For the (A) occurrence general audit objective

| October 14, 2019

Required

For the (A) occurrence general audit objective of the  sales revenue account, and (B) the  net realisable value general audit objective of the  inventory account, answer all of the following questions in accordance with the Australian Auditing Standards. You need to perform your analysis using the facts in the case study.  For each of the two audit objectives of the accounts specified above:

(1) Assess inherent risk and perform analytical procedures to assess the likelihood of misstatements for each of the general audit objectives of the accounts given above.  Analyse and explain your findings. (Total 20 marks)

(2) Assess control risk for each of the general audit objectives of the accounts given above. In your answer, identify existing internal controls that are relevant to the specified audit objectives and briefly explain how each internal control can prevent/detect misstatements for the specified audit objectives. (12 marks)

(3) Identify an existing internal control that is specific to each of the two general audit objectives of the accounts specified above, and design one test of control for each case.  The internal controls and tests of controls must be based on the facts given in the case study. Briefly explain how the tests of controls specifically check the relevant audit objectives of the accounts specified. (4 marks)

(4) Design one substantive procedure that produces reasonably reliable evidence for each of the general audit objectives of the accounts given above. Do NOT use the same procedures here as the tests of controls in part (3). Do NOT use analytical procedures for sales occurrence. (4 marks)

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