Hi please can you help me.

Question 1 (13 marks)

An assurance engagement, whether it be an audit or a review, has five elements. The first of these is the "three party relationship", and the second is the "subject matter". Bure (Pty) Ltd owns a large shopping mall. Premises in the mall are rented out. The amount which shop owners pay as rent consists of a basic amount and a percentage of the shops' monthly turnover calculated according to the terms and conditions in their rental agreements. To satisfy itself that shop owners are paying the correct amount of rent, Bure (Pty) Ltd has engaged Hendricks and Co, a firm of registered auditors to perform an audit on the financial information (e.g. monthly turnover figures) provided by the shop owners in support of their monthly rental payments. In terms of the rental agreement, shop owners must allow Hendricks and Co access to their accounting records. Required YOU ARE REQUIRED TO, i

n terms of the example given above

a) i. identifies the three parties in this assurance engagement (3)

ii. describe the subject matter (1)

iii. identify and explain the other three elements of the assurance engagement. (6)

b) discuss the importance of the clause in the rental agreement which allows Hendricks and Co access to the accounting records of the shop owners. (3)

Question 2: (20 marks)

Consider each of the following statements:

1. The reason that companies are audited is to catch directors who have defrauded the company in some way. (4)

2. Studying auditing is beneficial for individuals who have no interest in going into auditing as a career but who intend to become managers in business. (5)

3. The internal audit department of a public company is an important part of the company's corporate governance. (4)

4. The audit profession plays a vital role in society. (4)

5. The most important requirement for any audit, whether it be internal audit, external audit, a government audit, or a forensic audit is technical competence. (3) YOU ARE REQUIRED TO state whether you agree or disagree with each of the statements given above. Give reasons for your choice. Consider each statement separately.

Question 3: (39 marks)

Tendai a recently promoted senior accountant at mentions in her acceptance speech that the auditing profession can be described as the "umpire of the business world". YOU ARE REQUIRED TO identify and discuss the similarities between an umpire in cricket (or a referee in soccer or rugby) and an auditor. (14 marks)

3b) A young brilliant auditor Caleb from Overport in his presentation quotes that "Auditing is essentially a policing function. It therefore makes sense, in these times of increasing fraud and other crimes in the commercial and industrial world, for the auditing profession to work in conjunction with the commercial branch of the police or the Hawks." YOU ARE REQUIRED TO discuss what Caleb meant with the above quotation. (11 marks)

3C) You have recently commenced your auditing studies at university. Your best friend Ericka who studied graphic art and knows nothing about auditing and accounting has just started work for a listed clothing company in the fashion design department, says to you over lunch one day: "Some guys arrived today for the audit - they come from some firm or company that sells external audits or something and apparently every business has to have one. I find it strange that we have to get an audit from someone outside the company because a little while ago some guys from our company were doing something with an internal audit. What on earth does this audit thing have to do with a clothing company?" YOU ARE REQUIRED TO respond to your friend. (14 marks)

Question 4: (20 marks)

4.1) The auditor's ultimate objective is to be in a position to express an opinion on the annual financial statements prepared by the directors. To be in a position to do so the auditor must gather sufficient appropriate audit evidence. 1. What constitutes sufficient evidence? (3)

2. What constitutes appropriate evidence? (2)

3. Explain briefly the term risk assessment procedures. (2)

4. If the auditor is unable to gain sufficient appropriate audit evidence, what are the consequences? (2)

5. Is there a connection between the audit strategy, audit plan and the gathering of evidence? Explain. (3)

6. Do analytical procedures conducted by the client on their own financial information, qualify as audit evidence? (2)

7. Why does the auditor generally consider evidence supplied from sources outside the entity as more reliable than evidence supplied by the client itself? (3)

8. The auditor can decide on the sufficiency of audit evidence. Why then is only enough evidence to express "reasonable assurance" gathered, and not enough evidence to "certify" the financial statements? (3)

Question 5:

1. Define audit risk. (1)

2. Define significant risk. (1)

3. Define control risk. (1)

4. Define detection risk. (1)

5. Into which constituent element of audit risk does management override fall? (1)

6. Explain the assertions relating to "presentation and disclosure". (2)

7. The auditor does not have control over all constituent elements of audit risk. Explain. (1)

8. Under what circumstances may an auditor ignore risk which may result in material misstatement? (1)

9. Explain the following assertions: - 9.1 Occurrence (1) 9.2 Accuracy (1) 9.3 cut-off (1) 9.4 classification (1)

10. In general terms how is detection risk kept to an acceptable level? (2)

11. A friend of yours is presently undertaking a vacation job at your audit firm. This is his first exposure to auditing as he has neither studied auditing at university nor worked in an audit firm previously. On glancing through an audit file he came across the following note, and has asked you what it means, "Having completed our risk assessment procedures we are confident that the risk of material misstatement for the assertions relating to trade accounts payable is similar to that of last year. Therefore, our audit plan will be to carry out a mix of tests of controls and substantive testing." YOU ARE REQUIRED TO explain to your friend the meaning of the following terms in the context of an audit. You must link all the terms together in your explanation. 1. Risk assessment procedures (1)

2. Material misstatement (1)

3. Assertions (1)

4. Audit plan (1)

5. Substantive testing (1)