Hyacinth Co and Magnolia Co. Geranium Co, a new subsidiary, is audited by a local firm of auditors based near the companys head office. Daisy Co is audited by an unconnected audit firm which specialises in the audit of companies involved with chemical engineering. The Groups financial year ended on 31 December 2016 and the audit is in the completion stage, with the auditors report due to be issued in three weeks time. The Groups draft consolidated financial statements recognise profit before tax of $75 million and total assets of $130 million. The notes from your review of the audit working papers are shown below, summarising the issues relevant to each subsidiary (a) Hyacinth Co internal controls and results of controls testing The Group companies supply each other with various chemical products to be used in the manufacture of chemicals. Audit work performed at the interim stage at Hyacinth Co, including walk through procedures and internal control evaluations, concluded that internal controls over intra-group transactions were not effective, and this was documented in the audit file. At the final audit, tests of controls were performed to confirm this to be the case. The tests of controls confirmed that intra-group transactions are not being separately identified in the Groups accounting system and reconciliations of amounts owed between the subsidiaries are not performed. The group audit manager has concluded on the audit working papers that as intra-group balances are cancelled on consolidation, this issue has no impact on the Group audit and no further work is necessary. As part of the audit approach it was determined that extensive testing would be performed over the internal controls for capital expenditure at Hyacinth Co as it was identified during planning that the company had made significant acquisitions of plant and equipment during the year. Following controls testing the internal controls over capital expenditure were evaluated to be effective in Hyacinth Co. The working papers conclude that based on the results of controls testing at Hyacinth Co, it is reasonable to assume that controls are effective across the Group and substantive procedures on property, plant and equipment in each Group company have been planned and performed in response to this assessment. (9 marks) (b) Geranium Co new subsidiary This subsidiary was acquired on 30 September 2016 and is audited by Fern Co. The Group audit strategy contains the following statement in relation to the audit of Geranium Co: Geranium Co will only be consolidated for three months and the post-acquisition profit for that period to be included in the Group financial statements is $150,000. On that basis, Geranium Co is immaterial to the Group financial statements and therefore our audit procedures are based on analytical procedures only. Other than the analytical procedures performed, there is no documentation in respect of Geranium Co or its audit firm Fern Co included in the Group audit working papers. The draft statement of financial position of Geranium Co recognises total assets of $30 million. (7 marks) (c) Daisy Co restriction on international trade As well as being involved in chemical engineering and supplying chemicals for use by the other Group companies, Daisy Co specialises in producing chemicals which are used in the agricultural sector, and around half of its sales are made internationally. Daisy Co is audited by Foxglove Co, and the Group audit working papers contain the necessary evaluations to conclude that an appropriate level of understanding has been obtained in respect of the audit firm. Foxglove Co has provided your firm with a summary of key audit findings which includes the following statement: During the year new government environmental regulations have imposed restrictions on international trade in chemicals, with sales to many countries now prohibited. Our audit work concludes that this does not create a significant going concern risk to Daisy Co, and we have confirmed that all inventories are measured at the lower of cost and net realisable value. The Group audit manager has concluded that I am happy that no further work is needed in this area we can rely on the unmodified audit opinion to be issued by Foxglove Co. This issue was not identified until it was raised by Foxglove Co, it has not been mentioned to me by the Group board members, and it has no implications for the consolidated financial statements. The draft statement of financial position of Daisy Co recognises total assets of $8 million and the statement of profit or loss recognises profit before tax of $50,000 The draft consolidated financial statements recognises goodwill in respect of Daisy Co of $3 million (2015 $3 million). (9 marks) Required: In respect of each of the matters described above: (i) Comment on the quality of the planning and performance of the Group audit discussing the quality control and other professional issues raised; and (ii) Recommend any further actions, including relevant audit procedures, to be taken by your firm, prior to finalising the Group auditors report. Note: the split of the mark allocation is shown next to each of the issues above.

案例分析题2、(a) You are an audit manager in Pointer Co, a firm of Chartered Certified Accountants which offers a range of assurance services. You are responsible for the audit of Vizsla Co, a company which provides approximately 10% of your firms practice income each year. The finance director of Vizsla Co has recently contacted you to provide information about another company, Setter Co, which is looking to appoint a provider of assurance services. An extract from the email which the finance director of Vizsla Co has sent to you is shown below: One of my friends, Gordon Potts, is the managing director of Setter Co, a small company which is looking to expand in the next few years. I know that Gordon has approached the companys bank for finance of $6 million to fund the expansion. To support this loan application, Gordon needs to appoint a firm to provide a limited assurance review on the companys financial statements. He would also want the appointed firm to provide tax planning advice and to prepare both the companys and his personal tax computations for submission to the tax authorities. I have asked Gordon to contact you, and I hope that Pointer Co will be able to provide these services to Setter Co for a low fee. If the fee you suggest is too high, and unacceptable to Gordon, then I will recommend that Gordon approaches Griffon Co instead, and I would also consider appointing Griffon Co to provide the audit of Vizsla Co. Griffon Co is a firm of Chartered Certified Accountants which has an office in the same town as Pointer Co You have done some research on both Setter Co and Gordon Potts and have confirmed that the company is small enough to be exempt from audit. The company is owner-managed, with the Potts family owning 90% of the share capital. Gordon Potts is a director and majority shareholder of three other companies. An article in a newspaper from several years ago about Gordon Potts indicated that one of his companies was once fined for breach of employment law and that he had used money from one of the companys pension plans to set up a business abroad, appointing his son as the managing director of that business. Required: In relation to Pointer Cos potential acceptance of Setter Co as a client of the firm: (i) Explain the ethical issues and other matters which should be considered; and (ii) Explain the importance of obtaining customer due diligence and recommend the information which should be obtained. (16 marks) (b) Pointer Co has agreed to perform an assurance engagement for Vizsla Co; the engagement will be a review of prospective financial information which is needed to support the companys overdraft facilities. Vizsla Co had a financial year ended 30 September 2017, and an unmodified opinion was issued on these financial statements last month. Pointer Cos partner responsible for ethics has agreed that any threats to objectivity will be reduced to an acceptable level through the use of a team separate from the audit team to perform the work. The operating profit forecast for the two years to 31 March 2020 prepared by a member of the accounting team of Vizsla Co is shown below, along with some accompanying notes Notes: 1. Vizsla Co is a producer of greetings cards and giftware, the demand for which is seasonal in nature. 2. Design costs are mostly payroll costs of the staff working in the companys design team, and the costs relate to the design and development of new product ranges. 3. Vizsla Co has agreed with its bank to clear its overdraft by 1 September 2019, and the management team is confident that after that point the company will not need an overdraft facility. 4. The total Other expenses is calculated based on 30% of the projected revenue for the six-month period. Required: Recommend the examination procedures which should be used in the review of the profit forecast. (9 marks)

案例分析题(a) It is 1 July 20X5

案例分析题Daley Co is a family owned

案例分析题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 Notes: 1. Capital expenditure of $20 million has been recorded so far during the year. The Groups accounting policy is to recognise assets at cost less depreciation. During the year, a review of assets estimated useful lives concluded that many were too short, and as a result, the projected depreciation charge for the year is $5 million less than the comparative figure. 2. Acquired brand names are held at cost and not amortised on the grounds that the assets have an indefinite life. Annual impairment reviews are conducted on all brand names. In December 2016, the Chico brand name was determined to be impaired by $30 million due to allegations made in the press and by customers that some ingredients used in the Chico perfume range can cause skin irritations and more serious health problems. The Chico products have been withdrawn from sale. 3. A $20 million loan was taken out in January 2017, the cash being used to finance a specific new product development project. 4. The deferred tax liability relates to timing differences in respect of accelerated tax depreciation (capital allowances) on the Groups property, plant and equipment. The liability has increased following changes to the estimated useful lives of assets discussed in note 1. Planned acquisition of Azalea Co Group management is currently negotiating the acquisition of Azalea Co, a large company which develops and sells a range of fine fragrances. It is planned that the acquisition will take place in early June 2017, and the Group is hopeful that Azalea Cos products will replace the revenue stream lost from the withdrawal of its Chico perfume range. Due diligence is taking place currently, and Group management is hopeful that this will support the consideration of $130 million offered for 100% of Azalea Cos share capital. The Groups bank has agreed to provide a loan for this amount. Required： Respond to the instructions in the partners email. (31 marks) Note: The split of the mark allocation is shown within the email. Professional marks will be awarded for presentation, logical flow, and clarity of explanations provided. (4 marks)

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