15748952
AUE2601 – Assessment 2B
1.1 Sam Nkona, Gail du Plessis, Always Right, Numbers Inc.
1.2 A high yet not absolute form of assurance known as "reasonable assurance" is when
the auditor certifies that the information supplied is accurate to a significant degree.
On the other hand, limited assurance indicates that the auditor is not aware of any
required material improvements.
1.3 The agency theory looks to outline the interests of a principal and an agent, which can
include an individual and a financial planner. Stakeholder theory has been used as a
framework to explain corporate earnings management, particularly with respect to
earnings quality (the selection of more conservative accounting policy choices) and
the timing of earnings announcement under management discretion.
1.4 If Sports Galore was internally compiled, it must be audited because the public
interest score is is greater than 100.
1.5.1 An outside accountant is engaged by an organization to prepare and present financial
statements; this type of engagement is known as a compilation engagement.
1.5.2 I do not agree with the directors of Sports Galore’s expectation regarding the report
because the baseline level of assurance, wherein the independent auditor obtains
“sufficient and appropriate evidence,” limiting assurance to specific aspects of the
sustainability report.
1.5.3 The expectation gap exists when auditors and the public hold different beliefs about
the auditors' duties and responsibilities and the messages conveyed by audit reports.
2.1 Auditors who express an independent opinion on whether the annual financial
statements of a company, fairly present the financial position and results of the
company’s operations. The external auditor is not an employee of the company.
The external auditor enhances the degree of confidence that users of the financial
statements will have in the information in those financial statements. Registered
auditors offer their services to the public. They are described as being “in public
practice” and must be registered with the Independent Regulatory Board for Auditors
(IRBA).
2.2 According to the Act, at each annual general meeting, the shareholders must appoint
the audit committee in cases where it is necessary.
2.3.1 Control Objective: Controls provide reasonable assurance that changes to the
statement application are authorized, tested, approved, properly implemented, and
documented.
2.3.2 C1: The warehouse where all inventory is stored is locked and guarded by a security
guard at all times. Any inventory removed from the warehouse should be
accompanied by an approved picking slip - Preventive controls, on the other hand, are
designed to keep errors and irregularities from occurring in the first place.
C2: Orders received are sequentially numbered and matched to a signed delivery
note. All outstanding orders are followed up on by the sales clerk weekly - Detective
controls are designed to detect errors or irregularities that may have occurred.
C3: The accountant reconciles the debtors age analysis to the debtors account in the
general ledger monthly and the financial manager reviews the reconciliation to
identify any unusual reconciling items - Corrective controls are designed to correct
errors or irregularities that have been detected.
AUE2601 – Assessment 2B
1.1 Sam Nkona, Gail du Plessis, Always Right, Numbers Inc.
1.2 A high yet not absolute form of assurance known as "reasonable assurance" is when
the auditor certifies that the information supplied is accurate to a significant degree.
On the other hand, limited assurance indicates that the auditor is not aware of any
required material improvements.
1.3 The agency theory looks to outline the interests of a principal and an agent, which can
include an individual and a financial planner. Stakeholder theory has been used as a
framework to explain corporate earnings management, particularly with respect to
earnings quality (the selection of more conservative accounting policy choices) and
the timing of earnings announcement under management discretion.
1.4 If Sports Galore was internally compiled, it must be audited because the public
interest score is is greater than 100.
1.5.1 An outside accountant is engaged by an organization to prepare and present financial
statements; this type of engagement is known as a compilation engagement.
1.5.2 I do not agree with the directors of Sports Galore’s expectation regarding the report
because the baseline level of assurance, wherein the independent auditor obtains
“sufficient and appropriate evidence,” limiting assurance to specific aspects of the
sustainability report.
1.5.3 The expectation gap exists when auditors and the public hold different beliefs about
the auditors' duties and responsibilities and the messages conveyed by audit reports.
2.1 Auditors who express an independent opinion on whether the annual financial
statements of a company, fairly present the financial position and results of the
company’s operations. The external auditor is not an employee of the company.
The external auditor enhances the degree of confidence that users of the financial
statements will have in the information in those financial statements. Registered
auditors offer their services to the public. They are described as being “in public
practice” and must be registered with the Independent Regulatory Board for Auditors
(IRBA).
2.2 According to the Act, at each annual general meeting, the shareholders must appoint
the audit committee in cases where it is necessary.
2.3.1 Control Objective: Controls provide reasonable assurance that changes to the
statement application are authorized, tested, approved, properly implemented, and
documented.
2.3.2 C1: The warehouse where all inventory is stored is locked and guarded by a security
guard at all times. Any inventory removed from the warehouse should be
accompanied by an approved picking slip - Preventive controls, on the other hand, are
designed to keep errors and irregularities from occurring in the first place.
C2: Orders received are sequentially numbered and matched to a signed delivery
note. All outstanding orders are followed up on by the sales clerk weekly - Detective
controls are designed to detect errors or irregularities that may have occurred.
C3: The accountant reconciles the debtors age analysis to the debtors account in the
general ledger monthly and the financial manager reviews the reconciliation to
identify any unusual reconciling items - Corrective controls are designed to correct
errors or irregularities that have been detected.
