While conducting an audit of Buzella Limited financials for the year ended December 31, 2020, Karen Mighty, the senior audit manager discovered that the entity’s trade receivables are overstated due to fraud perpetuated in the accounting department in 2019. Miss Mighty discovered the fraud five days before the issue of the client’s financial statements, which was scheduled for March 10, 2021. The amount discovered by the auditor was approximately 45% of total current asset.

Required: 

a. Outline four audit procedures that could be utilized by Miss Senior to obtain sufficient and appropriate evidence. 

b. State the options available to Miss Smith regarding the disclosure of the event in the client’s audit report. 

c. Indicate the type event discovered in the case above by Miss Senior and why. 

d. Assuming the audit firm recommended the appropriate treatment in accordance with IFRS 9, but management does not agree despite numerous recommendations by the auditor, what is the appropriate audit report should be issued by the auditor and why?

Answer rating: 100% (QA)

Audit procedures are the processes techniques and methods used by auditors to obtain audit evidence allowing them to complete the audit objective and ... View the full answer