Question 2

During an audit of Wyndham Limited, the auditor used a variety of sampling methods based on areas selected for an audit test. Some methods were statistical and some non-statistical. Due to the extent of the audit, it was decided to use the work of experts and include work done by internal auditors to supplement evidence gathered. An extract of the Statement of Financial Position for year ended 2021 December 31 is as follows:

i. Property, plant and equipment $54 000 000; buildings $35 000 000, motor vehicles $5 000 000, plant and machinery $9 000 000 and investments $5 000 000

ii. Non-current liabilities amounted to $49 500 000 and current liabilities $2 350 000

A. Outline FOUR (4) factors that influence the reliability of audit evidence obtained from internal auditors. (4 marks)

B. Relate TWO (2) substantive procedures that could be used to verify the existence and classification of assets and liabilities. (4 marks)

C. Explain the following financial statement assertions with regards to account balances reported in a set of financial statements:

i. Rights and obligations

ii. Presentation

iii. Accuracy, valuation and allocation (6 marks)

D. Describe TWO (2) factors that will influence the auditors judgement regarding sufficiency of the evidence obtained from both the experts and internal auditors. (4 marks)

E. Identify other area(s) that would be selected for review. Give reason(s). (2 marks) (