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June 2015 Q5 part c (i)
1)
” In addition, the practitioner
does not need to comply with ISAs as these only relate to external audits.”If the practitioner not comply with ISA ,how do they know the Financial Statement is according to the Financial reporting framework?
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JUNE 2015 Q4 Deficiencies2)
“Purchase invoices are not sequentially numbered. Failing to
sequentially number them means that Cherry’s finance
department are unable to monitor if all invoices have been
completely recorded;If the invoices are sequentially numbered, then a sequence
check can be performed for any unrecorded invoices.”How to check/know the sequentially numbered invoice is unrecorded?
How the sequence check can identify the unrecorded invoice?——————————————————————————————
June 2015 Q2 (b)
(3)
“Capital expenditure committee
– Select a sample of capital additions during the year and confirm through a review of the capital expenditure committee
minutes that this purchase was authorised.
– Review a sample of capital expenditure purchase orders for evidence of authorisation by the capital expenditure
committee”What is the difference between the capital addition and the capital expenditure purchase orders and the capital expenditure committee need to authorize 2 documents?
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June 2015 Q1
(4)
“This represents a self-interest threat as the audit firm may be
perceived as performing the role of management by attending
these meetings and this threatens objectivity.”Why performing the role of management is self interest threat but not self review threat?
Thank you.
(1) A review engagement is not an audit engagement. Audits are carried out in accordance with International Standards on Audit (ISAs) but reviews are carried out in accordance with International Standards on Review Engagements (ISREs).
(2) If documents are sequentially numbered 0001, 0002 … 0999, records can be reviewed and the question can be asked “what happened to 0015, 0356, etc?” If they are not sequentially numbered there is no identifier.
(3) The capital addition is something that has been recorded as a capital item i.e. a debit entry in a property, plant and equipment ledger a/c – it is not a document. The “capex” purchase order is the order that should be authorised/approved to make the purchase.
(4) Undertaking management responsibilities can create a self-review threat (e.g. taking responsibility for the preparation of the financial statements or the implementation of controls). Attending board meetings would, however, create more of a self-interest threat because it is the board that will make recommendations on the (re)appointment and remuneration of the auditor.
2)
“Purchase invoices are not sequentially numbered. Failing to
sequentially number them means that Cherry’s finance
department are unable to monitor if all invoices have been
completely recorded;If the invoices are sequentially numbered, then a sequence
check can be performed for any unrecorded invoices.”Maybe I got the wrong idea, is it the sequentially numbered the purchase invoice first and the recorded or recorded only numbered the purchase invoice? Please clarify to me, Thank you.
as the sequentially numbered invoice does not equal to its being recorded and so the sequence check only can check with the completeness of invoice?
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