You are the auditor in-charged of Rainbow Sdn. Bhd. (Rainbow) for the year ended 31st December...
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You are the auditor in-charged of Rainbow Sdn. Bhd. (Rainbow) for the year ended 31st December 2021. In May 2021, a fraud was discovered, involving the chief buyer in the purchasing/acquisition department of Rainbow and a purchase ledger clerk in the accounts department over a period of two years. The managing director of Rainbow has written to you, claiming that you had a responsibility to detect frauds during the course of your audits, and requesting an explanation as to how they could have missed it. Required: (a) Describe your points in making response to the managing director with regards on the responsibility to detect fraud. (5 marks) (b) During your audit of Rainbow, the management has insisted you to obtain all evidence by solely inquiring their staff and use all the documents that they have generated from their system. Do you agree with their suggestion and defend your answer with two (2) justifications. (4 marks) (c) Explain the term 'professional scepticism' and provide one (1) example of audit procedure that you can perform in obtaining the audit evidence from the purchasing department of Rainbow. (4 marks) You are the auditor in-charged of Rainbow Sdn. Bhd. (Rainbow) for the year ended 31st December 2021. In May 2021, a fraud was discovered, involving the chief buyer in the purchasing/acquisition department of Rainbow and a purchase ledger clerk in the accounts department over a period of two years. The managing director of Rainbow has written to you, claiming that you had a responsibility to detect frauds during the course of your audits, and requesting an explanation as to how they could have missed it. Required: (a) Describe your points in making response to the managing director with regards on the responsibility to detect fraud. (5 marks) (b) During your audit of Rainbow, the management has insisted you to obtain all evidence by solely inquiring their staff and use all the documents that they have generated from their system. Do you agree with their suggestion and defend your answer with two (2) justifications. (4 marks) (c) Explain the term 'professional scepticism' and provide one (1) example of audit procedure that you can perform in obtaining the audit evidence from the purchasing department of Rainbow. (4 marks)
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a As an auditor my responsibility is to plan and perform an audit in accordance with auditing standards to obtain reasonable assurance that the financial statements are free from material misstatement... View the full answer
Related Book For
Accounting Business Reporting For Decision Making
ISBN: 9780730302414
4th Edition
Authors: Jacqueline Birt, Keryn Chalmers, Albie Brooks, Suzanne Byrne, Judy Oliver
Posted Date:
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