Auditing Essay

2264 Words Mar 5th, 2014 10 Pages
Question 1. Ethical Considerations
(A)
As an auditor when provide professional service and client have to follow the fundamental principle of the code of Ethics
Integrity
An auditor has to be fair and honest to the client. There is an obligation on the auditor to be straightforward and honest in all the professional and business relationships.
In this case, an auditor has to be integrity to present their honest and fair to the client. Even Game’s Limited’s managing director is unhappy with the existing auditing firm has been changed.

Objective
An auditor has to be objective and fair. Auditor has to be fairness and objective to provide financial report. The client’s point of view must not affect auditor’s objective.
In this
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Control risk- the risk may not be prevented or may not be promptly detected and corrected by the entity’s internal control.
In this scenario, every staff operates new system first time. It will increase the internal control risk.

(v) Control risk- the risk may not be prevented or may not be promptly detected and corrected by the entity’s internal control.
In this scenario, the position of systems administrator was created. This position is responsible for all systems maintenance, One person done all the job and report to accountant. Control risk will increase the mistake during one person done all jobs.

(vi) Inherent risk- Any risk to material misstatement given the inherent and environment characteristics.
In this scenario, the environment is the company has not previously been engaged in the clothing industry. It cannot control the final sales whether loss money or gain the money.

(B)
ASA 320.11 (ISA 320.11) requires the auditor to set performance materiality for the purpose of assessing the risks of material misstatement and determining the nature, timing and extent of further audit procedures that need to be performed.

The reliability of management information
Any factors that may indicate deviations from normal activities
Qualitative factors.

Question 3 Understanding and Assessing Internal Controls
(i)
Correction: The departments only make one copy of purchase

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