X Remaining Time: 3 hours, 07 minutes, 41 seconds Question Completion Status: QUESTION 4(10 MARKS): Suggested time allocation: 30 minutes Your audit client, Sweet Sounds Ltd (Sweet Sound), manufactures mini hi-ti systems. The company has a year-end of 30 June 2021. In December 2020 Sweet Sound changed its manufacturing process to make its product more reliable. Because of this increased reliability, the company decided to increase the warranty on its products from three (3) years to five (5) years in relation to all sales made from 1 January 2021. From management's review of warranty claims relating to the new products, it was noted that claims were down by about 20% compared with the old products. The management made an estimate of the provision for warranty of $4,000,000 for 30 June 2021 ($3,500,000 for the previous year) REQUIRED: a. Identify the main types of substantive audit procedures and describe each procedure. (2 marks) b. List down the financial statement assertions relating to account balances and explain each assertion. (4 marks) c. What are the main audit assertions that you should consider for this part of the audit for Sweet Sound? Describe the specific audit substantive testing you would perform to cover these assertions. (2 marks) d. Discuss any special risks in auditing provisions for warranty (and in auditing Sweet Sound's provision for warranty, in particular). (2 marks) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BI S Paragraph Arial 10pt : IS X v E Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers Save and Sub MacBook Pro X Remaining Time: 3 hours, 07 minutes, 41 seconds Question Completion Status: QUESTION 4(10 MARKS): Suggested time allocation: 30 minutes Your audit client, Sweet Sounds Ltd (Sweet Sound), manufactures mini hi-ti systems. The company has a year-end of 30 June 2021. In December 2020 Sweet Sound changed its manufacturing process to make its product more reliable. Because of this increased reliability, the company decided to increase the warranty on its products from three (3) years to five (5) years in relation to all sales made from 1 January 2021. From management's review of warranty claims relating to the new products, it was noted that claims were down by about 20% compared with the old products. The management made an estimate of the provision for warranty of $4,000,000 for 30 June 2021 ($3,500,000 for the previous year) REQUIRED: a. Identify the main types of substantive audit procedures and describe each procedure. (2 marks) b. List down the financial statement assertions relating to account balances and explain each assertion. (4 marks) c. What are the main audit assertions that you should consider for this part of the audit for Sweet Sound? Describe the specific audit substantive testing you would perform to cover these assertions. (2 marks) d. Discuss any special risks in auditing provisions for warranty (and in auditing Sweet Sound's provision for warranty, in particular). (2 marks) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BI S Paragraph Arial 10pt : IS X v E Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers Save and Sub MacBook Pro
