未知题型 Trombone Co (Trombone) operates a chain of hotels across the country. Trombone employs in excess of 250 permanent employees and its year end is 31 August 2014. You are the audit supervisor of Viola & Co and are currently reviewing the documentation of Trombone’s payroll system, detailed below, in preparation for the interim audit.Trombone’s payroll systemPermanent employees work a standard number of hours per week as specified in their employment contract. However, when the hotels are busy, staff can be requested by management to work additional shifts as overtime. This can either be paid on a monthly basis or taken as days off.Employees record any overtime worked and days taken off on weekly overtime sheets which are sent to the payroll department. The standard hours per employee are automatically set up in the system and the overtime sheets are entered by clerks into the payroll package, which automatically calculates the gross and net pay along with relevant deductions. These calculations are not checked at all. Wages are increased by the rate of inflation each year and the clerks are responsible for updating the standing data in the payroll system.Employees are paid on a monthly basis by bank transfer for their contracted weekly hours and for any overtime worked in the previous month. If employees choose to be paid for overtime, authorisation is required by department heads of any overtime in excess of 30% of standard hours. If employees choose instead to take days off, the payroll clerks should check back to the ‘overtime worked’ report; however, this report is not always checked.The ‘overtime worked’ report, which details any overtime recorded by employees, is run by the payroll department weekly and emailed to department heads for authorisation. The payroll department asks department heads to only report if there are any errors recorded. Department heads are required to arrange for overtime sheets to be authorised by an alternative responsible official if they are away on annual leave; however, there are instances where this arrangement has not occurred.The payroll package produces a list of payments per employee; this links into the bank system to produce a list of automatic payments. The finance director reviews the total list of bank transfers and compares this to the total amount to be paid per the payroll records; if any issues arise then the automatic bank transfer can be manually changed by the finance director.Required:(a) In respect of the payroll system of Trombone Co:(i) Identify and explain FIVE deficiencies;(ii) Recommend a control to address each of these deficiencies; and(iii) Describe a test of control Viola & Co should perform. to assess if each of these controls is operating effectively.Note: The total marks will be split equally between each part. (15 marks)(b) Explain the difference between an interim and a final audit. (5 marks)(c) Describe substantive procedures you should perform. at the final audit to confirm the completeness and accuracy of Trombone Co’s payroll expense. (6 marks)Trombone deducts employment taxes from its employees’ wages on a monthly basis and pays these to the local taxation authorities in the following month. At the year end the financial statements will contain an accrual for income tax payable on employment income. You will be in charge of auditing this accrual. Required:(d) Describe the audit procedures required in respect of the year end accrual for tax payable on employment income. (4 marks)

未知题型 (a) Define the ‘three Es’ of a value for money audit. (3 marks)(b) ISA 230 Audit Documentation requires auditors to prepare audit documentation for an audit of financial statements on a timely basis.Required:Describe FOUR benefits of documenting audit work. (4 marks)(c) ISA 530 Audit Sampling applies when the auditor has decided to use sampling to obtain sufficient and appropriate audit evidence.Required:Define what is meant by ‘audit sampling’ and explain the need for this. (3 marks)

未知题型 Recorder Communications Co (Recorder) is a large mobile phone company which operates a network of stores in countries across Europe. The company’s year end is 30 June 2014. You are the audit senior of Piano & Co. Recorder is a new client and you are currently planning the audit with the audit manager. You have been provided with the following planning notes from the audit partner following his meeting with the finance director.Recorder purchases goods from a supplier in South Asia and these goods are shipped to the company’s central warehouse. The goods are usually in transit for two weeks and the company correctly records the goods when received. Recorder does not undertake a year-end inventory count, but carries out monthly continuous (perpetual) inventory counts and any errors identified are adjusted in the inventory system for that month.During the year the company introduced a bonus based on sales for its sales persons. The bonus target was based on increasing the number of customers signing up for 24-month phone line contracts. This has been successful and revenue has increased by 15%, especially in the last few months of the year. The level of receivables is considerably higher than last year and there are concerns about the creditworthiness of some customers.Recorder has a policy of revaluing its land and buildings and this year has updated the valuations of all land and buildings.During the year the directors have each been paid a significant bonus, and they have included this within wages and salaries. Separate disclosure of the bonus is required by local legislation.Required:(a) Describe FIVE audit risks, and explain the auditor’s response to each risk, in planning the audit of Recorder Communications Co. (10 marks)(b) Explain the audit procedures you should perform. in order to place reliance on the continuous (perpetual) counts for year-end inventory. (3 marks)(c) Describe substantive procedures you should perform. to confirm the directors’ bonus payments included in the financial statements. (3 marks)The finance director of Recorder informed the audit partner that the reason for appointing Piano & Co as auditors was because they audit other mobile phone companies, including Recorder’s main competitor. The finance director has asked how Piano & Co keeps information obtained during the audit confidential.Required: (d) Explain the safeguards which your firm should implement to ensure that this conflict of interest is properly managed. (4 marks)