PROBLEM 1

Based on the audit evidence obtained during an interim audit, there are indications of impairment on
one of the projects run by the client. At the time of the year end audit, the auditor asks the client to
perform an impairment test. Client respond the request with preparing a projection calculation that
makes project appear very feasible success project, so the carrying amount of the project asset is still
lower than the recoverable value. The impairment test results are then provided to the auditor. Seeing a
very complex technical calculations with the basic science of engineering, auditor directly agreed with
the results of the impairment test, and approved that project assets is not to be impaired.
Required:
a. Explain what the generally accepted auditing standards that were violated by the auditor
b. What actions should be done by the auditor with the result of client impairment test .

PROBLEM 2
Here are some findings that can potentially exist in a financial statement audit.
1) Double count of sales
2) Mark up the master price of inventory
3) Not record sales returns from customers
4) Double count of inventory
5) Record down payment from customer as revenue
6) Capitalizing as assets amounts that should be expensed

Required:
For each condition above, analyze :
a. Management assertions that are not met
b. Impact of the findings to the income statement and statement of financial position if no
corrections

c. Audit procedure that can detect the findings
PROBLEM 3
For each of the following situations, explain the internal control components (based on the COSO
framework) that is inadequate:
1) Procurement department has difficulty in finding suppliers because the suddenly user request
2) Head of Internal Audit is difficult to meet Managing Director for discussing the internal audit
report
3) Some of the tax invoice from the vendor are lost and damaged so that the company cant credit
input tax.
4) Companys project is not running smoothly because most project personnel have routine
responsibilities in their division position
5) Preparation of Corporate Plan (annual plan) is only done by the Finance Division based on
previous year with a little adjustment.

PROBLEM 4
David was a head of cash office in ABC Bank. He persuaded customer to deposit with offering 10%
deposit rate (while in other banks is 6-7%). The customers were asked to transfer the money to his
account and then he retransferred the money to the account in the name of his mother. Then, he made
a fake deposit slip according to the value and term deposits requested by the customer. David can carry
out these action because of taking advantage of customers who truly believed on him. Customer didnt
suspect when they were asked to sign a blank deposit slip. As a result of theft, customers suffer a loss of
Rp 19.4 billion
According to the bank's internal information, David was still a contract employee and recruited from XYZ
Bank and at the time of the action, David was the head position of the cash office. When he was in XYZ
Bank, he had also embezzled customer funds through fictitious deposits and the money used to
purchase luxury cars and overseas trips.
Required:
Identify the internal control weaknesses in ABC Bank that contributed the occurrence of case.