Question1: [20 Marks]

1- ABC Company have had recurring losses at its comprehensive income statement for the last three years.

2- DAN Company had A pending litigation against the company. The amount claimed by the plaintiff is $250,000.

3- The following Ratios Extracted from ALFA Company books:

2019

2020

Industry average

Credit Sales[% of total sales]

55%

75%

35%

Receivables Turn over

3.56

2.41

7.1

Accounts Receivables % of Total assets

32.7%

44.2%

25.4%

4- The auditor of Beta discovers client's tax evasion.

5- The auditor of Client XO Company discovers a fraudulent act committed by a senior employee of XO Company.

6- PWS Audit firm was approached by Zeta Company to audit its Financial Reports for the first time. After accepting the engagement, PWS discovered misstatements on the ending balance of Accounts Receivable.

Requirements:

For each independent issue identify & explain briefly:

1.The effect on the Audit Procedures [Planning, Risk Assessment, Materiality Level identified by Auditor, Auditor's appropriate Response & Course of Actions, Going Concern Issue, Key Audit Matters, Type of Audit Opinion].

You are expected to make your own assumptions & Scenarios, explain the appropriate Course of actions & Responses of the auditor, with appropriate Justifications to your answers.

Important Notes:

I- Your Marks will be based on:

a.Appropriate Assumptions, Justifications, & Conclusions. [1 Mark each]

b.Consistency of the answers' assumption, justification, & conclusions. [1 Mark each]

c.Sufficiency of Answers. [1 Mark each]

d.Tidily & Clarity of Answers. [1 Mark each]

II- You are expected to send a draft of answer before the final answer & ask your instructor about ambiguity points.

III- There is more than one correct answer for each question, so ask, discuss, & show your own efforts. Shopping for ready answers is not welcomed & is in Contradict with Main Learning Goals of the course.