CIA 7006 Auditing and Assurance Assignment Answers
CIA 7006 Auditing and Assurance
Group Assignment 1
(i) Choose ONE public listed company in healthcare and entertainment industry and obtain the 2021 annual report.
(ii) Develop a questionnaire for documenting the Understanding of the company and its environment.
-WRITE 6 PAGES REPORT
(iii) [INTRODUCTION]
Discuss briefly the background of the company including:
- Who is the Current CEO?
- How much did Accounts Payable change in RM & percent from 2020 to 2021?
- In which of the last 5 years was the company’s Net Income highest, and what was Net Income in that year?
- Does the company use the FIFO or LIFO inventory valuation method?
- What is the date of Audit Report included in the Annual Report?
(iv) Prepare a set of analytical procedures (analytical reviews) of the company as part of audit planning process over a 5-year (2017-2021 period – company that you’ve chosen in (i)) using the following ratios. Please present your analytical reviews in tabular form.
PROFITABILITY/PERFORMANCE RATIOS:
(a) Gross profit margin
(b) Net profit margin
(c) Return on assets
(d) Return on equity
Entity and Environment Category: Nature of the Entity
Risk Factors
- What are the entity’s major sources of revenue, including the nature of its products and/or services?
- Who are the entity’s key customers?
- Who are the entity’s key suppliers?
- What is the entity’s organizational structure?
- Where are its major locations?
- What are the entity’s major assets?
- What are the entity’s major liabilities?
- Do general economic conditions present any risks for the entity?
- Does the regulatory environment present any risks for the entity?
- Does the legal/political environment present any risks for the entity?
- Does the competitive industry environment present any risks for the entity? Identify any competitors.
- Do social/environmental factors present any risks for the entity?
- Do technological factors present any risks for the entity?
- Does management give high priority to internal control?
- Has management established and maintained internal control that will, among other things, initiate, record, process, and report transactions consistent with management assertions in the financial statements?
- Has management been responsive to prior recommendations from its auditors?
- Is there high turnover of senior management, counsel, or board members?
- Does the board of directors and its major committees contain an appropriate number of “independent” directors?
- Does an audit committee exist? If so, is the audit committee composed of “independent” directors?
- Does the audit committee adequately assist the board in maintaining a direct line of communication with the entity’s external and internal auditors?
- Does the audit committee have adequate resources and authority to discharge its responsibilities?
- Is this evidenced by
- Regular meetings?
- The appointment of qualified members?
- Minutes of the meetings?
- Is the organization of the entity clearly defined in terms of lines of authority and responsibility?
- Is the organizational structure appropriate for the size and complexity of the entity?
- Does the entity have a performance measurement system?
- If so, what key performance indicators (KPIs) are used by management to measure performance?
- Does the entity have an internal audit function?
- Are recommendations made by the internal and external auditors implemented?
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