Mighty Market - Portfolio Part B PDF

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Summary

This is a CAATs module, we deal with excel, databases and access
We do engagment letters, working papers and data analysis...

Description

2019: AUE4871 - Portfolio Part B

AUE4871 : PORTFOLIO PART B JMX Auditors needs an opinion from AAA Computer Auditors on whether the loyalty expense (1000/010) for the year and the liability – loyalty points (in rands) (4000/300) present fairly, in all material respects, the financial performance and position of Mighty Market for the year ended on 31 December 2018, so that they can rely on it for purposes of their financial statement audit. You are required to plan and execute the above assurance engagement, as well as report on your findings for your portfolio parts B, C and D. Before an auditor can perform an assurance engagement it is important that the exact nature of the engagement is understood and the criteria be established. Understanding the processes relevant to the engagement is also of utmost importance to enable the proper planning of the engagement. Such an understanding should be based on your accounting knowledge combined with your knowledge of the client’s business, and this will help you to create an ‘expectation’ against which you can measure the reality of what you find during your assurance engagement. Graphically depicting processes also helps an auditor to make sense of a narrative system description. Risk identification takes places throughout the entire assurance engagement from gaining an understanding of the engagement up to just before delivering the assurance report at the end of the engagement. When an auditor understands what needs to be delivered in terms of the assurance engagement, as well as understanding the business and relevant business processes of the client, he/she can prepare the assurance strategy. The assurance strategy is the overall, high-level approach the audit team will follow to gather sufficient and appropriate assurance evidence to enable them to express an appropriate opinion.

REQUIRED: B1

Document your understanding of the type of engagement.

B1.1

Prepare a working paper that properly documents the objective of this engagement, as well as describe how this type of engagement will differ from an engagement where an opinion is to be expressed on the effectiveness of the internal controls by referring to each phase of an assurance engagement. Document this using Microsoft Word.

B1.2

Add a header and a footer to your working paper, as well as an appropriate objective and a conclusion for your working paper, so that your working paper is properly documented in terms of auditing standards. Tip: make sure you understand the difference between the objective of your engagement and the objective of your individual working paper within your engagement.

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2019: AUE4871 - Portfolio Part B

B2

Calculate and document the materiality figure(s) to be used as criteria for your engagement.

B2.1

Prepare a working paper in Microsoft Excel that properly documents and calculates an appropriate materiality figure(s) to be used as criteria for your engagement. Tips: Use an absolute value and round your materiality figure(s). Make use of advanced formulas and professional layout and formatting wherever possible in your portfolio to showcase your Excel skills.

B2.2

Briefly explain the concept of materiality in your own words in a text box in this working paper.

B2.3

Add a header and a footer to your working paper, as well as an appropriate objective and a conclusion for your working paper, so that your working paper is properly documented in terms of auditing standards.

B3

Document your understanding.

B3.1

Prepare a working paper in Microsoft Word that documents your understanding of sales and loyalty points at Mighty Market. In terms of sales briefly describe the following:  The business model of Mighty Market.  When a sale may be recorded in general in terms of accounting principles.  When an actual sale may be recorded for Mighty Market in terms of accounting principles.  When a sale is recorded by Mighty Market according to their system description and whether this is in accordance with accounting principles. In terms of loyalty points briefly describe the following:  The differences between the loyalty expense and the loyalty liability account.  When loyalty points may be added to the loyalty expense account and to a Mighty Market customer’s loyalty point balance in terms of accounting principles.  When loyalty points may be deducted from the loyalty expense account and from a Mighty Market customer’s loyalty point balance in terms of accounting principles.  When loyalty points are recorded by Mighty Market according to their system description and whether this is in accordance with accounting principles.

B3.2

On the same working paper, also create a general ledger (T) account for the Loyalty expense account (1000/010) and another for the Liability - Loyalty points account (4000/300). Each general ledger account should indicate the various types of transactions and the number of entries for each type you would expect to be occurring during the year for each of these account. (You can use “xxx” for your amounts, but for the total for the year and the balances you can use the trial balance amount as per the case study.) For example: Type 1 transaction x 3 Type 3 transaction x 5 Total b/f

GL account name xxx Type 2 transaction x 10 xxx Total c/f yyy 12345.00

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xxx 12345.00 yyy

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2019: AUE4871 - Portfolio Part B

B3.3

Consider the information in your working paper and document any risks you may have identified.

B3.4

Add a header and a footer to your working paper, as well as an appropriate objective and a conclusion for your working paper, so that your working paper is properly documented in terms of auditing standards.

B4

Document the relevant processes of Mighty Market.

B4.1

Prepare a relationship diagram of the Mighty Market files in Microsoft Access that shows how the various files link together. Do this by first importing all the files into Microsoft Access, then  Select Relationships on the Database Tools menu.  Add all the files using the Show Table menu item.  Drag and drop the fields to show the relationships between the various files.  Print the relationship diagram to PDF using the Relationship Report tool, but only after you make sure the layout is professional. Tip: Before doing this you simply have to understand relational databases and database normalisation. First read the following article for a good overview: https://en.wikiversity.org/wiki/Designing_a_Relational_Database. Now read and understand Chapter 8 of your prescribed textbook. Then only you should Google or look at relevant YouTube videos to help you with relationship diagrams in Microsoft Access.

B4.2

Prepare activity diagrams, using Microsoft Word, to show all the main activities (processes) at Mighty Market that affects the Loyalty expense account (1000/010) and/or Liability - Loyalty points account (4000/300). Tip: The work you did as part of B3 could assist you to help identify all the processes that affect those accounts.

B4.3

Copy your activity diagrams in B4.2 and then modify them to show the underlying files being used, rather than the main activities.

B4.4

Explain whether the sum of the Loyalty points balance field in the Subscriber master file can be used to verify the opening and closing balance of the Liability – Loyalty points account.

B4.5

Consider the information in your working paper and document any risks that you may have identified.

B4.6

Add a header and a footer to your working paper, as well as an appropriate objective and a conclusion for your working paper, so that your working paper is properly documented in terms of auditing standards.

B5

Prepare and document your assurance strategy.

B5.1

Prepare a working paper in Microsoft Word that properly documents an appropriate assurance strategy for AAA Computer Auditors for their assurance engagement at Mighty Market. Note: You may exclude the audit team and budget section of the assurance strategy. Tips: Make sure you adequately substantiate your CAATs strategy decisions in addition to the normal assurance strategy information.

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2019: AUE4871 - Portfolio Part B

B5.2

Specifically include a section in your assurance strategy that documents your plans regarding the requirements to identify controls addressing the inherent risks you will identify, as well as the requirements to evaluate these controls through tests of controls for the particular type of assurance engagement you are performing. Relate your answer to your decision to perform data analysis as part of your CAATs. Tip: Refer back to your answer in B1.1 to help you.

B5.3

Add a header and a footer to your working paper, as well as an appropriate objective and a conclusion for your working paper, so that your working paper is properly documented in terms of auditing standards.

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