Auditing Fundamentals

1) Identify the control weaknesses. Be specific in your response-what is each weakness and why (in other words what could result from the lack of weak control?) (6 Marks) 2) State the implication of each weakness identified (3 Marks) 3) Make recommendations of how the company can improve the internal controls. (6 Marks) 4) Two additional items have arisen during the review. The items are: - Item 1: The client has experienced significant operating losses since 2020 and has had to get permission from the bank to post it's loan repayments. Management is going to include the problem in the annual report but is not going to reflect the situation in the financial statement notes. What opinion would you issue and WHY? Base your response solely on this scenario. ( 3 Marks - 1 for the opinion and 2 for why) - Item 2: As a part of the post-balance sheet data audit procedures, the CPA, learned of heavy damage to one of the client's two manufacturing plants due to a recent fire; the loss will not be reimbursed by insurance. It occurred after the balance sheet date. The newspapers described the event in detail. The financial statements and notes as prepared by the client do not disclose the loss caused by the fire. Is this a subsequent event? If so, what type and what action should be taken (4 marks) 1) Identify the control weaknesses. Be specific in your response-what is each weakness and why (in other words what could result from the lack of weak control?) (6 Marks) 2) State the implication of each weakness identified (3 Marks) 3) Make recommendations of how the company can improve the internal controls. (6 Marks) 4) Two additional items have arisen during the review. The items are: - Item 1: The client has experienced significant operating losses since 2020 and has had to get permission from the bank to post it's loan repayments. Management is going to include the problem in the annual report but is not going to reflect the situation in the financial statement notes. What opinion would you issue and WHY? Base your response solely on this scenario. ( 3 Marks - 1 for the opinion and 2 for why) - Item 2: As a part of the post-balance sheet data audit procedures, the CPA, learned of heavy damage to one of the client's two manufacturing plants due to a recent fire; the loss will not be reimbursed by insurance. It occurred after the balance sheet date. The newspapers described the event in detail. The financial statements and notes as prepared by the client do not disclose the loss caused by the fire. Is this a subsequent event? If so, what type and what action should be taken (4 marks)