Luke and Zane are two audit seniors working for the same Big
Four accounting firm. Both started employment with the firm around
the same time. They have mutual respect for each other; however,
they have been highly competitive since they commenced work
Luke has recently married and he and his wife are paying off their mortgage. Zane is single with a reputation in the firm for playing hard but working hard too. They have both been seniors for almost 18 months and are looking for promotion to audit supervisor. They are both aware that there is only one supervisor position available. Â
Luke recently replaced Zane on a particular job, and the reason given to both Luke and Zane was that another assignment had arisen with a long-time client of Zane's. Once Luke had replaced Zane on that particular job, he realised that the client had called the audit manager to say that they were not impressed with Zane, as he had missed a number of issues within the audit and was arriving at work late. The audit manager had not discussed these comments with either Luke or Zane. After going through the work that Zane had completed, Luke realised that Zane had performed an excellent job, identifying a number of issues that he thought he might possibly have missed. Furthermore, Luke suspects that Zane and the client had a personality conflict, and that the client has misled the audit manager. Â
Luke realises that he can finish off the audit, resolve the issues and obtain a good review from this assignment, which would help him in the promotion stakes. He also knows that the audit manager is unlikely to bring the client's unsupported allegations to Zane's attention.Â Â
Required Work through this scenario using the American Accounting Association decision-making model, and decide what action Luke should take.Â Â Â
Scenario Two: (500 Words)Â Â
You are involved in the audit of Puzzler Ltd (Puzzler), and have been examining the documentation associated with Puzzler's purchase from Worthington Ltd (Worthington) of the expensive and troublesome Jigsaw Cutter. However, the documentation is highly summarised and incomplete, and it is difficult for you to determine whether Puzzler's capital purchasing policy has been followed. Â
Puzzler's General Managerâ€”Production, Blake Sheen, would ultimately have been responsible for presenting the case for the Worthington purchases to Puzzler's Board. You have a good relationship with Blake, including a common interest in the national football competition. You approach Blake, who listens carefully to your concerns and seeks to reassure you that all necessary procedures were followed. He also tells you not to be concerned with the teething problems that they are having with the Worthington equipment, as he used to work with them as an engineer prior to joining Puzzler and knows that they build top-quality machines. He suggests that you join him for lunch as his guest at an extremely expensive restaurant in the city so that you can discuss the matter further. Â
As you are about to leave, Blake offers you two tickets to the upcoming football grand final, which he says he won in a competition and is unable to use. RequiredÂ (a) List and discuss four ethical issues you face. (b) Describe what actions you should take in order to overcome the issues you identified.
Scenario Three: (1000 Words) Â
The Peak Sawmill Limited (Peak) operates a timber sawmill in a large regional town. It sources its raw material (pine logs) from a number of local growers and from its own plantations. Logs are transported on large trucks that are weighed in on the company's weighbridge and weighed out after dropping their loads in the storage area. Logs are then debarked and sawn to size in the cutting area of the mill. The various logs are then sent to other areas of the sawmill depending on what they will be used for. Â
You are a senior on the audit. In the planning stage of the audit, you perform analytical procedures. In the current audit period, the average number of days to pay creditors has declined significantly from the average recorded over the past three financial years. Â
Your investigation reveals that log suppliers represent more than 90 per cent of the value of accounts payable. As an internal control, details of the goods received notes are matched against the supplier's invoice. The accuracy of the invoice is checked, after which the invoice is authorised for payment by the mill accountant. Any discrepancy between what the supplier's invoice amount should be and the actual amount charged by the supplier is communicated to the supplier by way of a pre-numbered â€˜request for creditâ€™ form. This form provides reasons for the differences and the amount requested to be credited to the company by the supplier. Â
The correct amount of the invoice is entered into the accounts payable accounting system and the supplier's monthly statement is reconciled to the accounts payable balance per the creditors' ledger at month end. The differences are mostly attributable to: Â
â€¢ unprocessed invoices due to pricing differences â€¢ timing differences in the recorded date of a payment made â€¢ amounts requested for credit â€¢ settlement discounts disallowed. Â
Cathy Vernon, the company's financial controller, informs you that due to the increase in the price of timber, new contracts with suppliers have been negotiated over the past year. The accounts payable personnel have complained that management is too slow in informing them about the effective dates of the implementation of the contracts and the revised prices. A brief inspection of the accounts payable reconciliations for five of the biggest suppliers indicates that many invoices are being held back due to the lack of correct pricing.Â Â
RequiredÂ (a) List two key assertions at risk in relation to accounts payable. (b) Provide your justification for each assertion. (c) For each assertion, outline one substantive test of detail to obtain sufficient appropriate audit evidence.
Other samples, services and questions:
When you use PaperHelp, you save one valuable — TIME
You can spend it for more important things than paper writing.