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Perform the planning analytical review for the financial statements of Matty Kitchens

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1.      Perform the planning analytical review for the financial statements of Matty Kitchens, analyzing the key movements. Include supporting calculations. (10 marks) 

 

1.    Using the notes that you took on the company’s performance, identify the audit risks and explain how each audit risk could result in a material misstatement in the financial statements. Design the audit approach for each significant audit risk identified. (20 marks)

 

1.    Calculate planning materiality for the 20X3 fiscal year-end audit. Provide both quantitative and qualitative analysis supporting your figure for preliminary materiality. (5 marks)

4.. Evaluate the audit work done by the audit junior on the weekly inventory counts and outline additional procedures that should be performed by the audit team in future inventory counts. (20  marks).

5. Prepare the property, plant and equipment (PPE) audit program that will be used by AMS Accounting for the March 31, 20X3, fiscal year-end audit of Matty Kitchens. (20 marks) 

 

6. Discuss the importance of documentation in the audit file and identify what parts of the audit file require documentation. (10 marks) 

7. Assume the 20X3 fiscal year-end audit of Matty Kitchens is completed and that AMS Accounting has determined that the financial statements of Matty Kitchens are presented fairly, in all material respects, except for the area of obligations under lease agreements. AMS Accounting was unable to obtain any audit evidence to verify the value recorded by Matty Kitchens for the obligations under lease agreements as of March 31, 20X3, because the lease contracts were destroyed in a fire. The possible effects of AMS Accounting’s inability to obtain assurance over these contracts are material but not pervasive to the financial statements. Draft the expected audit report that will be issued by AMS Accounting for this engagement. Assume that the financial statements of Matty Kitchens are prepared under one of the two general purpose accounting frameworks used in Canada. (15 marks).  

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[Solved] Perform the planning analytical review for the financial statements of Matty Kitchens

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  • Submitted On 29 Jul, 2015 10:53:52
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1. Perform the planning analytical review for the financial statements of Matty Kitchens, analyzing the key movements. Include supporting calculations. (10 marks) Ans: While doing audit, it is very essential to understand the business model of the company, which needed to audited . Apart from that, we should also the risk prone areas of the company, that are inclined to fraud happening. Now here I understand that, as per the business model of Matty Kitchens, as it manufactures and sells all the packaged meals, there would be more importance of checking the status of inventory along with inventory holding days and within how many days, inventory is getting replaced. As the management has concern of reduced profitability, it should ensure that, which areas, where expenditure have gone up without proportionate increase revenue. Following need to be followed: (i) Procedure performance with respect to the acceptance and continuance which documented in CAS 220, Quality Control for Financial Statement Audit. (ii) Compliance evaluations with ethical requirements, inclusive of independence, in accordance with CAS 220. (iii) An understanding establishment of the terms of the engagement, in accordance with CAS210 Agreeing the Terms of Audit Engagements. 2. Using the notes that you took on the company’s performance, identify the audit risks and explain how each audit risk could result in a material misstatement in the financial statements. Design the audit approach for each significant audit risk identified. (20 marks) Ans: After going through the complete financial statement and by understanding the company’s performance, I believe that the more risk prone would be the inventories that are stored in the warehouses in different locations and supply of prepared foods to different grocery stores along with pricing of these packaged foods from time to time. So in the process of audit, it should be understood that, how the cost of the inventory are reckoned and how does the company values the foods which are slow moving in nature. From the warehouse, it should be understood that, how the inventories are stored and who are the store managers for these warehouses and it should be also checked that, how the movement of these kind of inventories from time to time. There are more possibility that the inventories from warehouses may be stolen and the foods post packaging may be taken away from the company and there are possibilities employees working in the company may be misplac...
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Perform the planning analytical review for the financial statements of Matty Kitchens

1. Perform the planning analytical review for the financial statements of Matty Kitchens, analyzing the key movements. Include supporting calculations. (10 marks) Ans: While doing audit, it is very essential to understand t...

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