Aini Caterer Sdn Bhd(ACSB) had reappointed your firm as the auditor for the financial year ended 30 September 2012.ACSB is in a business that provides food and services for banquets and weddings.A meeting to plan for the audit was held between you and the Chief Executive Officer(CEO) of ACSB.The condition and event of being expose to risk that were noted by you and documented in the audit planning memorandum are as that were noted by you and documented in the audit planning memorandum are as follows:
Condition and event that may indicate risk Type of risk Fact of the risk
I. This is our fifth audit engagement for ACSB Audit risk We(the auditor) are able to issues appropriate opinion since we are familiar with the entity and its environment.here we are in a better position to comprehend the risk of material misstatement resulting from the inherent risk and control risk.
II. The engagement partner place confidence on the seniors to review and finalizing the audit work.The partner will sign the audit report once the seniors had given the go ahead that they satisfied with the fieldwork
III. The fieldworks are done by the juniors.If juniors have any query,they need to get the advice from the seniors at the office,which in most instances were occupied with the finalizing of the work of other clients.
IV. The responsibility for accounting function is headed by an account executive.The current staff is just started working since 1 July 2012
V. In addition to business in Shah Alam,the company is expanding the business into Ampang
VI. The company operations are regulated by JAKIM’s Halal Certification,HACCP(hazard Analysis and Critical Control points),and Licensing and EAnforcement department of Municipal Council.
VII. The company is expanding into fresh food retailing business
VIII. The company’s kitchen workers are on contract basis and hired from Indonesia and Bangladesh
IX. The fieldwork is based on a generic materiality level,sampling frame,internal control questionnaire and audit procedures.
X. The evidence for class of transactions and account balances are predominantly supported by analytical procedures and inquiry from client’s management
XI. For the tests of detail, the juniors need to select all items with a particular characteristic,e.g.,all disbursements above RM20,000
I. Identify which risk is the:
• Inherent risk
• Control risk
• Detection risk
• Audit risk
II. Explain the fact of the risk.
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