Hi Tutors, can someone help mewith my auditing assignment.

word limit is 1500 total.

prescribed text book is

"Auditing & Assurance Services in Australia" by Gay & Simnett

Australian Auditing Handbook.

please find the attached document for the questions.

please do not hesitate to contact me if need further information.

Thanks in advance for your help.

Question 1 Jerry is an audit partner in a local office of a large regional accounting firm. One of Jerry's biggest clients is Thunderbolt Ltd. - a company which undertakes major property development projects. Thunderbolt is also a large employer in the local community. Until last year Thunderbolt had been very profitable but the economic downturn has started to have a detrimental impact. Jerry is preparing for the final audit meeting with the client. At this meeting there will be discussions about the main findings and any adjustments which are required to be made to the accounts. One major issue with the audit was lingering doubts over Thunderbolt's status as a going concern. Thunderbolt was coming close to violating its loan contracts which required it to maintain a current ratio of 1.7:1. This issue has caused Jerry many sleepless nights of late - Jerry likes the people who run Thunderbolt and is well aware of the negative impact that its closure would have on the local community. Jerry is also aware that Thunderbolt's violation of loan terms would most likely have a negative impact on his own immediate career prospects. Thunderbolt's year-end was 30 June but Jerry's firm carried out most of its work during February. At that time all of the projections looked fine, however recently Jerry noticed that one of Thunderbolt's major customers, Deciduous Ltd had been placed into administration. At year-end Deciduous owed Thunderbolt $1.8 million. If this amount were to be written off Thunderbolt would be breaching its loan contracts. While Jerry was aware that Deciduous was disputing the amount due (such tactics were common in the property development industry) he fully expected that the vast majority of the sum owed would be paid. This is now all in doubt. At the meeting with the client, Jerry asks whether any provision had been created in relation to the amount due from Deciduous or whether any updates to the projections originally audited in February had been made. Darryl, Thunderbolt's Chief Executive, advises Jerry that he does not believe this will be necessary. Darryl informs Jerry that the administrator of Deciduous has advised him that Deciduous will be able to meet all of its outstanding debts. Jerry advises Darryl that he hopes this is will be the case but he will need to obtain assurances from the administrator directly. Darryl asks why this is necessary as he is happy to give Jerry a letter to this effect. Jerry advises Darryl that he has to do his job. Darryl reacts to this angrily shouting: \"Jerry, you have been our auditor for years and at the first sign of trouble you appear willing to help the bank shut our doors, the effect of which will be a disaster for the local community and also for your firm. Many of your neighbours work for this company, what will they think? What will their children think? This will impact on your own children at school. All we are asking for is time - to let us trade out of this situation. As far as I am concerned, the accounts will not be altered. You can do as you wish - however remember what I have told you - local communities need businesses like ours. I will let them know who caused the closure of this business, if that's what it comes to!\" Required: Use the AAA model to recommend a course of action for Jerry (15 marks) Question 4 You have been involved with the audit of River Pty Ltd. - a manufacturer of household cleaning chemicals. As part of your interim review you have completed a 'walk through' of the procedures involved with the purchases and payments cycle. The following is a summary of the procedures you have documented on your file: The warehouse manager is responsible for placing orders for chemical 'ingredients'. Because of the bulk quantity discounts, he will usually place an order for three months of ingredients when there is one month of ingredients left. He is able to determine how much the company uses in manufacture each month by reviewing the inventory records held at the warehouse. To order, the warehouse manager contacts any of the approved suppliers and places an order over the phone. No record is kept of the conversation, nor does the warehouse manager require any approval. To make sure he doesn't reorder in error he 'ticks' the inventory ledger and writes the date of order next to the product number. When goods are received the warehouse assistants check the delivery note against the ingredients coming in and then lets the deliverer pump the ingredients into the company's storage tank. At no point do they check the actual quantity received. A warehouse assistant then gives the delivery note to the warehouse manager. The warehouse manager will then post a journal entry to the inventory system by keying the entry into the terminal. When the journal is accepted, the computer will generate a journal number. (Note: the journal posted by the system is DR Raw materials inventory; CR Creditors). The warehouse manager writes the journal number onto the delivery note and sends it to the accounts payable clerk at head office. The accounts payable clerk files the note by supplier. The accounts payable clerk at head office receives all supplier invoices. On receipt of the invoice the clerk checks the details to the delivery note received from the warehouse. If there are no discrepancies she will prepare a cheque requisition for the mount of the invoice and forward the cheque requisition, with the invoice and delivery note attached, to the financial controller for authorisation. If the payment is over $20,000 the financial controller must forward the requisition to the managing director for authorisation. The financial controller and/or managing director signs the cheque requisition to indicate authorisation and forwards the documentation to the banking clerk who keys the payment into the general ledger (the journal posted by the system is DR Creditors; CR Bank). Once the journal is accepted by the system, the system generates a journal number which the banking clerk writes on the cheque requisition. She then files the cheque requisition together with supporting documentation by cheque requisition number. All cheques are printed and signed (counter stamped) by the computer. When they have been printed they are returned to the banking clerk who checks the details and sends them to the supplier. Required: a) Identify four strengths and two weaknesses in the purchases and payments system and justify your selections. (12 marks) b) For each strength identified in part a), indicate one test to be performed to test the controls (4 marks) c) For each weakness identified in part a), identify a test which can be performed to minimise this risk (4 marks) Question 1 We are using the concept of AAA model to recommend a course of action for Jerry. Such as according to the AAA model Jerry should focus on the ethical point during the meeting with a client. Because of ethics code before respectable system that bounces principles to measuring upright besides corrupt. It is a term that alludes to law or useful structure that provides criteria for determining moral as well as bad. An ethical issue is a situation in which a separate or social event is stood up to through a decision that tests this code. Countless issues are anything but difficult to see and determination. Allurement like this will check your personal ethics. Jerry should note that others bookkeepers, similar others working in the occupational biosphere, are confronted through numerous moral difficulties, some of which are mind boggling and hard to determine. For example, the money markets' emphasis on intermittent benefits may entice an organization's administration to twist or uniform interruption bookkeeping principles to blow up revealed net pay. In these circumstances, specialized skill is insufficient to determine the difficulty[Gra00]. Jerry should consider the ethics and professionalism concept because this is something that many recognize a call to recognize unlike professions is the recognition by persons of their obligation to respect the interests of those they serve. It provides a precise infection of the moral behavior of those who are busy with a call. These meters are regularly expressed in a cryptogram of ethics. For example, law and medicine are people who say they have their moral codes of experts. These regulations provide guidance and direction to things in carrying out their duties experts[Gra00]. Public accounting has accomplished across the board greeting as a vocation. The AICP, the nationwide association of experts confirmed Chartered Accountants, put away its individual code of ethics, which approves direct good people should strive to achieve. Similarly, the Institute of Managing Bookkeepers (IMA), the National Association Essential accountants who work in industry and government ethics code, and the Institute of Internal Auditors, the countrywide proposal internal accounting examiners give their administrations governments[Gra00]. Jerry should focus on the clients perceptive and loans violating condition and oral and written both format. After find out the wrong side take decisions that resolve this ethical issues. After that, according to the AAA model, Jerry should increase security, increase flexibility, scalability and multiple backup systems. Such as AAA's support of approval, notwithstanding validation, implies get to can be kept up on a need premise, without maintaining different passwords. The bookkeeping bolster suggests that client is examining and cost-portion approaches can be executed, and also giving a trail that may be valuable in investigating system issues. Various gadgets with the same privately regulated client name/secret word offer a low level of security. Everybody is having entry to everything, without respect for need, additionally superfluously expands hazard. Numerous privately managed passwords would seem to extend security, yet may prompt representatives recording passwords if excessively numerous exist to recollect. This circumstance would be exacerbated if complex passwords were actualized[Gra00]. AAA, with its integrated security database and approval highlights, permits a solitary secure client name/secret word blend for every representative but enables confining access to a need premise. In the meantime, AAA considers the quick determination of traded off passwords or fired officials. AAA is a formatted way to deal with security administration that remaining parts reliable and adaptable as the system becomes bigger and more perplexing. By incorporating the security databases and supporting approval, AAA keeps away from the nightmare of overseeing various client name/secret word blends in a developing domain or the frail option security of utilizing few mixes. Privately put away verification implies whenever there's a capability of a bargained client name/secret key or end of a representative, every gadget ought to be reconfigured. The more devices that exist, the rougher the measure of exertion. AAA stays away from this similarly that server security is kept up under similar conditions. AAA bolsters different security servers, for example, TACACS+, on a similar system to give repetition if there should be an occurrence of gadget disappointment or connection clog. Moreover, AAA takes into consideration various validation strategies to be indicated in this way, if the first is inaccessible, then a moment or third alternative could be utilized. For instance, if the predefined TACACS+ server is disconnected, the privately put away client name/secret word database could be used or possibly the empower watchword. These choices must be characterized ahead of time or get to could be hindered until the predetermined administration is reestablished[Gra00]. Question 4 A) The identify strengths in the purchases and payments system are increased the volume of sales, improved profits, helpful for small traders and receiving of interest. The identify weakness in the purchases and payments system are substantial risk and difficulties in recovery of installments. I choose these strengths and weakness because they affect mostly the River Pty Ltd audit and profit ratio. These concentrations indicate the Procure Purchase System is a framework for which cash is paid for merchandise by methods for periodical portions with the perspective of extreme buy. All money being spent meanwhile is viewed as an installment of contract and the products turn into the property of the purchasers just when every one of the portions has been paid. This system tugs in additional customers as the installment is towards be complete in single pieces. This reminders prolonged the size of sales. It supports frugality between the procurers who are obligated to replacement particular part of their pay intended for the installment of the servings. This instills the partiality to save amongst the people[Gra00]. This company system is an ability designed for the diminutive manufacturers and merchants. They buy computers as well as additional equipment on the basis of the party and, therefore, pay the buyer in loading the total price. The seller receives the portion that integrates the separate costs and intrigues. The plot is calculated beforehand and includes integral parts to be paid by the buyer. Afterward the point of view of the supplier, this frame is very favorable as it appreciates that indefinite the buyer does not pay the one hand, you can retrieve the document. This organization debt claims structure contains a record for every client that owes cash to the organization. Each record demonstrates the measure of money the customer owes, the date of the buy or benefit, and the customer's installment history. Most records likewise confirm the due date of the subsequent chapter. As clients send cash to the organization, representatives refresh files in the registers receivable framework to mirror the episodes. I was select this weakness because they display a buyer requirements to salary a developed price for the acquired which incorporates rate in totaling to hugger-mugger[Gra00]. B) The test that is used for control is Application Programming Interface test. A critical variable while choosing gadgets is the vision of getting an approach to share information adequately. Gathering and showing information are the initial steps, the genuine end amusement is the thing that one does with it and that requires uninvolved and fast sharing through what is called an API. Programming interface remains for application program interface, and mentors need them since they are usually utilizing an online programming bundle that is seeing many informational indexes. Any merchant that provisions an equipment device supposes they are the primary framework mentors are overseeing, and a web API can make excellent sharing alternatives. An API accomplishes more than web sharing. However, the requirements of this article are to recall that information is typically introduced in disconnection with programming from the equipment organizations. Most mentors now understand that the cooperation of the considerable number of information matters, and merchants are inbreeding their items so awful they no longer give similar advantages those instructors developed to love in any case. Most items can fare to a CSV record that can be foreign into Excel for examination. Organizations that can give an API to sharing latently makes life less demanding for training[Gra00]. C) The test that is used for minimizing the risk is firmware test. A lesser-known range and occasionally discussed segment are firmware, the control programs for gadgets. The catchphrase here is a program or light programming coding to deal with the devices and sensors of estimation gadgets. To me, I see an excessive amount of slack here and get irritated when gadgets are not doing what they can do. Firmware can extend from merely negligible or primary to overwhelming reliance given the vision of the organization. Why is this imperative you inquire? Basic. A substantial portion of the things we underestimate rely on upon great firmware, for example, activity lights and different parts of present day life. Numerous abilities for reasons unknown don't care for firmware since we don't see it like programming or feel it like equipment. Firmware is the interpreter to the two sections to innovation, and most items are continually refreshing because organizations don't have room schedule-wise to amplify the parts completely inside[Gra00]. References Grant E. Gay, G. (2000). Auditing & Assurance: Services in Australia. McGraw-Hill Book Company, 2000