Case-1 Party Cruises is a new client of MMM Partners. Party Cruises is a low-cost cruise ship operator, travelling between Australia and five countries in South-East Asia. The planning for the first audit is underway. The auditors have become aware that police in two countries are investigating several Party Cruises employees for stealing food and other supplies from the ships' kitchens and selling it at local markets. The police have charged ten cabin stewards of Party Cruises with theft and fraud. Required (a) What account balances are at risk? Explain. (b) What key assertions for the above accounts are likely to be affected? Case-2 A client has a material balance in property, plant and equipment. The discussions with management indicate that there is a risk the client will capitalize all repair costs to minimize the impact on profits. Repairs are likely to be material this year because of flooding at the city premises. Extensive repairs were due to be commenced in the month prior to year-end, with completion around two months later. In addition, the board papers reveal that several machines were sold during the year. Required Based on the above information, what accounts and assertions are likely to be affected? Explain. Case-3 The auditor is planning for the audit of a car accessories retail business. Inventory is material, and items range in value from $1 to over $500. The nature of the store means that many items are specially ordered with special branding and promotional packaging. Orders are placed six months in advance from overseas suppliers. Large deposits are required to be paid to suppliers when orders are placed. The auditor believes that the account balances for inventory and prepayments are at risk of material misstatement. Required (a) Identify the key assertions at risk in relation to inventory and prepayments. (b) For each assertion in (a), identify a type of evidence that would be persuasive. Case-4 Dinitha is working on the audit of a client's accounts receivable. During the last few weeks she has conducted interviews with the accounts receivable manager, the chief financial officer and staff working in the accounts receivable department. She has also overseen the external confirmations of accounts receivable, 30 per cent of which required the recipient to respond whether or not the amount stated was correct. Dinitha also conducted a review of subsequent cash receipts from the client's customers. She vouched a sample of accounts receivable balances back to the underlying invoices, cash receipts and sales returns, and traced a sample of these documents to the accounts receivable ledger. Required (a) List the types of audit evidence gathered by Dinitha and comment on the persuasiveness of each type. (b) Link each type of evidence to the relevant accounts receivable assertions.