Waffle Plc $($Waffle$)$ is a listed company which produces luxury waffles, selling them to a large number of supermarkets and delicatessens. It has a turnover of $515$ million and a profit before tax of $53$ million. The company has a year end of $31$ January $2021.$ As the audit manager, you are aware of the following matters:

Nigella Bank provided Waffle with a five$-$year bank loan of $4\mathrm{.}2$ million, in February $2018.$ Waffle has made regular monthly repayments of $73,500$ throughout the life of the loan, but missed the repayments for November and December $2020.$ Waffle resumed its monthly payments in January $2021.$

One of Waffle$$s major customers, Peanut Ltd$,$ went into liquidation in March $2021.$ Included in Waffle$$s year end trade receivables account is a balance of $7\mathrm{.}7$m due from Peanut Ltd$.$

Waffle$$s most senior laboratory analyst, Megan Trainer, was dismissed in May $2020$ after turning up to work under the influence of non$-$prescription drugs. In August $2020,$ Ms Trainer began a case against Waffle for unfair dismissal, claiming $525,000$ in lost wages and damages. Waffle$$s lawyers have advised that it will be highly unlikely that she will be successful in the claim.

Required:

For each of the three matters i$),$ ii$),$ iii$)$ outlined above:

a$)$ Analyse the substantive procedures your audit team should perform to obtain sufficient, appropriate audit evidence regarding the matter.

$(9$ marks$)$

b$)$ State whether Waffle should amend the financial statements in response to the matter.

$(3$ marks$)$

c$)$ Discuss the potential impact on the audit report if Waffle does not make any amendments identified in b$),$ fully explaining your answers.

$(3$ marks$)$

ISA$530$ Audit Sampling provides guidance to the auditor on the use of sampling during the audit.

Required:

d$)$ Critically evaluate one method of sampling that would most effectively be applied to Waffle$$s trade receivables$$ balances and what would be the advantages and disadvantages of using the method you have identified?

$(4$ marks$)$

$($QUESTION CONTINUES ON NEXT PAGE$)$

QUESTION $1($continued$)$

Many accounting systems of companies, large and small are computer based. It is important that the auditor has a complete understanding of the controls in a computer based environment and how these impact the auditors$$ assessment of risk and subsequent audit procedures.

Required:

e$)$ Evaluate the use of six different types of Computer Assisted Audit Techniques $($CAATs$)$ during an audit.

$(6$ marks$)$

Total: $25$ marks