Aue3701-october-2016-exam-solution.pdf - AUE3701 OCTOBER 2016 EXAM SOLUTION AUE3701 EXAM SOLUTIONS OCTOBER 2016 QUESTION 1 a b • GROUP ANNUAL

Aue3701-october-2016-exam-solution.pdf - AUE3701 OCTOBER...

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AUE3701 OCTOBER 2016 EXAM SOLUTION
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AUE3701 EXAM SOLUTIONS OCTOBER 2016 QUESTION 1 ( a & b ) GROUP ANNUAL FINANCIAL STATEMENTS TO BE PREPARED THE RISK THAT THE AFS MAY BE MATERIALLY MISSTATED AS ERRORS COULD OCCUR DURING CONSOLIDATION AS THE PROCESS IS COMPLEX THE RISK THAT THE AFS MAY BE MATERIALLY MISSTATED AS INTERCOMPANY TRANSACTIONS MAY NOT BE ELIMINATED THE RISK THAT THE AFS MAY BE MATERIALLY MISSTATED AS RELATED PARTY TRANSACTIONS MAY NOT BE PROPERLY ACCOUNTED FOR AS PER REQUIREMENTS THE RISK THAT THE AFS MAY BE MATERIALLY MISSTATED AS RELATED PARTY TRANSACTIONS AND RELATIONSHIPS MAY NOT BE AT ARMS LENGTH THE RISK THAT THE AFS MAY BE MATERIALLY MISSTATED AS THE BUSINESS COMBINATION DURING THE PERIOD AND AS THIS TRANSACTION IS COMPLEX ERRORS COULD OCCUR IN THE RECORDING THEREOF NEW AUDIT CLIENT THE RISK THAT THE AFS ARE MATERIALLY MISSTATED AS THE OPENING BALANCES COULD CONTAIN MISSTATEMENTS AS WE WERE NOT THE AUDITORS IN THE PREVIOUS YEAR DIRECTORS TO RECEIVE SHARE OPTIONS CEO IS A SHAREHOLDER THE RISK OF THE AFS BEING MATERIALLY MISSTATED AS THE DIRECTORS MAY MANIPULATE THE RESULTS BY OVERSTATING INCOMES AND UNDERSTATING EXPENSES IN ORDER TO INCREASE EARNING PER SHARE TO ENSURE THAT THEIR SHARE OPTIONS VEST SELLING MAGAZINES TO INTERNATIONAL COUNTRIES THE RISK THAT THE AFS ARE MATERIALLY MISSTATED AS FOREIGN EXCHANGE LAWS OR REGUALTIONS MAY NOT BE FOLLOWED OR COMPLIED WITH LACK OF GOOD CORPORATE GOVERNANCE PRINCIPLES NO INDEPENDENT DIRECTORS THE RISK OF THE AFS BEING MATERIALLY MISSTATED AS THE CONTROL ENVIRONMENT MAY BE
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WEAKER DUE TO MANAGEMENT THAT LACK INTEGRITY RESULTING IN MISSTATEMENTS IN THE AFS FINANCING APPLICATION IS THE RISK OF THE AFS BEING DEPENDENT ON AUDITED AFS OF MATERIALLY MISSTATED AS THE ENTITY PUBLISHING 4U MAY MANIPULATE THE AFS IN ORDER TO ENSURE THAT THEY RECEIVE THE FINANCING FROM THE BANK THERE IS A RISK THAT THE AUDITOR COULD BE HELD LIABLE TO THE BANK DUE TO THEM RELYING ON THE AUDITED STATEMENTS WHEN DECIDING WHETHER TO PROVIDE FINANCING OR NOT QUESTION 2 ( a & b ) DESCRIPTION OF RISK AUDIT ASSERTION THERE IS A PRESUMED FRAUD RISK IN REVENUE RECOGNITION OCCURENCE THERE IS A RISK THAT REVENUE IS BEING SOLD TO FOREIGN COUNTRIES MAY BE RECORDED AT THE INCORRECT EXCHANGE RATES ON THE TRANSACTION DATES ACCURACY THERE IS A RISK THAT REVENUE MAY BE OVERSTATED BY THE DIRECTORS IN ORDER TO MEET THEIR EARNINGS PER SHARE TARGET TO BE ABLE TO ENSURE THEIR SHARE OPTION VEST OCCURENCE THERE IS A RISK THAT REVENUE IS RECOGNISED WHEN SOLD TO THE RETAIL CUSTOMERS RATHER THAN WHEN IT IS SOLD TO THE FINAL CUSTOMER CUT-OFF OCCURRENCE THERE IS A RISK THAT REVENUE MAY NOT BE APPROPRIATELY PRESENTED AND DISCLOSED PRESENTATION & DISCLOSURE THERE IS RISK THAT ONLINE REVENUE MAY BE RECOGNISED BEFORE THE RISKS AND REWARDS OF OWNERSHIP HAVE PASSED TO THE CUSTOMER CUT-OFF OCCURENCE QUESTION 3 ( a ) REVIE W NOTE IMPROVEMENT 1. THE ENGAGEMENT LETTER SHOULD BE ADDRESSED TO THE RESPONSIBLE PARTY. IN
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