ACCT1059: Sheridan AV is a New Client of Your Firm and You are Appointed as Audit Senior: Auditing 1, RMIT,, Singapore

Assignment aims

This assignment is designed to facilitate your learning of the key skills and knowledge needed when facing a financial report audit of a company, and how to analyze, research and pinpoint facets of the company that require auditing attention.

Case Background

This case analysis relates to the case study, titled Sheridan AV, which is featured in AuditSIM. The details of the case study cover key aspects of a financial report audit.

For the purposes of this assignment, you are to imagine that you work for a company called Alex Gold Financial Services as part of an audit team. Your audit team leader is called Graeme Moore. From your virtual desk, he will provide you with:

•  various documents from the electronic filing system
• a set of video resources, such as recorded interviews with staff
• a set of tasks.

Questions:

Sheridan AV is a new client of your firm and you are appointed as Audit Senior for Sheridan AV’s audit for the financial year ended 31 March 2021. You are required to carry out the following tasks:

1. Prepare an Engagement Letter for this year’s audit of Sheridan AV.

2. Prepare an Internal Memorandum to Graeme Moore to report your research on the wholesale and retail AV industries that Sheridan AV operate on, consider whether your research findings could increase the risk of material misstatements in Sheridan AV’s financial statement.

3. Using analytical procedures on the draft 9 months financial statement and the other information provided in the Planning Documents and Resources, perform an analysis of Sheridan AV’s financial position and its business risks, discuss the ratios (Gross Margin, Net Margin, Current Ratio, Quick Ratio) indicating a significant or an unexpected fluctuation. Which specific areas do you believe should receive special emphasis during your audit?

4. Identifytwohigh level (detective) internal controls and propose a control test for each control in the sales and cash receipt process.

5. Identify two control deficiencies in purchasing and/or payroll processes and propose an internal control for each control deficiency.