Express Comfy Co. operates an airline business since a few years ago. The company’s year-end is 31 December of each year. You are the Engagement partner in charge and you have started planning the audit. You are setting a meeting with the client to identify any relevant audit risks. From your meeting you came across the following: 

In order to expand their flight network, Express Comfy Co will need to acquire more airplanes; they have placed orders for another six planes at an estimated total cost of QR70millionsand the company’s CEO has requested from the procurement director to handle this matter. Accordingly, the Procurement Director assigned Mr. Hamad AL-Kaaby to handle this transaction. Due to his prolonged experience and the trust the company is having in Mr. Hamad, the Procurement Director has delegated all power and authority to Mr. Hamad with no need to return back to him during the processing of this transaction. Mr. Hamad is now the one communicating with the vendors(suppliers), preparing the invoices, following up on things, and he is the one to check the fleet of planes when they arrive to ensure they meet the quality standards set by the company. 3In addition, the company has spent an estimated QR50 million on refurbishing (restoring) their existing planes. In order to fund the expansion, the Finance Department has applied for a loan of QR80 million. It has yet to hear from the bank as to whether it will lend them the money. Notably, the CFO of the company has assigned four accountants from the finance department to handle the processing of this loan request. Four accountants have been assigned due to the fact that Ms. Reem Al-mansoury, the Chief Internal Auditor of the company, is currently on vacation, and one of these four accountantshas been asked to cover for her during her absence. The company receives bookings from travel agents as well as from individuals directly via their website. The travel agents are given a 90-day credit period to pay Express Comfy Co, however, due to difficult trading conditions, a number of the receivables (travel agents) are struggling to pay. Furthermore, and due to the complexity of the online transactions, Engineer Ahmed El-Sabbahy has been assigned to handle these transactions, who in turn is responsible for all the online transactions with no other control procedures to protect the company from any sort of errors and/or fraud. Worth noting too, the website was launched a few months ago and has consistently encountered difficulties with customer complaints that tickets have been booked and paid for online but Express Comfy Co has no documented record of them and hence has sold the seat to another customer. For this reason, the company is currently in communication with an external expert IT company to look into this issue. Based on the previous key facts concerning express Comfy, you are required to submit a report that covers the following points: 

1. Identify the pre-conditions that should have been met before accepting Express Comfy as a client. You are also required to state the contents of the engagement letter highlighting the role and responsibilities of each party involved.

2. Outline the members of the audit team who are expected to audit the records of East Comfy highlighting the role played by each of these members.

3. Outline the steps involved in the audit cycle as well as the audit strategy and relate these to East Comfy.

4. Outline the main procedures involved in setting the audit plan(s) for Easy Comfy.

5. Outline the audit risk model and explain its components. You are also required to address the strengths and weaknesses in the Easy Comfy internal control system together with the appropriate recommendations to overcome these weaknesses.

Answer rating: 100% (QA)

1The auditor must determine the acceptability of the financial reporting framework to be applied in the preparation of the financial statements evaluate whether law or regulation prescribes the applic... View the full answer