You are the auditor for Mito Hotels (Mito), for the financial year ending 30 June 2020....

 

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You are the auditor for Mito Hotels (Mito), for the financial year ending 30 June 2020. Mito is a hotel chain that owns and operates hotels across Australia. You are in the process of planning the Mito audit, and you have noticed that there has been an increasing incidence of corporate clients prepaying for their employees' accommodation. Mito has recorded these prepayments as revenue when they receive the payments for the bookings. Required Relying on the information provided above only (i.e. do not create your own facts), in relation to Mito's Hotel revenue account, a) Identify the key assertion at risk. (1m) b) Explain why this represents a risk to the auditor. (1.5m) c) Outline a practical, appropriate substantive test that addresses the risk. (1m) d) Outline a specific, practical preventive control that would directly address the risk. (1m) You are the auditor for Mito Hotels (Mito), for the financial year ending 30 June 2020. Mito is a hotel chain that owns and operates hotels across Australia. You are in the process of planning the Mito audit, and you have noticed that there has been an increasing incidence of corporate clients prepaying for their employees' accommodation. Mito has recorded these prepayments as revenue when they receive the payments for the bookings. Required Relying on the information provided above only (i.e. do not create your own facts), in relation to Mito's Hotel revenue account, a) Identify the key assertion at risk. (1m) b) Explain why this represents a risk to the auditor. (1.5m) c) Outline a practical, appropriate substantive test that addresses the risk. (1m) d) Outline a specific, practical preventive control that would directly address the risk. (1m)

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Ans a When management prepares the financial statements they make five assertions about financial st... View the full answer