THE FOLLOWING IS A SERIES OF 13 QUESTIONS FOCUSED ON RISK ASSESSMENT, THE AUDIT RISK MODEL...

  

Transcribed Image Text:

THE FOLLOWING IS A SERIES OF 13 QUESTIONS FOCUSED ON RISK ASSESSMENT, THE AUDIT RISK MODEL AND AUDIT PLANNING. [Answer each question by inserting your ANSWER within the question box] The following is a partial balance sheet an auditor is examining during the planning phase of an audit of the 2019 Land's End financial statements. Cash Restricted cash Accounts receivable.net Statement of Financial Position ($1,000s] $193,405 1,948 34,549 321,905 56,574 Inventories, net Prepaid expenses Total current assets Property and equipment Goodwill Intangible asset Land's End Other assets Total assets Dec 31, 2019 Dec 31, 2018 608,381 149,894 110,000 257,000 5,636 1,130,911 $194,581 2,356 49,860 332,297 26,659 606,753 136,501 110,000 257,000 13,881 1,123,135 Planning Phase Assumptions and Analysis: Assumptions 1: The target (maximum] acceptable audit risk [AR] for the Land's End audit is 0.08 or 8% risk Assumption 2: The initial, beginning of the audit, estimated risk of material misstatement [RMM] is 0.22 or 22% risk Assumption 3: The tolerable error [tolerable misstatement] for each account within the statement of financial position [balance sheet] has been set at $ 10,000,000 for $ 10,000 in $ 1,000s). Question 12: 12a 15 pts]: Considering only the 2018 balance sheet evidence, what would be a reasonable auditor's expectation for the 2019 Cash balance? 12b [5 pts]: Provide your reasons as why this is a reasonable auditor's expectation: THE FOLLOWING IS A SERIES OF 13 QUESTIONS FOCUSED ON RISK ASSESSMENT, THE AUDIT RISK MODEL AND AUDIT PLANNING. [Answer each question by inserting your ANSWER within the question box] The following is a partial balance sheet an auditor is examining during the planning phase of an audit of the 2019 Land's End financial statements. Cash Restricted cash Accounts receivable.net Statement of Financial Position ($1,000s] $193,405 1,948 34,549 321,905 56,574 Inventories, net Prepaid expenses Total current assets Property and equipment Goodwill Intangible asset Land's End Other assets Total assets Dec 31, 2019 Dec 31, 2018 608,381 149,894 110,000 257,000 5,636 1,130,911 $194,581 2,356 49,860 332,297 26,659 606,753 136,501 110,000 257,000 13,881 1,123,135 Planning Phase Assumptions and Analysis: Assumptions 1: The target (maximum] acceptable audit risk [AR] for the Land's End audit is 0.08 or 8% risk Assumption 2: The initial, beginning of the audit, estimated risk of material misstatement [RMM] is 0.22 or 22% risk Assumption 3: The tolerable error [tolerable misstatement] for each account within the statement of financial position [balance sheet] has been set at $ 10,000,000 for $ 10,000 in $ 1,000s). Question 12: 12a 15 pts]: Considering only the 2018 balance sheet evidence, what would be a reasonable auditor's expectation for the 2019 Cash balance? 12b [5 pts]: Provide your reasons as why this is a reasonable auditor's expectation:

Answer rating: 100% (QA)

Question 12 12a 5 pts Considering only the 2018 balance sheet evidence what would be a reasonable auditors expectation for the 2019 Cash balance A reasonable auditors expectation for the 2019 Cash bal... View the full answer