Protector Ltd (Protector) is a company that supplies and distributes security screen doors and is an ongoing audit client of your audit firm, Pratt & Associates. You have ascertained the following information from a telephone call to the general manager of Protector, prior to the commencement of this year's audit.

a. Protector has experienced considerable staff turnover in its accounts payable department, including the departure of the accounts payable manager, who resigned early in the year. This has created some delays in the processing of payments.

b. As part of its cost-cutting program, Protector has decided to retrench its internal audit department three months before year-end.

c. Protector plans to upgrade its general ledger reporting by acquiring a new software package. The conversion is planned for two months prior to its financial year-end.

d. During the year, Protector received a visit from the Australian Taxation Office for a desk audit of its recent income tax returns. As a result of this audit, a number of issues were raised, but to date, no assessment has been issued. The company's tax advisers are presently following up on these matters.

e. Last year, Protector received adverse comments from some debtors concerning the confirmation letters that they were sent. AS s result, the Protectors' credit manager has asked that you do not send confirmation letters to debtors this year. She has offered you every possible assistance in verifying debtors by other means. You note that last year, 70 per cent of debtors who received a confirmation letter responded.

Required.

Explain how each of the above matters will affect your overall planning in regards to the expected scope and conduct of the audit of Protector for the current year.

Answer rating: 100% (QA)

Considerable staff turnover in the accounts payable department The considerable staff turnover in Protectors accounts payable department including the departure of the accounts payable manager has cre... View the full answer