案例分析题You are a manager in the audit department of Bison Co, a firm of Chartered Certified Accountants, responsible for the audit of the Eagle Group (the Group), which has a financial year ending 31 December 20X8. Your firm is appointed to audit the parent company, Eagle Co, and all of its subsidiaries, with the exception of Lynx Co, a newly acquired subsidiary located in a foreign country which is audited by a local firm of auditors, Vulture Associates. All companies in the Group report using IFRS Standards as the applicable financial reporting framework and have the same financial year end. You are provided with the following exhibits: 1. An email which you have received from Maya Crag, the audit engagement partner. 2. Background information about the Group including a request from the Group finance director in respect of a non‑audit engagement. 3. Extracts from the Group financial statements projected to 31 December 20X8 and comparatives, extracted from the management accounts, and accompanying explanatory notes. 4. Managements determination of the goodwill arising on the acquisition of Lynx Co. 5. An extract from the audit strategy document prepared by Vulture Associates relating to Lynx Co. Required: Respond to the instructions in the email from the audit engagement partner. Note: The split of the mark allocation is shown in the partners email (Exhibit 1). Professional marks will be awarded for the presentation and logical flow of the briefing notes and the clarity of the explanations provided. Exhibit 1 Email from audit engagement partner To: Audit manager From: Maya Crag, Audit engagement partner Subject: Audit planning for the Eagle Group Hello I have provided you with some information in the form of a number of exhibits which you should use in planning the audit of the Eagle Group (the Group). I held a meeting yesterday with the Group finance director and representatives from the Group audit committee, and we discussed a number of issues which will impact on the audit planning. Using the information provided, I require you to prepare briefing notes for my use in which you: (a) Evaluate the audit risks to be considered in planning the Group audit. You should use analytical procedures to assist in identifying audit risks. You are not required to consider audit risks relating to disclosure, as these will be planned for later in the audit process. (b) Design the principal audit procedures to be used in the audit of the goodwill arising on the acquisition of Lynx Co. Managements calculation of the goodwill is shown in Exhibit 4. You do not need to consider the procedures relating to impairment testing, or to foreign currency retranslation, as these will be planned later in the audit. (c) Using the information provided in Exhibit 5, evaluate the extract of the audit strategy prepared by Vulture Associates in respect of their audit of Lynx Co and discuss any implications for the Group audit. (d) After considering the request in Exhibit 2 from the Group finance director in respect of our firm providing advice on the Groups integrated report, discuss the ethical and professional implications of this request, recommending any further actions which should be taken by our firm. Exhibit 2 Background information about the Group and request from Group finance director Group operational activities The Group, which is a listed entity, operates in distribution, supply chain and logistics management. Its operations are worldwide, spanning more than 200 countries. The Groups strategy is to strengthen its market share and grow revenue in a sustainable manner by expansion into emerging markets. There are over 50 subsidiaries in the Group, many of which are international. There are three main business divisions: post and parcel delivery, commercial freight and supply chain management, each of which historically has provided approximately one third of the Groups revenue. A fourth business division which focuses purely on providing distribution channels for the oil and coal sector was established two years ago, and in 20X8 began to grow quite rapidly. It is forecast to provide 12% of the Groups revenue this year, growing to 15% in 20X9. This division is performing particularly well in developing economies. In recent years, revenue has grown steadily, based mainly on growth in some locations where e commerce is rapidly developing. This year, revenue is projected to decline slightly, which the Group attributes to increased competition, as a new distribution company has taken some of the Groups market share in a number of countries. However, the Group management team is confident that this is a short term drop in revenue, and forecasts a return to growth in 20X9. Innovation The Group has invested in automating its warehousing facilities, and while it still employs more than 250,000 staff, many manual warehouse jobs are now performed by robots. Approximately 5,000 staff were made redundant early in this financial year due to automation of their work. Other innovations include increased use of automated loading and unloading of vehicles, and improvements in the technology used to monitor and manage inventory levels. Integrated reporting The Group is proud of this innovation and is keen to highlight these technological developments in its integrated report. The Group finance director has been asked to lead a project tasked with producing the Groups first integrated report. The finance director has sent the following request to the audit engagement partner: We would like your firm to assist us in developing our integrated report, and to provide assurance on it, as we believe this will enhance the credibility of the information it contains. Specifically, we would like your input into the choice of key performance indicators which should be presented, how to present them, and how they should be reconciled, where relevant, to financial information from the audited financial statements. The publication of an integrated report is not a requirement in the jurisdiction in which the Group is headquartered, but there is a growing pressure from stakeholders for an integrated report to be produced by listed reporting entities. If Bison Co accepts the engagement in relation to the Groups integrated report, the work would be performed by a team separate from the audit team. Exhibit 3 Extracts from consolidated financial statements Statement of financial position Statement of profit or loss Notes to the extracts from financial statements Goodwill 1. Goodwill relates to the Groups subsidiaries, and is tested for impairment on an annual basis. Management will conduct the annual impairment review in December 20X8, but it is anticipated that no impairment will need to be recognised this year due to anticipated growth in revenue which is forecast for the next two years. In March 20X8, the Group acquired an 80% controlling shareholding in Lynx Co, a listed company located in a foreign country, for consideration of $351 million. Managements determination of the goodwill arising on this acquisition is shown in Exhibit 4. Other intangible assets 2. Other intangible assets relates mostly to software and other technological development costs. During the year $35 million was spent on developing a new IT system for dealing with customer enquiries and processing customer orders. A further $20 million was spent on research and development into robots being used in warehouses, and $5 million on developing new accounting software. These costs have been capitalised as intangible assets and are all being amortised over a 15 year useful life. Equity and non-current liabilities 3. A share issue in July 20X8 raised cash of $100 million, which was used to fund capital expenditure. 4. Non current liabilities includes borrowings of $550 million (20X7 $500 million) and provisions of $100 million (20X7 $120 million). Changes in financing during the year have impacted on the Groups weighted average cost of capital. Information from the Groups treasury management team suggests that the weighted average cost of capital is currently 10%. Financial performance 5. Revenue has decreased by 37% over the year, due to a new competitor in the market taking some of the Groups market share. 6. Other operating income comprises the following items: 7. Operating expenses includes the following items: Exhibit 4 Determination of goodwill on the acquisition of Lynx Co Notes:​​​​​​​ 1. The contingent consideration will be payable four years after the acquisition date and is calculated based on a payment of $525 million, only payable if Lynx Co reaches revenue and profit targets outlined in the purchase documentation. The amount included in the goodwill calculation has been discounted to present value using a discount factor based on an 18% interest rate. 2. The non controlling interest is measured at fair value, the amount being based on Lynx Cos share price on 1 March 20X8. 3. The assets and liabilities acquired and their fair values were determined by an independent firm of Chartered Certified Accountants, Sidewinder Co, who was engaged by the Group to perform due diligence on Lynx Co prior to the acquisition taking place. A fair value uplift of $12 million was made in relation to property, plant and equipment. Exhibit 5 Extract from audit strategy prepared by Vulture Associates in respect of the audit of Lynx Co The two points below are an extract from the audit strategy. Other sections of the audit strategy, including the audit risk assessment, have been reviewed by the Group audit team and are considered to be satisfactory. Lynx Co is projected to be loss making this year, and the Group audit team is confident that sufficient procedures on going concern have been planned for. Controls effectiveness We will place reliance on internal controls, which will reduce the amount of substantive testing which needs to be performed. This is justified on the grounds that in the previous years audit, controls were tested and found to be highly effective. We do not plan to re test the controls, as according to management there have been no changes in systems or the control environment during the year. Internal audit Lynx Co has offered the services of its internal audit team to help perform audit procedures. We are planning to use the internal auditors to complete the audit work in respect of trade receivables, as they have performed work on this area during the year. It will be efficient for them to perform and conclude on the relevant audit procedures, including the trade receivables circularisation, and evaluation of the allowance for trade receivables, which we will instruct them to carry out.

案例分析题You are an audit manager in Thomasson Co, a firm of Chartered Certified Accountants

案例分析题2、You are the manager responsible for the audit of Thurman Co, a manufacturing company which supplies stainless steel components to a wide range of industries

案例分析题You are a manager in the audit department of Williams Co and you are reviewing the audit working papers in relation to the Francis Group (the Group), whose financial year ended on 31 July 2014

案例分析题Section B TWO questions ONLY to be attempted 3、You are a manager working in the public sector audit department of Fern Co

案例分析题Section A BOTH questions are compulsory and MUST be attempted 1、You are an audit manager in Montreal Co, a firm of Chartered Certified Accountants, and you are responsible for the audit of the Vancouver Group (the Group). The Group operates in the supply chain management sector, offering distribution, warehousing and container handling services. The Group comprises a parent company, Vancouver Co, and two subsidiaries, Toronto Co and Calgary Co. Both of the subsidiaries were acquired as wholly owned subsidiaries many years ago. Montreal Co audits all of the individual company financial statements as well as the Group consolidated financial statements. You are beginning to plan the Group audit for the financial year ending 31 July 2016, and the audit engagement partner has sent you the following email: Notes from meeting with the Group finance director and audit committee representative The Group has not changed its operations significantly this year. However, it has completed a modernisation programme of its warehousing facilities at a cost of $25 million. The programme was financed with cash raised from two sources: $5 million was raised from a debenture issue, and $20 million from the sale of 5% of the share capital of Calgary Co, with the shares being purchased by an institutional investor. An investigation into the Groups tax affairs started in January 2016. The tax authorities are investigating the possible underpayment of taxes by each of the companies in the Group, claiming that tax laws have been breached. The Groups tax planning was performed by another firm of accountants, Victoria Co, but the Groups audit committee has asked if our firm will support the Group by looking into its tax position and liaising with the tax authorities in respect of the tax investigation on its behalf. Victoria Co has resigned from their engagement to provide tax advice to the Group. The matter is to be resolved by a tribunal which is scheduled to take place in September 2016. The Group audit committee has also asked whether one of Montreal Cos audit partners can be appointed as a non-executive director and serve on the audit committee. The audit committee lacks a financial reporting expert, and the appointment of an audit partner would bring much needed knowledge and experience. Financial information provided by the Group finance director Consolidated statement of financial position Consolidated statement of profit or loss for the year to 31 July Notes:​​​​​​​ 1. Several old warehouses were modernised during the year. The modernisation involved the redesign of the layout of each warehouse, the installation of new computer systems, and the replacement of electrical systems. 2. The deferred tax asset is in respect of unused tax losses (tax credits) which accumulated when Toronto Co was loss making for a period of three years from 2009 to 2012. 3. The non-controlling interest has arisen on the disposal of shares in Calgary Co. On 1 January 2016, a 5% equity shareholding in Calgary Co was sold, raising cash of $20 million. The profit made on the disposal is separately recognised in the Group statement of profit or loss. 4. The provisions relate to onerous leases in respect of vacant properties which are surplus to the Groups requirements. 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)

案例分析题You are a manager in the audit department of Huntsman Co, a firm of Chartered Certified Accountants, responsible for the audit of several companies and for evaluating the acceptance decisions in respect of potential new audit clients. One of your audit clients is Redback Sports Co, which operates a chain of sport and leisure centres across the country. The company has a financial year ending 28 February 20X9, and you are about to start planning the audit. Stella Cross, the audit engagement partner, met with the companys finance director last week to discuss business developments in the year and recent financial performance. In addition, Stella has been approached by Mick Emu, the managing director of Emu Gyms Co. Mick has enquired regarding whether Huntsman Co can provide the company with an audit or limited assurance review, and Stella would like you to evaluate this request. Huntsman Co already provides a payroll service to Emu Gyms Co and has assisted Mick with his personal tax planning in the past. Mick also has a suspicion that several employees are carrying out a fraud at the company, and he has asked whether an audit or limited assurance review would have alerted him earlier to the situation. You are provided with the following exhibits: 1. An email you have received from Stella Cross, in respect of both Redback Sports Co and Emu Gyms Co. 2. Notes of a meeting which Stella held recently with the finance director of Redback Sports Co. 3. Extracts from the latest management accounts of Redback Sports Co. 4. Notes of a telephone conversation which Stella had yesterday with Mick Emu, managing director of Emu Gyms Co. Required: Respond to the instructions in the email from the audit engagement partner. Note: The split of the mark allocation is shown in the partners email (Exhibit 1). Professional marks will be awarded for the presentation and logical flow of the briefing notes and the clarity of the explanations provided. Exhibit 1 Email from audit engagement partner To: Audit manager From: Stella Cross, Audit engagement partner for Redback Sports Co Subject: Audit planning for Redback Sports Co, and evaluation of accepting Emu Gyms Co as a potential audit client Hello I have provided you with some information in the form of a number of exhibits which you should use to help you with planning the audit of Redback Sports Co for the financial year ending 28 February 20X9. Using the information provided in Exhibits 2 and 3, I require you to prepare briefing notes for my own use, in which you: (a) Evaluate the business risks to be considered in planning the companys audit. (b) Evaluate the risks of material misstatement to be considered in developing the audit strategy and audit plan. (c) Design the principal audit procedures to be used in the audit of the grant received from the government in September 20X8. In Exhibit 4, I have also provided you with some information relating to Emu Gyms Co. In respect of this, in your briefing notes you should also: (d) Evaluate the matters to be considered in deciding whether to accept an engagement to provide Emu Gyms Co with an audit or limited assurance review. (e) In relation to the suspicion of fraud being carried out at Emu Gyms Co: Discuss whether an audit or limited assurance review of financial statements in previous years could have uncovered the fraud. Exhibit 2 Notes of a meeting held on 30 November 20X8 Meeting attendees: Stella Cross, audit engagement partner, Huntsman Co Aneta Bay, finance director, Redback Sports Co Business background Redback Sports Co operates 20 sport and leisure centres around the country. Each centre has a large gym and a swimming pool, and many also have tennis and badminton courts. Given the nature of the companys operations, it has to comply with health and safety regulations set by the national regulatory body, and its facilities are inspected regularly to ensure that all regulations are being followed, and for the company to retain its operating licence. The company is not listed and therefore does not need to comply with local corporate governance regulations. However, the companys chief operating officer and chairman consider it good practice to have independent input to the board, and there are two non-executive directors. One of the non-executive directors is a leisure industry expert who was chairman of a rival company, Lyre Leisure Co, for ten years. The second non-executive director is an academic who specialises in organisational behaviour and who has written several books on performance management in the sport and leisure industry. The companys board has approved a plan to expand through acquiring other leisure and sport facility providers. The strategy is not likely to be implemented for another two years, when the board would like the first acquisition to take place. However, potential target companies will be identified in the next 12 to 18 months. Ultimately, the board would like to seek a flotation of the company within five years, and they consider that expanding the company would improve profits and make a stock exchange listing more feasible. Redback Sports Co has a small internal audit department with two staff who report to the finance director, as the board does not have an audit committee. The company offers a membership scheme whereby, for an annual subscription, members can use the facilities at any of the centres. Customers who are not members can pay to access a centre for a day under the companys pay as you go plan. The membership scheme accounts for approximately 85% of the companys revenue, with the remaining revenue resulting from pay as you go sales. Business developments in the year The industry is competitive and the companys strategy is to encourage customers to renew their membership and to attract new members by offering a range of new activities. According to the finance director, a successful initiative which started in March 20X8 is the Healthy Kids campaign; this offers children two hours coaching per week in a range of sports including swimming and tennis. This coaching is provided free as part of their parents membership, and it has proved to be very successful the finance director estimates that it has led to 3,000 new members since it was launched. In June 20X8, the company opened a new coastal sport and leisure centre which, as well as offering the usual facilities, also has a scuba diving centre and offers other water sports facilities. An investment of $12 million was also made in new gym equipment across all centres, to ensure that the company offers the most modern facilities to its customers. An advertising campaign has been launched, to promote the company brand generally, and to make customers aware of the investments in the facilities which have been made. As part of this campaign, the company paid $1 million to a famous athlete to endorse the company for a period of two years. The athlete will appear at the opening of the new coastal sports centre and has agreed to feature in poster advertisements for the next two years. Redback Sports Co is also involved with a government initiative to help unemployed people have access to sport facilities. The company received a grant of $2 million in September 20X8, under the terms of which it allows unemployed people three hours of free access to its facilities per month. By the end of November, 33,900 free hours of facility use have been provided under this scheme. The government intends the initiative to run for three years, to promote long-term health of participants. A new data management system has been introduced, which integrates membership information with accounting software. This allows more efficient management of the customer database which is used extensively for marketing purposes, as well as providing more timely information on financial performance to management. Data from theprevious system was transferred to the new system in July 20X8, and the two systems ran in parallel for two months while training was given to staff and the new system was monitored. One feature of the new system is that it records and reports on the free hours of access provided to unemployed people, which the company has to report on a monthly basis to the government. Exhibit 3 Extracts from management accounts of Redback Sports Co Notes 1. Revenue is forecast to increase significantly this year. This is largely due to the success of the advertising campaign featuring the celebrity athlete and the Healthy Kids programme (referred to in Exhibit 2). 2. The grant received of $2 million, the details of which are explained in Exhibit 2, has been recognised in full as income for the year. 3. The companys operating expenses includes the following items: 20X9 20X8 $000 $000 Staff costs 15,300 14,300 Marketing 8,500 8,500 Maintenance and repairs of facilities 5,500 5,300 4. Capital expenditure was mostly financed through borrowings. On 1 March 20X8, a ten-year $30 million loan was received from the companys bank. The loan does not bear interest and is repayable at par value of $34 million. As well as the bank loan, a loan of $1 million was advanced to the company from its managing director, Bob Glider, on 1 July 20X8. The terms of this loan include 3% interest paid to Bob annually in arrears, and the capital will be repaid in seven years time in 20Y5. 5. Two new sport and leisure centres were opened this year. As well as the coastal sport and leisure centre (referred to in Exhibit 2), a new centre was opened in an affluent urban area in the capital city. 6. The management information system shows that members visit a sport and leisure centre on average three times per week. Exhibit 4 Notes of a telephone conversation between Stella Cross and Mick Emu, managing director of Emu Gyms Co Notes taken by Stella Cross: Mick Emu phoned me this morning to discuss developments at Emu Gyms Co and to enquire whether our firm could carry out either an audit of the companys financial statements, or a limited assurance review of them. This would be the first time that the financial statements have been subject to audit or limited assurance review. Business background The company was founded by Mick in 20X5, and since that time our firm has provided a payroll service for the companys staff, which now number 35 employees working in the companys four gyms, all located in urban areas. We have also provided Mick with advice on his personal tax position and financial planning in respect of his retirement, as he wants to sell the company in a few years time. Mick runs the company with his son, Steve, who is a qualified personal trainer, and with his daughter, Siobhan, who is the marketing director. The company employs one accountant who prepares the management and financial accounts and who deals with customer memberships. The company has grown quite rapidly in the last year, with revenue of $8 million for the financial year to 30 September 20X8, and with total assets of approximately $55 million. The comparative figures for 20X7 were revenue of $65 million and total assets of $48 million. Loan application Mick thinks that it will be difficult to attract more members for his gyms in existing locations, and would like the company to expand by constructing a new gym. He has discussed a loan of $4 million with the companys bank to fund the necessary capital expenditure. The bank manager has asked for the companys financial statements for the year to 30 September 20X8 and comparative information, and has also requested a cash flow and profit forecast for the next three years in order to make a lending decision within the next two months. Mick has asked whether a representative of the firm can attend a meeting with Mick and the companys bank manager, to support the loan application and answer questions from the bank manager, assuming that we are engaged to perform either an audit or a limited assurance review on the financial statements. Suspected fraud Mick mentioned that one of the reasons he would like an audit or limited assurance review of the financial statements is because he has noticed some unusual trends in the companys financial information. This has led him to suspect that several employees are carrying out a fraud. Each gym has a small shop selling gym wear and a caf, where customers can buy light meals, drinks and snacks. Mick has noticed that the cash receipts from sales in the shops and cafs have reduced significantly in the last year, however, there has been no reduction in purchases from suppliers. As a consequence, the gross margin for these sales as reported in the management accounts has fallen from 32% to 26%. This indicated to him that staff members could be giving away items for free to customers, or they could be taking inventories from the shops and cafs for their personal use or to sell. The shops and cafs keep a relatively small amount of inventory which is replenished on a regular basis. Until this year, sales in the shops represented approximately 5%, and caf sales represented approximately 8% of the companys revenue. The figures for this year are 3% and 6% respectively. Mick wonders whether the potential fraud would have been uncovered earlier, had the financial statements been subject to audit or limited assurance review in previous years.

案例分析题Section B TWO questions ONLY to be attempted 3、You are the manager responsible for the audit of Rope Co for the year ended 30 September 2016. During a visit to the team performing the fieldwork, the audit senior shows you a cash flow forecast covering six-month periods to 30 September 2018 as prepared by management as part of their assessment of the going concern status of the company. The audit senior asks whether any of the forecast cash flows disclosed require any further investigation during the audit fieldwork. The actual and forecast six-monthly cash flows for Rope Co for the periods ended: The following additional information has been provided in support of the forecasts: Receipts from customers and payments to suppliers have been estimated based on detailed sales forecasts prepared by the sales director. Salaries and overheads have been estimated as the prior year cost plus general inflation of 2%. The bank loan expires on 5 January 2018. The finance director expects to take out a matching facility with the current lender to pay off the existing debt. On 1 October 2015, the chief executive, Mr J Stewart, gave the company a three-year, interest free loan secured by a fixed charge over the operational assets of Rope Co. The audit team was unaware of this loan prior to obtaining the cash flow forecast. The directors plan to sell some investments in listed shares to fund the repayment of the chief executives loan. At 30 September 2016, the investments were carried in the statement of financial position at their fair value of $350,000. Required:

案例分析题Faster Jets Co is an airline company and is a new audit client of Brown Co

案例分析题Section A BOTH questions are compulsory and MUST be attempted 1、The Zed Communications Group (ZCG) is an audit client of your firm, Tarantino Co, with a financial year ending 31 December 2016. You are the manager assigned to the forthcoming audit. ZCG is a listed entity, one of the largest telecommunications providers in the country and is seeking to expand internationally. ZCG also provides broadband and fixed telephone line services. You have just received the following email from the audit engagement partner: Notes from meeting with finance director One of ZCGs strategic aims is to expand internationally, either by acquiring existing telecommunications providers in other countries, or by purchasing licences to operate in foreign countries. In March 2016, ZCG purchased a 50% equity shareholding in Wallace Telecoms Co (WTC), a company operating in several countries where ZCG previously had no interests. The other 50% is held by Wolf Communications Co. The cost of the 50% equity shareholding was $45 million. ZCG is planning to account for its investment in WTC as a joint venture in the Group financial statements. On 1 January 2015, ZCG purchased a licence to operate in Farland, a rapidly expanding economy, at a cost of $65 million. The licence lasts for 10 years from the date that it was purchased. Since purchasing the licence, ZCG has established its network coverage in Farland and the network became operational on 1 July 2016. The licence was recognised as an intangible asset at cost in the Group statement of financial position at 31 December 2015. Since the network became operational, customer demand has been less than anticipated due to a competitor offering a special deal to its existing customers to encourage them not to change providers. Most of ZCGs mobile phone customers sign a contract under which they pay a fixed amount each month to use ZCGs mobile network, paying extra if they exceed the agreed data usage and airtime limits. The contract also allows connection to a fixed landline and internet access using broadband connection and most contracts run for two or three years. For the first time this year, the Group is adopting IFRS 15 Revenue from Contracts with Customers. In order to extend its broadband services, ZCG has started to purchase network capacity from third party companies. ZCG enters a fixed-term contract to use a specified amount of the sellers network capacity, with the seller determining which of its network assets are used by ZCG in supplying network services to its customers. In the first six months of2016, ZCG purchased $178 million of network capacity from a range of suppliers, with the contract periods varying from twelve months to three years. The cost has been capitalised as an intangible asset. Internal audit ZCG has a well-established internal audit department which is tasked with a range of activities including providing assurance to management over internal controls and assisting the Groups risk management team. The internal audit department is managed by Jules Winfield, a qualified accountant with many years experience. An extract from the executive summary of the latest internal audit report to the Group finance director is shown below: We are pleased to report that ZCGs internal controls are working well and there have been no significant changes to systems and controls during the year. As a result of our testing of controls we uncovered only two financial irregularities which related to: Failure to obtain appropriate authorisation and approval of senior management expense claims, such as travel and other reimbursements; the unsubstantiated expense claims amounted to $575,000. Inadequate access controls over the Groups IT systems; this resulted in a payroll fraud amounting to $750,000. Financial information extracts from latest management accounts Required: Respond to the instructions in the audit engagement partners email. (31 marks) Note: The split of the mark allocation is shown in the partners email. Professional marks will be awarded for the presentation of the briefing notes and the clarity of the explanations provided. (4 marks)

案例分析题You are a manager in the audit department of Snow Co, a firm of Chartered Certified Accountants, and you are responsible for the audit of Margot Co. The company has a financial year ending 30 June 20X9, and you are about to start planning the audit. Margot Co produces fruit-based food products using agricultural produce grown on its farms. Ben Duval, the audit engagement partner, met with the companys finance director last week to discuss business developments in the year and recent financial performance. You are provided with the following exhibits: 1. An email you have received from Ben Duval, in respect of the audit of Margot Co. 2. Notes of a meeting which Ben held recently with the finance director of Margot Co. 3. A reference document prepared by Snow Co containing an overview of the accounting requirements applied in the agriculture sector. 4. Extracts from the latest management accounts of Margot Co and accompanying notes, including the results of preliminary analytical procedures, which have been performed by a member of the audit team. 5. An email which the audit engagement partner received from Len Larch, a production manager working at one of the companys olive farms. Required: Respond to the instructions in the email from the audit engagement partner. Note: The split of the mark allocation is shown in the partners email (Exhibit 1). Professional marks will be awarded for the presentation and logical flow of the briefing notes and the clarity of the explanations provided. Exhibit 1 Email from Ben Duval To: Audit manager From: Ben Duval, Audit engagement partner for Margot Co Subject: Audit planning for Margot Co Hello I have provided you with some information in the form of a number of exhibits which you should use to help you with planning the audit of Margot Co for the financial year ending 30 June 20X9. Using the information provided, I require you to prepare briefing notes for my own use, in which you: (a) Evaluate the significant risks of material misstatement to be considered in planning the companys audit. You should not include risks of material misstatement relating to the valuation of the companys bearer plants or biological assets, which will be evaluated separately. (b) Design the principal audit procedures to be used in the audit of: (i) The impairment of the factory, and (ii) The development cost capitalised in respect of the new packaging. (c) Discuss the matters to be considered in planning to use an auditors expert in the audit of the fruit, which are recognised as biological assets of the company. In Exhibit 5, I have provided you with an email I received from Len Larch, one of the companys production managers. In respect of this, in your briefing notes you should also: (d) Discuss the audit implications of the email from Len Larch, recommending any further action to be taken by our firm. Thank you. Exhibit 2 Notes of a meeting held on 28 February 20X9 Meeting attendees: Ben Duval, audit engagement partner, Snow Co Ayana Easton, finance director, Margot Co Business background​​​​​​​ Margot Co was established 30 years ago by Jim Margot, who began processing the fruit grown on his family farm to make a small range of food products including canned fruit and fruit juice. The business was relatively small until ten years ago, when the company began to expand by acquiring more farmland with different crops, and building new production facilities. This extended the range of food products which could be processed, which now includes olive oil, packaged nuts and frozen fruit. The company sells its products under the Fructus Gold brand name, and the goods are sold in major supermarkets and online on the companys website. The company is not listed, and the Margot family members are the companys majority shareholders. Jim Margot retired several years ago, his daughter, Mia Margot, is the companys chief executive officer, and other family members hold positions in senior management. Business developments in the year Online sales​​​​​​​ In the last year, sales made through the companys website grew significantly. The finance director believes that this was in response to an advertising campaign costing $225,000, which promoted the Fructus Gold brand and coincided with the launch of a new online sales portal on the company website designed to make online ordering easier. To encourage online sales, the company has regular special offers, with discounts periodically offered on a selection of product lines, and offers such as Buy One Get One Free for a limited time on some products. Research and development​​​​​​​ Recently, concern over the level of plastic used in packaging has encouraged food producers to investigate the use of plastic-free packaging for their products. In July 20X8, the board approved a budget of $400,000 to be spent on research and development into new packaging for its products. By 28 February 20X9, $220,000 has been spent, with this amount being paid to ProPack, a firm of packaging specialists, to design and develop a range of plastic-free bottles, bags and containers. It is anticipated that the packaging will be ready for use in two years time at which point the company will introduce it for use across its product range. ProPack is currently testing prototypes of items which have been developed, with encouraging results. Loan A loan of $375,000 was taken out during the year to support the companys research and development plans. Factory damage One of the companys several factories, used to process fruit and produce fruit juice, was damaged in August 20X8 when a severe storm occurred. High winds destroyed part of the factory roof, and heavy rain led to flooding and damage to machinery and processing equipment. The factory has not operated since the storm, and the finance director has performed an impairment review on the building and plant and equipment; details of the impairment review are given in the extract from the management accounts (Exhibit 4). Use of an auditors expert The fruit growing on trees and the harvested agricultural produce are biological assets which were recognised at fair value of $31 million in the 20X8 audited financial statements. Due to the specialised nature of these assets, an auditors expert will be used to provide evidence relating to their valuation. A resource document containing an overview of the accounting requirements in relation to the companys activities is provided in Exhibit 3. Exhibit 3 Reference document Extract from Snow Cos internal technical guidance for audit staff working with clients in the agriculture sector IAS 16 Property, Plant and Equipment Bearer plants Definition: A bearer plant is defined under IAS 16 as a living plant that: is used in the production or supply of agricultural produce; is expected to bear produce for more than one period; and has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales. IAS 41 Agriculture Biological assets Produce growing on bearer plants, and harvested agricultural produce are biological assets and should be accounted for under IAS 41. Biological assets are measured on initial recognition and at subsequent reporting dates at fair value less estimated costs to sell, unless fair value cannot be reliably measured. A gain or loss arising on initial recognition of agricultural produce at fair value less costs to sell shall be included in the statement of profit or loss for the period in which it arises. IAS 2 Inventories Agricultural produce When agricultural produce enters the production process, it should be accounted for under IAS 2. Exhibit 4 Extract from management accounts and results of preliminary analytical procedures Software development costs of $30,000 were capitalised during the year, which relate to development of the online sales portal. The finance director suggests that both the software development costs and the advertising costs should be capitalised because the increased sales in the year are a direct result of the advertising campaign and improvements in the online sales portal. The Fructus Gold brand name is not recognised in the statement of financial position, as it is an internally generated asset. This accounting treatment has been confirmed as correct and in accordance with IAS 38 Intangible Assets. The notes to the 20X8 financial statements disclosed that the estimated fair value of the brand name is $18 million. 2. Property, plant and equipment The carrying amount of $615 million includes $880,250 relating to the storm-damaged factory (referred to in Exhibit 2) and its fixtures and fittings. The factory is a cash-generating unit for the purpose of impairment testing. The finance director has provided a summary calculation, detailing the following impairment review which indicates that an impairment loss of $210,250 needs to be recognised: The fair value less costs to sell has been estimated based on the sales proceeds which could be generated from selling the damaged machinery. The value in use is estimated based on the future sales which could be generated if the damage to the building is repaired and new machinery is put into the factory. The company is planning on carrying out the restoration and buying new machinery, at a total estimated cost of $450,000. This amount has been provided for within current liabilities, with a corresponding entry accounted for as a prepayment. Exhibit 5 Email sent from Len Larch, employee of Margot Co, to Ben Duval, audit engagement partner To: Ben Duval From: Len Larch Subject: Business practices Hello Ben I obtained your contact details from your firms website, I hope you dont mind me approaching you directly. I am emailing to voice some concerns over recent business practices at Margot Co. In my role as production manager in one of the companys factories, I inspect samples of the fruit which comes into the factory from the companys farms, and speak to the farmers on a regular basis. Recently, several farmers told me that they have been instructed to use certain chemicals to spray the fruit trees, which should increase the fruit yield. However, some of these chemicals are prohibited for use in this country because they can be toxic to humans. While talking to one of my friends who is a production manager from another factory, it transpired that he had also become suspicious that banned chemicals are being used in the farms. He raised the issue with one of the company directors, who allegedly gave him $10,000 and asked him not to discuss it with anyone. My friend said that I should ask for the same sum of money, but I felt uncomfortable and thought I should tell someone from outside the company about what is going on. Please do not mention my name if you decide to investigate this further. Thank you, Len.​​​​​​​

案例分析题4、You are an audit manager in Brearley Co, responsible for the audit of the Hughes Group (the Group)

案例分析题4、You are a manager at Chennai Co, a firm of Chartered Certified Accountants

案例分析题Section B TWO questions ONLY to be attempted 3、The audit of Davis Cos financial statements for the year ended 30 November 2017 is nearing completion and the auditors report is due to be signed next week

案例分析题It is 1 July 20X5

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