QUESTION 1A:
Assume that you are the engagement manager conducting the financial statement audit of your selected company. You are required to prepare a planning memorandum. You can assume that the financial statements included in the annual report are not yet audited and you are responsible for planning the audit of these statements.
Use the information provided in the company’s Annual Report and other publicly documents relevant to your planning process. State any assumptions you find it necessary to make.
The memo should be no more than three (3) pages in length using normal margins and a font size no less than 10 and larger than 12.
Use www.sedar.comto select a known company’s 2020 financial statements.
The memo should include (but not limited to):
• High level business information;
• Risk assessment (business risk, engagement risk, audit risk)
• Analysis of internal controls and relationship to risk
• Select three to five areas of risk (eg. revenue, payables, payroll, inventory, finance) and write an audit program for each selected risk. The audit program should include:
o Approach;
o Materiality;
o Sources of evidence;
o Preliminary analytics; and
o Suggested procedures.
QUESTION 1B:
Building on this, you are the engagement manager conducting the financial statement audit of your selected company. You are now required to use your planning memo as a guide to prepare detailed audit procedures for ONE of your identified risks to the financial statements. The procedures may be presented in a memo. You may assume that the financial statements included in the annual report are not yet audited and you are responsible for preparing detailed audit procedures.
Use the information provided in the company’s Annual Report and other publicly documents relevant to your planning process. State any assumptions you find it necessary to make.
Your submission should be no more than five (5) pages in length using normal margins and a font size no less than 10 and larger than 12.
The submission should include (but not limited to):
• Identification of financial statement risk;
• Assessment of risks (inherent, control, detection) at the assertion level
• The audit program should include:
o Materiality;
o Reliability of evidence;
o Nature, Timing, Extent of the procedure; and
o Documentation references to CAS, ASPE, IFRS or other requirements.
You may use the substantive procedure exhibits provided in chapters 11 through 14 as a guideline for the format. Your instructor is available for further guidance if any of the requirements are not clear.
