Question 4 - Applying some learning from Lakeside (20 marks)

PART A

In Case 1 of Lakeside you are provided with a description of matters relating to how the Lakeside Company operates and certain issues and concerns arising from those operations. This information was provided during a formal meeting on June 1 between Richard Abernethy (managing partner of Abernethy & Chapman), Wallace Andrews (an audit manager at Abernethy & Chapman) and Benjamin Rogers (President of the Lakeside Company).

(a)What specific type of audit procedure is this meeting illustrating? (1 mark)

(b)What specific type of audit evidence is being generated by this meeting? (1 mark)

In Case 2, another meeting is arranged for June 15 with the current auditor (William King of King & Co) who it is being proposed you will take over from.

(c)What specific type of audit procedure is this meeting illustrating? (1 mark)

(d)What specific type of audit evidence is being generated by this meeting (June 15) ? (1 mark)

(e)Identify which meeting you believe provides the more reliable (more appropriate) evidence and briefly explain why. (3 marks)

(f)Identify 3 pieces of information from the Case 1 meeting with Rogers that are corroborated in Case 3 when you apply analytical procedures for risk assessment. (3 marks)

(g)One of the important requirements of quality control for firms offering professional assurance & related services is Monitoring (ASQC 1.48-56, A64-A72). Which partner at Abernethy & Chapman has been delegated responsibility for this element of quality control (quality assurance)? (1 mark)

(h)Explain how this requirement (Monitoring) is further illustrated by a different example in Case 2 of Lakeside? (1 mark)

PART B

One of the material items noted by Wallace Andrews for discussion and clarification with Benjamin Rogers was the major addition being made to the company warehouse, justified on the basis of the need for additional storage required for inventory to support expanding distributorship sales.

Describe and explain the audit steps (procedures) your engagement team took to be satisfied the warehouse addition was properly presented and disclosed (true & fair) on the financial report of Lakeside. (8 marks)

Your answer should be able to:

describe the steps (procedures) your team undertook;

identify the specific types of procedure and resulting types of evidence your steps illustrate;

explain if those steps illustrated tests of controls, test of details of transactions, tests of details of balances;

explain if each of Andrews' concerns were resolved.

it is based on lake side case