Auditing Principles and Procedures

College of Administrative and Financial Sciences

Assignment

Course Name: Auditing Principles and ProceduresStudent’s Name:
Course Code: ACCT 401Student’s ID Number:
Semester: summer termCRN:
Academic Year:1442 H

For Instructor’s Use only

Instructor’s Name:
Students’ Grade:  Marks Obtained /Out of 5Level of Marks: High/Middle/Low

IInIIiiiIIINSTRUCTION THEM CAREFULLY

INSTRUCTIONS:

  • The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
  • Assignments submitted through email will not be accepted.
  • Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
  • Students must mention question number clearly in their answer.
  • Late submission will NOT be accepted.
  • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
  • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).
  • Submissions without this cover page will NOT be accepted.

Qesuestions:         Chapters included 6, 7, 8, 10  Total Marks 5

  1. Case Study Situation

You are an audit manager for Alder Auditing Bureau, a firm that has recently gained two new audit clients of a similar size. Your audit staff have completed their preliminary investigations of the two clients. You are reviewing their notes which can be summarized as follows:

Client 1 – Feyaty-Al-Madinah

Feyaty-Al-Madinah is an old-fashioned family company which has been in business for over a thirty years and trades as wholesalers of fruit and vegetables. Its management structure is divided into five layers ranging from supervisor, deputy manager, manager, senior manager and director. The senior managers and directors have been with the company for many years. Each level of management has clear authority limits set down in the company manual, which also sets out detailed written procedures for every job. Management at all levels generally has an unforgiving attitude to errors and inefficiencies. Most of the systems are paper-based, although the accounting ledgers are maintained on a computer and there are rigid systems of authorisation before transactions can be processed. Staff turnover in clerical posts and at supervisor and deputy manager level is high.

 

Client 2 – Alkhalij Agency For Advertising

Alkhalij Agency for Advertising is a new company set up six months ago. It trades as a website design business and as an advertising agency. Alkhalij Agency for Advertising is run by two brothers who manage the business jointly. Alkhalij Agency for Advertising mostly employs creative people but it does have a small clerical staff to deal with billing and time recording. The approach to work is casual, spontaneous and rather uncontrolled. Error detection is not seen as a priority. The management’s view is that they will deal with errors and problems when they arise. Staff are happy and so staff turnover is low.

Required: in your review of the control environment for each of these clients, what conclusions would you draw about the risk of error arising in the accounts? (3Mark)

  • Explain the Concept of Audit Sampling and types of Sampling Risk. (1 Mark)
  • What are the transactions and documents processed through the revenue process? (1 Mark)