REQUIRED Task 1

| October 14, 2019

Assume that you are an audit manager at MFC Chartered Accountants. Your audit firm just gained 

a new client, Brilliant Construction Limited (BCL). You have been assigned to the audit of BCL. You 

are part of the team responsible for planning the BCL audit engagement for 2016. As part of the 

audit, you have been asked to obtain an understanding of BCL and its environment as per Auditing 

Standard  ISA  315.  The  background  information  of  BCL,  including  its  internal  environment,  is 

provided  in  the  case  study.  A  comprehensive  understanding  about  BCL’s  internal  and  external 

environment is crucial in ensuring an effective and efficient audit. This is especially true given that 

this is the first time your firm is working on the audit of BCL. 

You need to do an extensive research on BCL’s external environment, including the economy and 

the  industry  that  the  company  is  operating  in. In  order  to  do  this,  you  need  to  gather  relevant 

information  from various  sources  such as  financial news, industry  reports, government  statistics 

etc. 

2

Based on your analysis of BCL’s internal and external environment, identify  two key accounts at 

risk.  For  each  of  the  account,  explain  the  main  assertion  at  risk.  You  need  to  justify  why  the 

accounts  are  at  risk  based  on  your  analysis  of  the  client’s  internal  and  external  environments. 

Appropriate  references  need  to  be  provided  when  necessary.  Students  who  simply  provide  the 

name of the accounts and the assertions without explaining them will not receive any mark. 

Task 2 

Your audit team has performed analytical procedures. These include comparing the client’s ratios 

with the prior years and industry average. The unaudited income statement for the year ended 31 

July 2016 are provided below together with the audited income statement for the years ended 31 

July  2015,  2014.  You  are  also  provided  with  a  number  of  ratios  calculated  based  on  the  2016 

unaudited Income Statement and 2015 and 2014 audited Income Statements. 

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