Question 2 (6 marks) Great Gold Grains Ltd (GGG) is a large agricultural company that prides itself on using top of the line farming equipment to efficiently and effectively plant and harvest wheat GGGs auditors are Steff Balkan LLP (S B) S B is currently completing its interim audit work for the current year end audit, and the audit senior, Henry Staver, is preparing to audit GGGs capital assets The procedures that Henry rolled forward from last years audit include the following To sample capital asset additions, request a printed listing of year to date additions, then randomly choose the required number of sample items from the listing Using monthly sales and cost of sales reports, use a calculator to determine the gross margin by month to look at trends during the year Try to identify any significant outlier months, which should be discussed further with management Obtain the listing of assets from the prior year file, as well as current year additions and disposals Using a calculator, recalculate depreciation on a sample of assets and compare to the amount of depreciation recorded by GGG Obtain the period end capital asset continuity schedule in Excel and follow the formulas to ensure all balances are appropriately totalled footed To test automated controls over entering capital asset addition data into the master file, review GGGs information technology system documentation that describes how the system will show an error message if an employee enters an addition with a negative value, a purchase date in the prior year, a purchase date in future years, or a useful life date greater than 50 years John Stuart, one of S Bs retired partners, recently commented that GGGs audit procedures were too manual, and that the audit procedures should be brought up to date by using computer assisted audit techniques (CAATs) Henry respects Johns opinion but is NOT familiar with CAATs and is too shy to ask Required Explain to Henry what CAATs are, and describe three key benefits of using CAATs in an audit (2 marks) For each audit procedure listed above that is NOT performed using CAATs, provide Henry with an alternate audit procedure that utilizes CAATs (4 marks)

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Question 2 (6 marks) Great Gold Grains Ltd. (GGG) is a large agricultural company that prides itself on using top-of-the-line farming equipment to efficiently and

Question 2 (6 marks)

Great Gold Grains Ltd. (GGG) is a large agricultural company that prides itself on using top-of-the-line farming equipment to efficiently and effectively plant and harvest wheat. GGGs auditors are Steff & Balkan LLP (S&B).

S&B is currently completing its interim audit work for the current year-end audit, and the audit senior, Henry Staver, is preparing to audit GGGs capital assets. The procedures that Henry rolled forward from last years audit include the following:

To sample capital asset additions, request a printed listing of year-to-date additions, then randomly choose the required number of sample items from the listing.
Using monthly sales and cost of sales reports, use a calculator to determine the gross margin by month to look at trends during the year. Try to identify any significant outlier months, which should be discussed further with management.
Obtain the listing of assets from the prior-year file, as well as current-year additions and disposals. Using a calculator, recalculate depreciation on a sample of assets and compare to the amount of depreciation recorded by GGG.
Obtain the period-end capital asset continuity schedule in Excel and follow the formulas to ensure all balances are appropriately totalled/footed.
To test automated controls over entering capital asset addition data into the master

file, review GGGs information technology system documentation that describes how the system will show an error message if an employee enters an addition with a negative value, a purchase date in the prior year, a purchase date in future years, or a useful life date greater than 50 years.

John Stuart, one of S&Bs retired partners, recently commented that GGGs audit procedures were too manual, and that the audit procedures should be brought up to date by using computer-assisted audit techniques (CAATs). Henry respects Johns opinion but is NOT familiar with CAATs and is too shy to ask.

Required:

Explain to Henry what CAATs are, and describe three key benefits of using CAATs in an audit. (2 marks)
For each audit procedure listed above that is NOT performed using CAATs, provide Henry with an alternate audit procedure that utilizes CAATs. (4 marks)