Auditing

QUESTION 1 Indicate whether you agree or disagree with the following statements and explain your reasoning. (12 MARKS) a) Teresa Dziuba was assigned to the Heathcliff Energy audit. She was ensuring that when recognizing revenues, all transactions and events that should have been recorded have been recorded. She was testing the occurrence assertion b) Assume materiality for the financial statements as a whole is $100,000 and performance materiality for accounts receivable is set at $40,000. If the auditor finds one receivable that is overstated by $55,000, the auditor can ignore the error as it is less than $100,000 (overall materiality). c) Steve Slopak, the group partner was reviewing the work of Manny Fernandez on the Lake Shore Gold account Manny asked Steve for an explanation on how audit risk would affect his work Steve answered: "Audit risk affects the quantity and quality of evidence gathering." d) Joseph Cabana was explaining to Carl Metz how sampling risk works for the audit team: "Sampling risk is the risk that as auditors we will arrive at a conclusion that has nothing to do with sampling issues, e) Kendal Clarke was auditing the miscellaneous expense account. She decided to chose every transaction that had a value of $20,000 or higher. Kendal is performing a statistical sampling technique known as random selection. e) Melissa Wilson had concluded that control risk was low for her audit client. Therefore, she decided that the most appropriate audit strategy was a combined audit strategy