Susan has worked for several years as an internal auditor for Kaneohe Custom Kitchens Ltd., a company that manufactures high-end kitchen cabinets. Last year, she resigned from her position at Kaneohe and started her own accounting practice. She has accepted an offer to conduct an external audit of Kailua Kitchen craft Inc. She received the offer in part because of her long experience in the kitchen cabinet industry. Both companies are publicly owned. Susan used various procedures in her audit at Kailua, including a walk-through test during the control risk assessment process, and observation during the tests of controls.

Required

a. Explain three ways in which Susan’s approach to conducting the Kailua audit will be different from the audits she conducted for Kaneohe. (6 marks)

b. Explain what a walk-through test is, and why Susan would use it during the control risk assessment process. 

c. Identify two weaknesses of the observation procedure as a means of evaluating internal control. 

Answer rating: 100% (QA)

a i Being an internal auditor for Kaneohe Custom Kitchens Ltd Susan is designed to look at the key risks facing the business and how the business is managing those risks effectively It usually results ... View the full answer