Chips Ahoy. Write the audit approach section following the cases in the chapter. The following is an excerpt from an article, $$Memory Chip Trader Gets $14$ Years for Bank Fraud,$$ The Straits Times $($Singapore$),$ February $13,2009$:

Through most of the $1990$s$,$ entrepreneur Kelvin Ang Ah Peng rode the crest of a wave as his company traded in memory chips and recycled used ones for sale at a good price. His story, which follows the ebb and flow of the integrated circuit $($IC$)$ chip business, started at EC Asia International $($ECI$)$ in $1993.$ Computer chips were expensive, so his business did well. A major earthquake in Taiwan in $1999$ totaled the computer chip factories there. Production halted and the market price of computer chips soared even higher. The bubble burst the following year, when the Taiwan factories recovered and several computer chip businesses folded. In $2001,$ as ECI struggled to keep afloat, Ang started abusing its credit facilities. Between that year and early $2007,$ he bought and sold worthless memory chips and created fake orders and invoices to receive payment from banks. He was charged in October $2008$ on $687$ charges involving US$$290$ million; last month, he pleaded guilty to $30$ charges$28$ for cheating and $2$ for money laundering and falsifying revenues in ECI$$s initial public offering $($IPO$)$ prospectus. Deputy Public Prosecutor David Chew Siong Tai said that, to secure credit in the absence of incoming orders, Ang fashioned an elaborate scheme with the help of Hong Kong firms. He got ECI$$s partners to issue the necessary trade documents and to circulate computer chips and money between Hong Kong and Singapore. Chips were actually shipped in these sham transactions as if they were bona fide business

trades. In reality these were worthless, defective chips due for scrapping by ECI. In November $2006$ when asked about ECI$$s unusually large inventory in Hong Kong and the huge debts owed by the firm$$s Hong Kong $$customers$,$ Ang confessed to an ECI subsidiary$$s director that $90$ per cent of the inventory did not exist and that its billings were all faked. Yesterday, Ang, $44,$ was jailed for $14$ years for having swindled banks of US$$23$ million $($S$$35$ million$)$ and laundering these proceeds through Hong Kong. The Australian$-$listed ECI is now being liquidated, and Ang was declared a bankrupt last year.

trades. In reality these were worthless, defective chips due for scrapping by ECI. In November $2006$ when asked about ECI$$s unusually large inventory in Hong Kong and the huge debts owed by the firm$$s Hong Kong $$customers$,$ Ang confessed to an ECI subsidiary$$s director that $90$ per cent of the inventory did not exist and that its billings were all faked. Yesterday, Ang, $44,$ was jailed for $14$ years for having swindled banks of US$$23$ million $($S$$35$ million$)$ and laundering these proceeds through Hong Kong. The Australian$-$listed ECI is now being liquidated, and Ang was declared a bankrupt last year.

The writing should be organized around below sections for each case.

Objective. Express the objective in terms of the facts supposedly asserted in financial records, accounts, and statements.

Control.$$Write a brief explanation of desirable controls, missing controls, and especially the kinds of $$deviations$$ that might arise from the situation described in the case.

Tests of controls.$$Write some procedures for getting evidence about existing controls, especially procedures that could discover deviations from those controls. If there are no controls to test, then there are no procedures to perform; go then to the next section. A $$procedure$$ should instruct someone about the source$($s$)$ of evidence to tap and the work to do$.$

Audit of balance. Write some procedures for getting evidence about the existence, completeness, valuation, ownership, or disclosure assertions identified in the objective section you wrote.

Discovery summary. Write a short statement about the discovery you expect to accomplish with your procedures