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Hello mam im really sorry for referring to you as Sir all this time,
Can you help me construct some more procedures at the completion stage for this particular client, there is only 2 given in the markscheme..
‘’Daisy’s year end is 30 September, however, subsequent to the year end the company’s sales ledger has been corrupted by a computer virus. Daisy’s finance director was able to produce the financial statements prior to this occurring; however, the audit team has been unable to access the sales ledger to undertake detailed testing of revenue or year-end receivables.
All other accounting records are unaffected and there are no backups available for the sales ledger. Daisy’s revenue is $15•6m, its receivables are $3•4m and profit before tax is $2m.’’
Can i suggest
“Obtain expert advice as to recovery of the system or part of it to place reliance on”How about talk to internal audit if any on their findings and any evidence that theyd have collected to help us confirm balances
I don’t object to Sir as I’m used to be being assumed to be “he” with the name “Kim” (I blame my mother).
When you ask about a particular Q/A can you please remember to reference it (e.g. D12) – this should be apparent from the contents of an approved kit.
I think in its original form this was 12 marks for 2 issues – and this was one of the issues for which there were 3 requirements – so recommending procedures only called for 2 marks = 2 points.
The thing about audit evidence from an expert is that it is going to cost the audit client. And the point that the examiner is testing is what are the alternative procedures? So just to “fall back” on an expert to overcome what you’ve been told you can’t do (access the sales ledger) will not be credited. Similarly, “falling back” on internal audit is not an answer – if they could confirm balances – so should you (the auditor) be able to confirm balances.
Analytical procedures is the obvious answer point (in the published answer) – building on the “discuss with management ….” what alternative records could the client have?
I think the best suggestion of alternative procedure would be to obtain a schedule of monthly receipts (the client could extract from the cash book/agree to bank statements). Customers aren’t going to know that Daisy’s sales ledger has been corrupted – so they are still going to pay on the invoices/statements they had already received before the virus.
Thank you mam from saving me to suggest expert advice and relying on other people as audit procedures for other similar questions
Thank you thats a very helpful explanation
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