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.




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.



(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

  1. What are the entity’s major sources of revenue, including the nature of its products and/or services?
  2. Who are the entity’s key customers?
  3. Who are the entity’s key suppliers?
  4. What is the entity’s organizational structure?
  5. Where are its major locations?
  6. What are the entity’s major assets?
  7. What are the entity’s major liabilities?
  8. Do general economic conditions present any risks for the entity?
  9. Does the regulatory environment present any risks for the entity?
  10. Does the legal/political environment present any risks for the entity?
  11. Does the competitive industry environment present any risks for the entity? Identify any competitors.
  12. Do social/environmental factors present any risks for the entity?
  13. Do technological factors present any risks for the entity?
  14. Does management give high priority to internal control?
  15. 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?
  16. Has management been responsive to prior recommendations from its auditors?
  17. Is there high turnover of senior management, counsel, or board members?
  18. Does the board of directors and its major committees contain an appropriate number of “independent” directors?
  19. Does an audit committee exist? If so, is the audit committee composed of “independent” directors?
  20. Does the audit committee adequately assist the board in maintaining a direct line of communication with the entity’s external and internal auditors?
  21. Does the audit committee have adequate resources and authority to discharge its responsibilities?
  22. Is this evidenced by
  • Regular meetings?
  • The appointment of qualified members?
  • Minutes of the meetings?
  1. Is the organization of the entity clearly defined in terms of lines of authority and responsibility?
  2. Is the organizational structure appropriate for the size and complexity of the entity?
  3. Does the entity have a performance measurement system?
  4. If so, what key performance indicators (KPIs) are used by management to measure performance?
  5. Does the entity have an internal audit function?
  6. Are recommendations made by the internal and external auditors implemented?


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