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Required: Question 1: As part of your planning process, you are considering whether you will need to use the services of an expert in the audit of Double Ink Printers Ltd (DIPL). Required: Based on...

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Required:

Question 1:

As part of your planning process, you are considering whether you will need to use the services of an expert in the audit of Double Ink Printers Ltd (DIPL). Required: Based on the background information contained in the case, explain whether it will be necessary to use the work of an expert in the audit of DIPL. (5 marks).

Question 2:

You are at the planning stage of the audit of Double Ink Printers Ltd (DIPL) for the year ended 30 June 2017 and have been asked by the audit manager to assists determine the materiality levels.

Required: (a) Referring to the background information contained in the case, identify five factors that would influence your determination of the preliminary figure for overall materiality for the 2017 audit of DIPL. (5 marks). (

b) Explain why the factors identified in (a) above are relevant to your calculation of the preliminary figure for overall materiality. (5 marks).

(c) Describe how the factors identified in (a) above will influence your preliminary figure for overall materiality in the audit planning process. (5 marks)

Answered Same DayDec 17, 2019HI6026

Solution

David answered on Dec 24 2019
87 Votes
Answer 1.
Internal audit for the DIPL is so much important, it should be in the system for the following reasons:
Gives the Aims insight:
It is not possible for you audit your own completed task without the specific conflict of interest, so internal auditors do not have any kind of benefits greed regarding to the manipulation of financial data of the company and make them operational effectiveness. In the view point of the expert auditor biasness events chances are very less or they do not any kind of biasness towards the operations and aims of the corporation. Such as, which kind of the inventory cycle uses in the DIPL, what are cost methods used in the DIPL, is it LIFO or FIFO, DIPL’s average printing cycle is similar to the standard’s define, etc.
Operations efficiency improvement of the company:
Most of the company’s employee work against the define standards of the company due to their own benefits, for example they show less amount of money as cost of goods and maintain in the other head, so that from these activities they get bonuses and other incentives, this is also true that worker could not has anxiety that their unlawful work may be inspect under reviewing and because of these functioning expenditures of the corporation might be advanced as usual. To confrontation this matter DIPL would essential to have skilled auditor group for reviewing their operational task. You will be similarly made sure that your task is implementation as per the rules and technique definite; these procedures are satisfactory in justifying the exclusive risk of the worker. Through constantly assessment of the task in the company will make well-organized the procedures of the corporation. For example: DIPL has operating expenses are amplified as per the process’s income, it is seeming that corporation is undertaking properly in terms of the core processes and also this is on for the reason that they are spending their cash on the Audit fees.
Their income, working expenses and auditing fees from external auditor as follows:
    
    2015
    2016
    1017
    Income
    34212000
    37699500
    43459500
    All Operating and Cost of Goods Sold
    27432000    
    30469500
    35151412
    % of operating expenses in terms of sales
    80.2%
    80.8%
    80.9%
    Auditing Fees
    112500
    127500
    135000
This is simply showing that DIPL’s operating expenses of income is increasing with the small difference, but these expenses should not be in the increasing trend, for the reason that DIPL required Internal Auditor.
Assessing the risk of the operations and company protect the assets of the company:
A peril valuation might benefit to identify any changes in the atmosphere and certificate for a remediation strategy to take habitation. Expert Internal Auditors will help you to method and document for some variations that have been completed to your environments and make definite the development for the any kind of defined risks.
Control evaluations:
Control evaluations would be beneficial for the DIPL, because this will boost the control environment of the company and internal auditor will evaluate the efficient operational effectiveness.
Make sure the all of the compliance are implemented effectively in as organization:
Internal Auditor will take care of the DIPL’s working environment, all working in the DIPL under the Compliance or not or employees are able to meet their compliance requirement or not. This will benefit DIPL to effort in the license of the rule and guideline of the business. There is also the external audit fees are in growing tendency each year. Hence that it will assistance in DIPL by regularly accomplishment in an inside audit, you can ensure adherence with...
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