A. The director of Melon Berhad, have asked your firm to act as their auditor for the year ending 30 September 2020 . They will be asking their existing auditor to resign, as the existing auditor do not provide a cost effective service. Required: Describe the investigation you would carry out and ethical matters you would consider before you can accept the appointment as the company auditor. Provide THREE (3) points with an appropriate justification. (6 marks) B. Materiality is an important aspect to be considered during the audit process. The purpose of setting performance materiality is to establish a scope for the audit procedures for the individual account balance or disclosure. In practice auditors commonly set performance materiality for each account at between 50 and 75 per cent of overall materiality. The firms provide guidance in determining the appropriate percentage to use within the range. Required: Explain any TWO (2) differences between quantitative and qualitative factors when determining the overall materiality. (4 marks) (TOTAL: 10 marks) QUESTION 2 ISA 230 Audit Documentation requires auditors to prepare audit documentation for an audit of financial statements on a timely basis. Required: i. Explain any TWO (2) purposes of audit documentation. (4 marks) ii. Differentiate between TWO (2) types of documentation with appropriate example. (6 marks) (Total: 10 marks) QUESTION 3 Audit sampling helps auditor to gather evidence over large populations of entity data in a cost effective manner. Required: i. Explain TWO (2) reasons why auditors use samples in carrying out their audit procedures rather than check all the elements in the population. (6 marks) ii. Identify any TWO (2) advantages and TWO (2) disadvantages of sampling. (4 marks) (Total: 10 marks) QUESTION 4 Internal control is a process designed by the management of the company to obtain reasonable assurance regarding the achievement of company's objectives. Required: i. Discuss any TWO (2) reasons why the auditor must obtain an understanding of internal control. (4 marks) ii. Explain THREE (3) inherent limitations of internal control. (6 marks) (Total: 10 marks)