Question 5
ICAN
•
2021
•
AUDIT AND ASSURANCE
•
mixed
Case Stimulus
JAK Professional Services is a member firm of James Candle International in Cayman Islands. The member firm's practice review exercise has just been concluded. As part of the global firm, practice reviews are done yearly on selected engagement files where member firms review one another. Some of the issues included in the review notes raised on JAK Professional Services audit files are as follows: (i) Lack of sufficient and appropriate audit evidence regarding audit of cash and bank as well as inventory balances. This was partly due to the fact that no evidence existed in the file regarding physical cash and inventory count which were material; (ii) No proper documentation of confirmation replies received from banks, receivables and solicitors; (iii) No cash flow working documentation to show how the figures on the cash flow statements in the financial statements were arrived at; (iv) Improper documentation of how expected credit loss on financial instruments in the financial statements were arrived at; and (v) Figures in the financial statements could not be traced to the respective working papers. As an experienced auditor, some of the trainees were not impressed about the report and have approached you for clarification.
Requirements
(
a
)
Meaning of 'sufficient and appropriate audit evidence'.
(
b
)
Factors to be considered when deciding amount of audit evidence needed.
(
c
)
What auditors should do in case of inadequate audit evidence.
(
d
)
Reasons for sufficient and appropriate audit documentation.
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About This Question
This is
Ican
2021
Audit And Assurance
Question 5.
It is one of the
mixed
questions from the
2021
Ican
Audit And Assurance
examination.