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Q 1 . Research, cite, and summarize ( in one or two sentences per standard identified ) the auditing standards as they relate to the

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 20X2 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.
Q5. Evaluate the preliminary analytical procedures completed by Garcia and Foster, CPAs (workpapers B.3.1
to B.3.3.) This question relates to Step 2 of the Garcia and Foster Audit Plan.
a. Determine if the analyses of account fluctuations were appropriately performed and completed
(workpapers B.3.1 and B.3.2). Review the explanations of account fluctuations provided by the
auditors. Describe any problems you identify.
b. Determine if the ratio analysis (workpaper B.3.3) was appropriately performed and completed.
Review the explanations of ratio fluctuations provided by the auditors. Describe any problems
you identify.
Q6. Prepare a memo to document your understanding of Alpine Cupcakes environment and provide your
assessment of Garcia and Foster's audit risk. Describe the specific risks for Alpine Cupcakes, explain why
you believe these factors relate to the Alpine Cupcakes audit, and identify which specific accounts are
likely to be affected by these risks. Describe how the audit teams should address the risks identified.
For example, the background information mentions that sugar prices may rise. What risks would this
present to Alpine Cupcakes? Which accounts would be affected by this risk? How should the audit team
address these risks in the audit plan?
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