Chartered Accountants Program Audit & AssuranceMain examPage 2 of 14 AnnouncementsWhere a question refers to or requires candidates to provide a reference to a Standard, candidates can use International Standards, Australian Standards or New Zealand Standards.Candidates must use the assertions contained in ISA 315 (Revised) Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment para. A124 (or national equivalent) in the exam.Question 1 begins on the next page, please turn over
Chartered Accountants Program Audit & AssuranceMain examPage 3 of 14 Question 1 (20 marks)BackgroundAs a high performing audit senior within professional services firm A1 Services (A1), you have recently been assigned as the senior auditor on the upcoming audit engagement of Cryptag Limited (Cryptag), a listed, profit-oriented entity that designs and manufactures access systems for buildings and offices. Cryptag has a 31 December year end. The company has been an audit client of A1 for four years. The engagement partner, Megan, is very keen for you to get up to speed with the client and has emphasised that an in-depth understanding of the entity and its industry helps identify the issues that will impact the audit.It is now 1 December 20X6. At Megan’s request, you have commenced planning for the upcoming engagement, the 31 December 20X6 year-end audit of Cryptag. Based on conversations with Megan and having read the prior year financial statements, you have some understanding of the entity, its environment and its performance. You have been tasked to spend a few days at the client site to undertake some preliminary procedures to help with risk assessment, and to finalise the overall audit strategy. The chief financial officer (CFO) of Cryptag is busy preparing for the financial year end but has kindly provided you with the following information at your request:•Minutes of the board meetings for the current financial year (August and October 20X6) (Attachment 1). (Please note that minutes of board meetings for the six months to 30 June 20X6 were reviewed as part of the half-year review.)•Extract from the profit and loss account for the nine months ending 30 September 20X6 (Attachment 2).