Documente Academic
Documente Profesional
Documente Cultură
2013 SEMESTER 1
CONTENTS
MINI AUDIT VOSPA LTD
(b)Reasons for
your
concerns
(c) Audit
strategi
es
20X3
20X2
20X1
1.
2.
3.
4.
5.
Explanations
Operating Cycle
Account receivable turnover in days
Liquidity
Current and quick ratios
Solvency
Debt to net worth ratio
Overall Conclusions?
1 % of Total Assets
Variable Percent of Total Assets
1% of Total Revenues
Variable Percent of Total Revenues
$
$
$
$
Base
22,978,691
22,978,691
35,274,720
35,274,720
5% of Pre-Tax Income
10% of Pre-Tax Income
1% of Gross Profit
$
$
$
788,988
788,988
9,876,922
$
$
$
$
Materiality
Estimate
229,787
145,202
352,747
194,510
$
$
$
39,449
78,899
98,769
11
12
13
Paying habits
Good account.
Credit of $1620 should be allowed.
Good account.
Slow paying, good account.
Probably will collect nothing.
Slow paying, but has always paid.
Established company, good pay.
Good account.
Good account.
Slow paying, good account.
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Good account.
Slow pay. Good account.
Good account.
Good account.
Good account.
The Accounts Receivable accountant indicated that she had spoken with the
financial controller and the sales manager, about the delinquent Capitol Fine Rings
account. They were in agreement that it should be written off. Accounts amounting
to $14,200 had been written off during the year; you noted that all write-offs were
approved by the Accounts Receivable accountant, and that they are not listed in the
Accounts Receivable Aged Trial Balance.
From the cash receipts journal you saw the following subsequent payments made on
the accounts receivables balances as of December 31, 20X3.
Customer
Anne Charlotte
Pendants
Darings
Frankie's Floral Jewels
Incense Ltd
Lone Star Supply
Tears and Doefall
Pearls
Young and Beautiful
Payment
Amount
27,100
24,300
37,600
2,000
2,400
68,000
20,000
Payment Date
1-12
1-02
1-14
1-07
1-14
1-02
1-05
Required Exercises
1. Prepare a substantive audit program to test accounts receivable balances and
bad debts. Use the financial statement assertions as the major headings or
captions for your program. List the appropriate steps under each of these
headings:
None of the accounts receivables are fictitious
No accounts receivables have been omitted from the balance sheet
The accounts receivables are genuine claims owed by the company
Pledged accounts receivables used as collateral are disclosed
Receivables from directors, officers are properly disclosed
2. Perform all required audit work on the accounts receivables aged analysis
schedule according to the audit program prepared in (1) above. Prepare a
schedule to analyze the provision for doubtful debts and the bad debts write-off
account for the current year, performing all appropriate audit work. You have
determined that the expected uncollectible percentages from the prior year are
still appropriate for the current year i.e. 3% of total debtors.
15
CONFIRMATION OF DEBTORS
January 2. 20X3
Frankie's Floral Jewels
602 River Street
Manukau City
Dear Sir or Madam:
For the purpose of providing independent confirmation of our accounts
receivable, please advise our auditors, of the correctness of your balance with
us as of December 31, 20X3, as shown on the enclosed statement.
After comparing the statement with your records, please sign the
confirmation below and return it directly to our auditors in the enclosed,
addressed envelope. If your records differ from the balance shown, please
note your exceptions below.
This letter is not a request for payment, but merely for confirmation of your
account balance. Yours very truly,
VOSPA LTD
Peter Ng
CONFIRMATION OF DEBTORS
Confirmation Request No
D1
Chartered Accountants
425 Davies Rd
Manukau City
Dear Sir or Madam:
Your account showing a balance of $37,600 owing by us, as at 12/31/20X3 is
correct.
Very truly yours,
Frankie's Floral
Jewels
James Whitmore
Chief Accountant
January 16.20X4
Exceptions:
NO EXCEPTIONS
16
17
CONFIRMATION OF DEBTORS
Confirmation Request no D4
Chartered Accountants
425 Davies Rd
Manakau City
Dear Sir or Madam:
Your account showing a balance of $28,000 owing by us, as at 12/31/20X3 is
incorrect
Very
truly yours,
You
ng and Beautiful
Roger Mc Adams
President
1/9/20X4
Exceptions:
We only owe $8,000. Balance above is incorrect.
-------------------------------------------------------------------CONFIRMATION OF DEBTORS
Confirmation Request no D5
Chartered Accountants
425 Davies Rd
Manukau City
Dear Sir or Madam:
The statement of our account showing a balance of $31,900 as of 12/31/20X3
is correct.
Very
truly yours,
Darings
Rosemary Williams
Head Bookkeeper
1/15/20X4
Exceptions:
No exceptions
18
19
1. At the close of business on the date listed above, our records indicated the following deposit
balance(s):
ACCOUNT NAME
Vospa Ltd
ACCOUNT NO.
58-4329
INTEREST RATE
BALANCE'
N/A
$415,624
2. We were directly liable to the financial institution for loans at the close of business on the date listed above as
follows:
ACCOUNT
NO./
DESCRIPTIO
BALANCE'
^
DATE DUE
INTEREST
RATE
^
The information presented above is in agreement with our records. There are no other deposits or loan
accounts have come to our attention except as noted below.
Bill Churchill
Financial Institution Authorised
Signature
20
21
$1 250 000
Represented by:
Fixed Assets
Current Assets
Non-current Liabilities
Current Liabilities
NET ASSETS
3 600 000
1 600 000
2 450 000
1 500 000
5 200 000
3 950 000
$1 250 000
REVENUE STATEMENT
Operating profit before tax
Income tax expense
Operating profit after Taxation
Accumulated losses at 1 January 20X3
RETAINED EARNINGS AT 31 DECEMBER 20X3
23
2 900 000
(1 400 000)
1 500 000
(900 000)
$600 000
24
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