Question 1 (8 Marks) Pineapple Beach Hotel Co.

| March 17, 2019


Question 1 (8 Marks) 
Pineapple Beach Hotel Co. (Pineapple) operates a hotel providing accommodation, leisure facilities, and restaurants. Its year end was April 30, 2016. You are the audit senior of Berry & Co. and are currently preparing the audit program for the year-end audit of Pineapple. You are reviewing the notes of last week’s meeting between the audit manager and controller where the following material issue was discussed. 
Pineapple incurred significant capital expenditure during the year on updating the leisure facilities for the hotel. The controller has proposed that the new leisure equipment be depreciated over 10 years using the straight-line method.  
Required 
Describe substantive procedures to obtain sufficient and appropriate audit evidence in relation to the above issue.    
Question #2 (15 Marks) 
One of the commonly used substantive tests for cash balances is to verify bank reconciliations performed by the entity. Name the five steps in verifying the bank reconciliation. Are there circumstances under which auditors might perform the bank reconciliation for themselves? Explain.   
Question #3 (5 Marks) 
Are there any issues that may arise with the valuation of cash balances? Explain.   
Question #4 (15 Marks) 
Name and describe five possible internal controls related to the investment function.   
Question #5 (12 Marks) 
Indicate whether you agree or disagree with the following statements and explain your reasoning. 

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