For each of the test results for Gardens Nursing Home:

a. Identify whether this is a test of controls or a substantive test of detail.

b. Determine the key assertion addressed by the test procedure.

c. Explain why the conclusion reached is appropriate or inappropriate.

d. Outline the key additional procedure that you believe needs to be performed.

Fellowes and Associates Chartered Professional Accountants is a successful mid-tier accounting firm with a large range of clients across Canada. In April 2023, Fellowes and Associates gained a new client, Health Care Holdings Group (HCHG), which owns 100 percent of the following entities:
• Shady Oaks Centre, a private treatment centre • Gardens Nursing Home Ltd., a private nursing home • Total Laser Care Limited, a private clinic that specializes in the laser treatment of skin defects The year end for all HCHG entities is June 30.
During the 2023 financial year, Shady Oaks released its own line of treatment supplies, such as orthotics, massage oils, and exercise discs and balls, which are sold by direct marketing by a sales team employed by the centre. The sales team receives a base salary and a bonus component, which is based on the dollar value of sales it generates. You recognize that the team’s main motivation is to maximize its bonuses. You select a sample of payments received by the centre post year end and trace the payments back to the general ledger and customer account balance.
In addition, you are reviewing the results of a number of tests in relation to accounts payable at Gardens Nursing Home, as shown in table 6.9.
Source: Adapted from the Institute of Chartered Accountants Australia’s CA Program’s Audit and Assurance Exam, December 2008. Provided courtesy of Chartered Accountants Australia and New Zealand.

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TABLE 6.9 Testing results of Gardens Nursing Home's accounts payable Test Result 1 2 A number of suppliers were selected from the list of trade creditors at year end and balances traced to supplier invoices and goods received reports to ensure that goods were received prior to the year end. For 2 creditors out of 15 tested, the balance was only marginally overstated. A number of suppliers' invoices were selected and checked to ensure that the pricing and discount terms were reviewed and authorized by the purchase manager. Three out of 20 invoices tested had not been authorized and incorrect discounts were recorded for these invoices. A follow-up of the three samples with deviations did not highlight a pattern or specific reason for the errors. Conclusion Accepted as no material errors were found Accepted as the errors in discounts taken were immaterial