can you describe and review Q1 from the case study ?

Alphe Cupcales, ine. Trial Balance Dectimber 11, 2000 Nertormats by. 7 se arasion. Anvented by nV 2/25/2001 \begin{tabular}{|c|c|c|c|} \hline \begin{tabular}{l} Aocount \\ Nas. \end{tabular} & Descriedion & or. & 6 \\ \hline 2006 & felecommunicatiom fopense & \( 1,762.50 \lcm{215} \) & \\ \hline not & Cel Phane Service fopense & 39400 & \\ \hline 7010 & Postage fupence & 538.65 & \\ \hline011 & Frodesibnul Services Expense & 8,31100 & \\ \hline012 & Maintenance Expenie & 4,200 & \\ \hline rots & office Sugplies Evense & 31,55300 & \\ \hline & Dry Ceanins Expense & 167135 & \\ \hline noss & Storefront Faper Supplies Expense & 3,14875 & \\ \hline nos & Rental Getrie & 1900800 & \\ \hline Nost & Waste Servicea Expense & 600.00 & \\ \hline noss & Car Maintecance and Foel Expence & 1,056.40 & \\ \hline 2029 & Aepair bupense & Lestss & \\ \hline 3020 & Water Expense & & \\ \hline 2021 & Soda Machine Repair and CO2 Epene & 4,san00 & \\ \hline son & Gede Cavd fopente & 3,75036 & \\ \hline 2023 & Cocking Fupplins Espence & 52,19300 & \\ \hline r024.7025 & Banking fees & 1,560.00 & \\ \hline 8000 & Depreciation Exptnse: Equipment & 1450t00 & \\ \hline \multirow[t]{2}{*}{ souo } & Depreciation Expense: Plant s Propenty & 1320000 & \\ \hline & & \$313nsco.s2 & $3,123,900,52 \\ \hline \end{tabular} A.s. 2012 Minline Cuncakes. Ine. Clent Supporting Dooument Audit Year December 31, 20x2 Garcia and foster, CPAs Performed by SDM Dater 9/15/200a Revlewed br: nf Date: 2/14/20x3 Materially Methodologr: Planning materiality (PM) is determined as follows: (1) For public clients, we base materiality on 6W of prior vear's net income unless the dient is at a lons or iby break even, in which case we base materiahty on 1% of total assets. 2) For private clients, we base materiallity on 1% of peior vear's equity. folerable misstatement (TM) is set at 50% of PM. ummary of audit differences (SAO) threshold is set at 5% of PM. Ve will place amy idenefied misstatements greater than our SAD threshold ento the SAD listing. uring our evaluations of overall misstatements, we will compare the total of misstatements on the SAD loby ir PM threshold. pllication of Methodology to Alpine Audit for 20xz: foc Total Equity for Alpine Cupcakes, Inc.1 $742,409(B,1.1) ateriality thresholds for the zoxz audit: 1=0.0157,43,409=57,414=57,400=0.5057,400=53,700D=0.0557,400=5370 rmine Inherent Risk, Control Risk, and Detection Risk: ig the planning of the audit, including understanding the cllent and its environment and understanding nal control erwironment, we must determine the level of inherent risk (IR), control risk (CR) and detuctt cation of IR, CR, and DR for 202 Alpine Audit: reliminary risk assessment levels are set as follows: \begin{tabular}{ll} Audit Risk & = \\ Unherent risk & =HighLow \\ -ontrol risk & =HighModerate \end{tabular} ve set our risk assessment levels for the overall audit in order to reduce our audit risk to the approph- Minline Cuncakes. Ine. Clent Supporting Dooument Alpine Cupcakes specializes in gounmet cupcakes. Focusing en cupcakes alloss Alpise to kexp cous dewn by eliminating the aced to bay specialized equipment for a larger seale bakery. The Compuny offers a variety of choioes, including vanills, chocolate, lemon, spiet, carrot eake, ned velvet, thate-free chocolate, and almond vegan. About 80% of the Company's sales are to buainess clients, with the fomainen crodit while retail sales at the siorefront are cash only. Alexis works elosely with friends and family, inchading her beother-in-larw, who owns Mountain Dairy. Eventually, Alexis found that the business was taking a great deal of time and she was unable to supervise the kitehen properly. A that point, Alexis hired her good friend, Gabrielle Krwuse, to take over the kithehen as the main chef. She tanght everythizg she kaows to Giabrielle. Alevis coetioues to modify the Company's business plan and moniko the gourmet cupeake trend. Canent reports indicase that the gourmet cupcake basiness will coetinae to see positive gowth for the next 5 ycars. Aleais has a few concerns about the current condition of the business. In 20X1, sugar prices were on the rise and Alexis is hoping that prices decline in 202. The United Sutes Dairy Association has predicted that dairy prices will likely increase in 202 since the production per cow las boen decreasing in the past 3 years. Alexis continues to monitor the change in prices of other raw materials to try io preveat, aty pricing shocks to her business. Next year, Alexis is planning to implement a large-seale advertising campaign to try to double Apine's cupcake business. The Company is planning to offer a private debt issuance to cover the costs of the advertising campaign and additional baking equipenent needed to increase prodection Alevis fiscusset pe Company's plans for debt issuance with the audit commitice and then obtained manimous approvel fiom the entire board of directors. Audit Case Assignments they conducted the audit. Note that other papers are client documents that Garcia and Foster collected and kept in support of their audit. Finally, note the numbering system in the lower right-hand corner of each page and how each paper within the audit is numbered and linked back to the audit program. In this part of your assignment, you will examine the firm's audit documentation in relation to the auditors' performance on several risk assessment procedures. Please complete the following tasks: Q1. Research, cite, and summarize (in one or two sentences per standard identified) the auditing standards as they relate to the auditors' responsibilities in the following areas: a. Obtaining and documenting an understanding of the client's environment, including internal controls. b. Materiality assessment in planning and performing the audit. c. The audit risk model. d. Preliminary analytical procedures. Q2. Evaluate Garcia and Foster's documentation of their understanding of the client's environment (workpaper B.2.1.) Describe any problems you find and provide suggestions for improvement. This question relates to Step 2 of the Garcia and Foster Audit Plan. Q3. Review Garcia and Foster's calculations of materiality thresholds for the 202 Audit (workpaper B.2.1). Determine if the auditors correctly applied the materiality concept in their risk assessment procedures. Describe any problems you find and provide suggestions for improvement. This question relates to Step 2 of the Garcia and Foster Audit Plan. Q4. Evaluate other aspects of the Audit Risk Assessment memo (workpaper B.2.1.) In particular, review the auditors' application of the audit risk model and brainstorming processes. Describe any problems you find and provide suggestions for improvement. Identify and document any additional problems you discover with the memo. This question relates to Step 3 of the Garcia and Foster Audit Plan. Alphe Cupcales, ine. Trial Balance Dectimber 11, 2000 Nertormats by. 7 se arasion. Anvented by nV 2/25/2001 \begin{tabular}{|c|c|c|c|} \hline \begin{tabular}{l} Aocount \\ Nas. \end{tabular} & Descriedion & or. & 6 \\ \hline 2006 & felecommunicatiom fopense & \( 1,762.50 \lcm{215} \) & \\ \hline not & Cel Phane Service fopense & 39400 & \\ \hline 7010 & Postage fupence & 538.65 & \\ \hline011 & Frodesibnul Services Expense & 8,31100 & \\ \hline012 & Maintenance Expenie & 4,200 & \\ \hline rots & office Sugplies Evense & 31,55300 & \\ \hline & Dry Ceanins Expense & 167135 & \\ \hline noss & Storefront Faper Supplies Expense & 3,14875 & \\ \hline nos & Rental Getrie & 1900800 & \\ \hline Nost & Waste Servicea Expense & 600.00 & \\ \hline noss & Car Maintecance and Foel Expence & 1,056.40 & \\ \hline 2029 & Aepair bupense & Lestss & \\ \hline 3020 & Water Expense & & \\ \hline 2021 & Soda Machine Repair and CO2 Epene & 4,san00 & \\ \hline son & Gede Cavd fopente & 3,75036 & \\ \hline 2023 & Cocking Fupplins Espence & 52,19300 & \\ \hline r024.7025 & Banking fees & 1,560.00 & \\ \hline 8000 & Depreciation Exptnse: Equipment & 1450t00 & \\ \hline \multirow[t]{2}{*}{ souo } & Depreciation Expense: Plant s Propenty & 1320000 & \\ \hline & & \$313nsco.s2 & $3,123,900,52 \\ \hline \end{tabular} A.s. 2012 Minline Cuncakes. Ine. Clent Supporting Dooument Audit Year December 31, 20x2 Garcia and foster, CPAs Performed by SDM Dater 9/15/200a Revlewed br: nf Date: 2/14/20x3 Materially Methodologr: Planning materiality (PM) is determined as follows: (1) For public clients, we base materiality on 6W of prior vear's net income unless the dient is at a lons or iby break even, in which case we base materiahty on 1% of total assets. 2) For private clients, we base materiallity on 1% of peior vear's equity. folerable misstatement (TM) is set at 50% of PM. ummary of audit differences (SAO) threshold is set at 5% of PM. Ve will place amy idenefied misstatements greater than our SAD threshold ento the SAD listing. uring our evaluations of overall misstatements, we will compare the total of misstatements on the SAD loby ir PM threshold. pllication of Methodology to Alpine Audit for 20xz: foc Total Equity for Alpine Cupcakes, Inc.1 $742,409(B,1.1) ateriality thresholds for the zoxz audit: 1=0.0157,43,409=57,414=57,400=0.5057,400=53,700D=0.0557,400=5370 rmine Inherent Risk, Control Risk, and Detection Risk: ig the planning of the audit, including understanding the cllent and its environment and understanding nal control erwironment, we must determine the level of inherent risk (IR), control risk (CR) and detuctt cation of IR, CR, and DR for 202 Alpine Audit: reliminary risk assessment levels are set as follows: \begin{tabular}{ll} Audit Risk & = \\ Unherent risk & =HighLow \\ -ontrol risk & =HighModerate \end{tabular} ve set our risk assessment levels for the overall audit in order to reduce our audit risk to the approph- Minline Cuncakes. Ine. Clent Supporting Dooument Alpine Cupcakes specializes in gounmet cupcakes. Focusing en cupcakes alloss Alpise to kexp cous dewn by eliminating the aced to bay specialized equipment for a larger seale bakery. The Compuny offers a variety of choioes, including vanills, chocolate, lemon, spiet, carrot eake, ned velvet, thate-free chocolate, and almond vegan. About 80% of the Company's sales are to buainess clients, with the fomainen crodit while retail sales at the siorefront are cash only. Alexis works elosely with friends and family, inchading her beother-in-larw, who owns Mountain Dairy. Eventually, Alexis found that the business was taking a great deal of time and she was unable to supervise the kitehen properly. A that point, Alexis hired her good friend, Gabrielle Krwuse, to take over the kithehen as the main chef. She tanght everythizg she kaows to Giabrielle. Alevis coetioues to modify the Company's business plan and moniko the gourmet cupeake trend. Canent reports indicase that the gourmet cupcake basiness will coetinae to see positive gowth for the next 5 ycars. Aleais has a few concerns about the current condition of the business. In 20X1, sugar prices were on the rise and Alexis is hoping that prices decline in 202. The United Sutes Dairy Association has predicted that dairy prices will likely increase in 202 since the production per cow las boen decreasing in the past 3 years. Alexis continues to monitor the change in prices of other raw materials to try io preveat, aty pricing shocks to her business. Next year, Alexis is planning to implement a large-seale advertising campaign to try to double Apine's cupcake business. The Company is planning to offer a private debt issuance to cover the costs of the advertising campaign and additional baking equipenent needed to increase prodection Alevis fiscusset pe Company's plans for debt issuance with the audit commitice and then obtained manimous approvel fiom the entire board of directors. Audit Case Assignments they conducted the audit. Note that other papers are client documents that Garcia and Foster collected and kept in support of their audit. Finally, note the numbering system in the lower right-hand corner of each page and how each paper within the audit is numbered and linked back to the audit program. In this part of your assignment, you will examine the firm's audit documentation in relation to the auditors' performance on several risk assessment procedures. Please complete the following tasks: Q1. Research, cite, and summarize (in one or two sentences per standard identified) the auditing standards as they relate to the auditors' responsibilities in the following areas: a. Obtaining and documenting an understanding of the client's environment, including internal controls. b. Materiality assessment in planning and performing the audit. c. The audit risk model. d. Preliminary analytical procedures. Q2. Evaluate Garcia and Foster's documentation of their understanding of the client's environment (workpaper B.2.1.) Describe any problems you find and provide suggestions for improvement. This question relates to Step 2 of the Garcia and Foster Audit Plan. Q3. Review Garcia and Foster's calculations of materiality thresholds for the 202 Audit (workpaper B.2.1). Determine if the auditors correctly applied the materiality concept in their risk assessment procedures. Describe any problems you find and provide suggestions for improvement. This question relates to Step 2 of the Garcia and Foster Audit Plan. Q4. Evaluate other aspects of the Audit Risk Assessment memo (workpaper B.2.1.) In particular, review the auditors' application of the audit risk model and brainstorming processes. Describe any problems you find and provide suggestions for improvement. Identify and document any additional problems you discover with the memo. This question relates to Step 3 of the Garcia and Foster Audit Plan