Question 5 (8 marks)

Assume you are an audit senior working for a large accounting firm, Big4 Accounting Ltd. Your accounting firm audits Rio Mining Ltd (Rio), a large mining firm that operates all over Australia. Consider the following two situations:

A.Rio owns some highly specialised mining tools and equipment. These tools and equipment are held at various remote regions across the country. You have engaged an independent expert to carry out a physical audit check of the equipment and mining tools at each location. The expert will also be performing an independent valuation of each material asset (equipment and mining tools).

B.During the audit, you realised that the majority of Rio's customers are in Vietnam. Due to language barrier, direct confirmation of the account receivables' balances is not likely to give satisfactory results.

Required:

1.List two (2) key assertions at risk in relation to each account balance described in these two situations above. (2 marks)

For assertions at risk outlined in (1) above, explain the audit procedures you would perform to gather sufficient appropriate evidence.