Question 1: (10 marks)

You are a newly qualified accountant who works for the audit firm Harrison Ford & Co. You

have been approached by a potential new client, Calista Electronics Pty Ltd, who is looking for

an audit firm to carry out an audit on its annual financial report prepared in accordance with the

Corporations Act. The managing director, Calista Flockhart, is not sure exactly what an audit

involves and what are the responsibilities of the auditor.

REQUIRED:

Prepare notes for a meeting with Calista Flockhart which identifies the responsibilities of

the auditor and the responsibilities of management.

(10 marks)

The notes should cover the following:

Distribution of the annual report to shareholders.

Delivery of the audit report to the entity.

Obtaining and evaluating evidence concerning the financial report.

Preparation and presentation of the financial report.

Maintaining adequate internal controls.

Testing internal control procedures.

Expressing an opinion on the financial report.

Selecting appropriate accounting policies.

Ensuring the financial report is presented in accordance with standards.

Performing test of controls.