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Thread: ACC311 FUNDAMENTALS OF AUDITING Assignment No.2 Idea Due Date 09 January 2013

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    18 ACC311 FUNDAMENTALS OF AUDITING Assignment No.2 Idea Due Date 09 January 2013

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    ACC311 FUNDAMENTALS OF AUDITING Assignment No.2 Idea Solution Due Date 09 January 2013





    SEMESTER FALL 2012
    FUNDAMENTALS OF AUDITING (ACC311)
    ASSIGNMENT NO.02
    DUE DATE: 09THJANUARY 2013 MARKS: 25
    LEARNING’S OBJECTIVES - To enhance the understanding regarding the examining of control procedure including the internal control that an auditor use to adopt during the process of audit.
    LEARNING OUTCOMES - After going through this activity, the students would be able to know about the control procedure and internal control system that an organization has to adopt and the auditor have to examine.
    ASSIGNMENT
    Wood Work Furniture (WWF) is a leading manufacturer in furniture industry of Pakistan with eight showrooms located in big cities. The company since its incorporation in 2002 is listed at KSE. WWF manufactures furniture in two verities – Wood Furniture and Plastic Furniture.
    In the previous audit, the company auditor was satisfied with the control over physical existence, maintenance and valuation of the inventory. The company entered into the export business in 2010 by establishing 3 retail outlets in UAE. WWF also got audited the accounts of these outlets for the financial year 2011 by its principal auditors.
    During the audit, it was revealed that 30% of the company’s inventory was in UAE outlet stores. Further, the goal of expected sales has also not met in these foreign outlets. As a result, the inventory turnover ratio was much lesser as compare to Pakistani outlets.
    It was also revealed that the day’s sale in receivable has also been increased. In the financial year 2011, the cost of plastic furniture increased by 17% while that of wood furniture increased by 31%. The price of the plastic furniture decreased by 5% whereas, the price of wood furniture remains the same. The price of the UAE Currency had also been decreased by 9%, while the exchange rate at the time of export was Rs. 25 per UAE Dirham.
    The carrying cost was increased in year 2011 by 13%. The located place for the inventory in ware house is equally divided in the ratio of 3:1 for the wood and plastic inventory but currently the wood inventory alone requires the 85% space in the warehouse.
    The auditor showed his concern regarding the risk of material misstatement found in the value of inventory at UAE due to the involvement of foreign currencies, i.e. the foreign exchange transactions and cost of exporting the goods.
    REQUIRED:
    1. Is the foreign currency risk identified by the auditor is justifiable and why? (5)
    2. In the given scenario what type of audit procedure the auditor should adopt for testing the control procedures developed by WWF to control its sales and debtors? (10)
    3. Suggest WWF the ways, techniques and methods to manage its inventory and receivables efficiently. (10)
    IMPORTANT:
    24 hours extra / grace period after the due date is usually available to overcome uploading difficulties. This extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience.
    OTHER INSTRUCTIONS:
    DEADLINE:
    • Make sure to upload the solution file before the due date on VULMS.
    • Any submission made via email after the due date will not be accepted.
    FORMATTING GUIDELINES:
    • Use the font style “Times New Roman” or “Arial” and font size “12”.
    • It is advised to compose your document in MS-Word format.
    • You may also compose your assignment in Open Office format.
    • Use black and blue font colors only.
    REFERENCING GUIDELINES:
    • Use APA style for referencing and citation. For guidance search “APA reference style” in Google and read various website containing information for better understanding or visit Only the registered members can see the link. Register here
    RULES FOR MARKING
    Please note that your assignment will not be graded or graded as ZERO (0), if:
    • It is submitted after the due date.
    • The file you uploaded does not open or is corrupt.
    • It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.
    • It is cheated or copied from other students, internet, books, journals etc.
    Note related to load shedding: Please be proactive
    Dear students!
    As you know that Post Mid-Term semester activities have been started and load shedding problem is also prevailing in our country now a days. Keeping in view the fact, you all are advised to post your activities as early as possible without waiting for the due date. For your convenience; activity schedule has already been uploaded on VULMS for the current semester, therefore no excuse will be entertained after due date of assignments, quizzes or GDBs.

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