Question

12 An auditor tosting reersae for a Hone where the even based on the rate chaged per gsnd ooms are occupied smaer venunmde trom saes of food, et inerent risk was determaned to be hgh cpnt rk was detemined to be set at the maium, and detetion rik wan set to low The Auditor has ano determined that revene ws signicant and frud bed on pe ud eno The auditor wares to be efcient and oftection an ed uatheishe coud get nformation on the aa the number of apo a reasonableness ooupied and () vrge rate charged per soom. The audtor can ue ti nomaion f the auditor penomed a test of detal instead of an analyc heshe would eed to pick a sample of inoces for customers across the year based on non-stat sampling, the sample size would be dose to 200 m ts estimated the analyic would take 10-20 brurs of werk nd e Test tt detail Ooiceicanh vrfcaion would take 80 hours of work analytic to caloulate revenun What statement is TRUE if the auditor wants to be effestive and sficient, and comply with auditing standarts of the PCAOB: A. Perfom the analytic and testing controls is the most sffisient.and.apgroprte wproach in this case based on control risk at the maximum and detection risk set to low. B. Use of analytics only is not an appropriate approach in this cane besed on the Fraud sk and Significant Risk that was assessed C. Performing test of details, tost of controls, and analtical procedures is the most sfficiantand festi to test this balance. adh 13 i & .Abdullah company sells specialized equipment around the wold Use the following inomation to perform a reasonableness analytic Product A Product B Product C Average Price of product (last year) $100,000 per Product $200,000 perls50.000 per Product Productl 25 products sold per week 23 products sold 15 products sold per week Average # of sales per week (last year) per week Price increase (decrease) of product (this year) (-10 % ) 15% 5 % Assume the economy is the same as last year and that sales in the industry are consistent with prior year. There are 52 weeks in the year and the company is open every week of the year 13i) Using a reasonableness analytic how much total revenue is expected from Product B this year? 13ii) This reasonableness analytic would probably be best used in which phase of the audit: (A. Planning, B Substantive, C. Completion) Pick 1 letter only (A, B or C). (Pick 1 14. They key difference between a fraud and an error is the perpetrators word to fill in the blank).

Answer 1

Estimated price will be 200000-200000*10%=180000

Estimated sales 15*52=780 asumming year consists of 52 weeks

Estimated revenue from b=180000*780=140400000

These procedures are generally used at every stage of the audit

However more particularly these are used at substantive stage

Answer would be b

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