Section A

Learning Objective

Planning: understand the continuous process where auditors gather information about a client they have accepted.

Assignment Topic

Planning activities

Scope

AC$2\mathrm{.}1$ Explain how planning the audit helps the auditor in performing his$/$her duties.

AC$2\mathrm{.}2$ Describe the planning activities to determine the overall audit strategy.

Technical Aspects

This is an individual task.

The audit working paper may be created on Microsoft Word.

Font: Arial, Font size: $12,$ Line spacing: $1\mathrm{.}5$

Marking Criteria

Marks will be awarded as follows:

The format and layout of the working paper $8$ Marks

The content of the working paper $17$ Marks

Marks will be capped at $20$ Marks

$3\mathrm{.}1.$ Task $1$

Task $1$

$20$ Marks

You are a trainee accountant at LPK Auditors Inc. $$LPK$.$ Your firm was assigned to the audit of Asper Ltd for the year ended $31$ July $2024.$ Asper Ltd is a pharmaceutical company engaged in research, development, and production of prescription drugs. Asper Ltd$.$ has experienced significant changes in its market due to new competitors and technological advancements. In $2024$ a new product line was launched.

The audit partner, Cheryl Stiller, has tasked you with performing a revenue and cost trend analysis for the period $20202024$ to identify any unusual trends in revenue and costs that could indicate potential financial issues.

The following financial data is available:

Revenue

R$28000000-2024$

R$40000000-2023$

R$25000000-2022$

R$22000000-2021$

R$20000000-2020$

Cost of goods sold

R$17000000-2024$

R$24000000-2023$

R$15000000-2022$

R$13000000-2021$

R$12000000-2020$

Required:

Draft a working paper that documents the analytical review procedures you performed and summarises your findings. Use a standard working paper template.

$(20$ Marks$)$