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Aue3761 Assignment 3 Suggested solution | Due 24 August
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Auditing Notes for South African Students
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AUE3761 EXAM PACK 2024
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AUE3761 ASSIGNMENT 3SEMESTER 2 - 2020
DUE DATE: 24 August 2020
,PLAGIARISM
IS STRICTLY
PROHIBITED!
, AUE3761 ASSIGNMENT 3 OF 2020
QUESTION 1
a) Risk of material misstatement at the assertion level relating to revenue for
the year ended 30 June 2020
• There is a risk that the amount charged per hour on service contracts
for photograph services is calculated using a rate different from the one
set at the company`s annual general meeting;
• There is a risk that revenue received from international clients might not
be properly converted into Rands in the financial statements. There is a
risk of converting the foreign revenue at the wrong exchange rate;
• At year end, there is a risk that deposit fees received are recognised as
revenue before the related performance obligation has been fulfilled by
the entity;
• There is a risk that revenue might be recorded at the gross amount
before deducting 10% trade discount for balances paid seven days or
more prior to the wedding date;
• There is a risk that finance income relating to 10% interest chargeable
from the first day after the wedding date on outstanding balances might
be wrongly allocated to revenue;
• There is a risk that revenue relating to products might be recognised
before the transfer of control to the clients;
• There is a risk that the total fee might be calculated without including all
of wedding rate, travel fee and product fee;
• There is a risk that the kilometres travelled between the wedding venue
and MRU offices might not be accurately determined when determining
the travel fee to be included in revenue;
• There is a risk that the number of photographers used in the calculation
of revenue might not be recorded accurately resulting in misstatement
of revenue; and
• There is a risk that settlement discount of 5% might not be deducted
from revenue for balances settled seven days or less prior to wedding
date
b) Automated controls that MRU should have in place to ensure that
information captured on the Memoir software is valid, accurate and complete
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