You have reviewed the work performed by your assistant, Raymond Snow, on the

audit of Tin Ltd for the year ended 30 June 2008 and have noted the following two

independent matters:

(i)

In testing investments in listed securities, Raymond selected all shareholdings

with a market value above $200,000 and checked them to the closing market

value reported by the Australian Stock Exchange to determine the net

realisable value of each shareholding. The items tested totalled $5,500,000 or

60% of the total balance. Of the items tested, only one error of $110,000 was

discovered. Raymond concluded that the error was not itself material, as it was

only 2% of the balance tested. He extrapolated this error to the total population

and estimated that the error for the total population would be $185,000, which

was also immaterial. Therefore, he concluded that the investments in listed

securities were fairly stated at the lower of cost or net realisable value.

(ii)

Tin Ltd has 1,000 stock lines that are maintained on a perpetual inventory

system. Stock is counted on a cyclical basis so that all lines are covered at

least once per year. Raymond attended the March stocktake to observe the

counting procedures and conducted 20 test counts from the floor to the clients

count sheets and 20 from the clients count sheets to the floor. He uncovered

two minor discrepancies of one item each, which he considered to be

immaterial. The client also uncovered five minor discrepancies between the

perpetual records and the actual quantity on hand. None of these

discrepancies were adjusted on the perpetual records, as the amounts involved

only totalled $50,000 and were considered to be immaterial. Raymond

concluded that no further work was considered necessary on stock quantities at

year end.

Required:

(a)

Explain what is meant by sufficient appropriate audit evidence.

(b)

Explain whether sufficient appropriate audit evidence has been obtained for

each of the above situations. Give reasons for your answer.