You are the auditor of Structures Ltd, a large manufacturing company with a number of manufacturing facilities around the world. You are currently conducting the audit at the companys headoffice in Format. Consider the following:

1. The company leases numerous items of machinery and equipment. The original of each lease is held at the manufacturing facility which uses the leased equipment, whilst a certified photocopy of the original is held at the headoffice. As you wish to conduct some important tests on the companys lease agreements, you asked a trainee to extract a sample and obtain the lease agreement selected. Using the correct sampling methods, the trainee selected a sample from the certified copies held at head office and presented them to you.

2. A trainee was requested to obtain year-end bank certificates for the bank accounts used by each of the manufacturing facilities (each has its own bank account). This he did by contacting the accountant at each facility and asking them to request their banks to send a certificate as soon as possible as it was urgent. The accountants all obliged and faxed the bank certificates provided to them by the bank to Structures Ltds headoffice for the auditor.

3. The debtor credit control department is centralized at head office and the employees in this section share a performance bonus at year-end if the debtors days outstanding ratio is kept below 60days. The amount of the bonus is reduced by the audited bad debt allowance at year end. Tree Trunk, the senior credit controller has provided one of the trainees with evidence to support the allowance for bad debts at year end and the trainee has accepted the evidence without further procedures as the budget on the audit is tight.

4. Structures Ltd holds large inventories at its various sites. The trainee in charge of the inventory audit concluded as follows: our test counts of items selected from the inventory sheet and counted in the various warehouses have provided sufficient evidence as to the valuation and completeness of the clients inventory.

Required:

State and explain whether you would be satisfied with the evidence gathered in 1-4 above. Consider each situation separately and justify your answers.