AUE3701 OCTOBER 2016 EXAM SOLUTION

AUE3701 EXAM SOLUTIONS

OCTOBER 2016

QUESTION 1 ( a & b )

 GROUP ANNUAL FINANCIAL  THE RISK THAT THE AFS MAY BE
STATEMENTS TO BE PREPARED MATERIALLY MISSTATED AS ERRORS
COULD OCCUR DURING
CONSOLIDATION AS THE PROCESS IS
COMPLEX
 THE RISK THAT THE AFS MAY BE
MATERIALLY MISSTATED AS
INTERCOMPANY TRANSACTIONS MAY
NOT BE ELIMINATED
 THE RISK THAT THE AFS MAY BE
MATERIALLY MISSTATED AS RELATED
PARTY TRANSACTIONS MAY NOT BE
PROPERLY ACCOUNTED FOR AS PER
REQUIREMENTS
 THE RISK THAT THE AFS MAY BE
MATERIALLY MISSTATED AS RELATED
PARTY TRANSACTIONS AND
RELATIONSHIPS MAY NOT BE AT ARMS
LENGTH
 THE RISK THAT THE AFS MAY BE
MATERIALLY MISSTATED AS THE
BUSINESS COMBINATION DURING THE
PERIOD AND AS THIS TRANSACTION IS
COMPLEX ERRORS COULD OCCUR IN
THE RECORDING THEREOF
 NEW AUDIT CLIENT  THE RISK THAT THE AFS ARE
MATERIALLY MISSTATED AS THE
OPENING BALANCES COULD CONTAIN
MISSTATEMENTS AS WE WERE NOT
THE AUDITORS IN THE PREVIOUS YEAR
 DIRECTORS TO RECEIVE SHARE  THE RISK OF THE AFS BEING
OPTIONS MATERIALLY MISSTATED AS THE
 CEO IS A SHAREHOLDER DIRECTORS MAY MANIPULATE THE
RESULTS BY OVERSTATING INCOMES
AND UNDERSTATING EXPENSES IN
ORDER TO INCREASE EARNING PER
SHARE TO ENSURE THAT THEIR SHARE
OPTIONS VEST
 SELLING MAGAZINES TO  THE RISK THAT THE AFS ARE
INTERNATIONAL COUNTRIES MATERIALLY MISSTATED AS FOREIGN
EXCHANGE LAWS OR REGUALTIONS
MAY NOT BE FOLLOWED OR COMPLIED
WITH
 LACK OF GOOD CORPORATE  THE RISK OF THE AFS BEING
GOVERNANCE PRINCIPLES MATERIALLY MISSTATED AS THE
 NO INDEPENDENT DIRECTORS CONTROL ENVIRONMENT MAY BE