AUE3701
ASSIGNMENT 02
S1&S2
YEAR 2021
, AUE3701 Assignment 2 (2021)
1.
(a) Risk indicators (b) Description of risks of material misstatement at the
financial statement level
Conducting business The AFS may be materially misstated due to error as Cellular
internationally (most of conducts business internationally and the accounting
Cellular’s products are treatment for forex transactions is complex
sourced from China)
Related parties (Cellular is The AFS may be materially misstated due to error or
the parent company of App manipulation as the disclosure of related party relationships
Connect and Protect It) and transactions might be incorrect/incomplete in the financial
statements or might not be at arm’s length
Cellular group companies The AFS may be materially misstated as the entity might be
have to adhere to liable for legal damages for non-compliance resulting in
regulations (the Consumer negative publicity for the entity. This might lead to the going
Protection Act 68 of 2009 concern assumption not being properly accounted for and/or
and Competition Act 89 of disclosed.
1998)
Third party reliance The AFS may be materially misstated due to manipulation as
(Audited financial directors might engage in fraudulent financial reporting
statements to be used for (overstatement of assets and profit and understatement of
supplier renewal application) liabilities and expenses) to ensure that the Cellular’s licence is
renewed
Going concern issues due to : The AFS may be materially misstated as the going concern
- Licence contributes 70% of assumption might not be properly accounted for and/or
annual turnover and to be disclosed due to the possible non-renewal of the licence.
renewed withina month
after 31 March 2021 year-
end
Tight audit deadline The AFS may be materially misstated due to error as the
financial results prepared by the management of Cellular might
be incomplete due to time pressure or they may not have
sufficient time to identify, account for and disclose subsequent
events.
CEO is also 100% shareholder
of Cellular The AFS may be materially misstated due to manipulation
as management might engage in fraudulent financial
reporting by inflating the performance and position (eg
overstatement of revenue) of the entity or by reflecting a
poor performance and position (eg overstatement of
ASSIGNMENT 02
S1&S2
YEAR 2021
, AUE3701 Assignment 2 (2021)
1.
(a) Risk indicators (b) Description of risks of material misstatement at the
financial statement level
Conducting business The AFS may be materially misstated due to error as Cellular
internationally (most of conducts business internationally and the accounting
Cellular’s products are treatment for forex transactions is complex
sourced from China)
Related parties (Cellular is The AFS may be materially misstated due to error or
the parent company of App manipulation as the disclosure of related party relationships
Connect and Protect It) and transactions might be incorrect/incomplete in the financial
statements or might not be at arm’s length
Cellular group companies The AFS may be materially misstated as the entity might be
have to adhere to liable for legal damages for non-compliance resulting in
regulations (the Consumer negative publicity for the entity. This might lead to the going
Protection Act 68 of 2009 concern assumption not being properly accounted for and/or
and Competition Act 89 of disclosed.
1998)
Third party reliance The AFS may be materially misstated due to manipulation as
(Audited financial directors might engage in fraudulent financial reporting
statements to be used for (overstatement of assets and profit and understatement of
supplier renewal application) liabilities and expenses) to ensure that the Cellular’s licence is
renewed
Going concern issues due to : The AFS may be materially misstated as the going concern
- Licence contributes 70% of assumption might not be properly accounted for and/or
annual turnover and to be disclosed due to the possible non-renewal of the licence.
renewed withina month
after 31 March 2021 year-
end
Tight audit deadline The AFS may be materially misstated due to error as the
financial results prepared by the management of Cellular might
be incomplete due to time pressure or they may not have
sufficient time to identify, account for and disclose subsequent
events.
CEO is also 100% shareholder
of Cellular The AFS may be materially misstated due to manipulation
as management might engage in fraudulent financial
reporting by inflating the performance and position (eg
overstatement of revenue) of the entity or by reflecting a
poor performance and position (eg overstatement of
