You are an audit manager in an audit firm with 250 staff. Your firm is the
auditor of Sunrise, a chain of Supermarkets. Your firm has been the auditor
of this client for many years.
All of the planning work and tests of control have been completed for
Sunrise for the year ended 31 December 2003. Staff are still working on
substantive procedures. The company operates a continuous inventory
checking system with good records and you have tested this system and
will be relying on the records for the year-end balance.
The company is intending to invest a substantial amount in opening new
stores during the next year and it has been negotiating with both banks and
property companies in relation to leases.
Required:
(a) Describe the objectives of the following and how these objectives will
be met in the audit of Sunrise:
(i) Overall review of financial statements; (4 marks)
(ii) Review of working papers. (6 marks)
(b) Describe the:
(i) Auditor’s responsibilities with regard to subsequent events;
(6 marks)
(ii) Procedures that should be applied during the subsequent events
review at Sunrise.
(4 marks)