Subject name Auditing MA611 exam is on 19 june. Question will release at 2:15 pm need solution by3:30 pm there will be three case studies . All the study materials is available in my moodle i already...

Case study
Question 1
(a) As a prospective client for the audit of the financial statement of a company in this case the company being GT Ltd, I as an auditor will confirm the matter with the previous auditor as to what was the actual reason for his removal and as the future auditor of the company, it is my responsibility to discuss with the previous auditor whether there are any reasons due to which I should not be taking up the audit of this company. From the above case it seems that Mr. Shiftey is hiding sometime.
(b) There is no legal issue in accepting the audit for the company GT limited. The auditor being Alpha Partners, should also check whether there is any threat to the independence as an auditor in context to Self review threat, or Advocacy threat, intimidation threat or self interest threat. As none of the threats are present and no legal limitations are there, hence Alpha Partners can take up the audit of GT Limited.
Question 2
After the proper assessment of the threat to the independence, the auditor, Alpha Partners after accepting the order must prepare a letter of engagement or the appointment letter from the company GT Limited and also revert with a consent letter of acceptance of the audit. The letter should provide with the scope of work and the remuneration of the work. This is important as the engagement letter will make the appointment bound by law and legal to the court.
This also includes preparation of an audit plan so that the assertions of the management can be proved and those assertions can be clearly identified before the process of audit.
Question 3
In the audit risk model, the auditor determines the total risk related to the audit and how to manage that risk. The formula for calculation of audit risk is:
Audit risk = Control risk x Detection risk x Inherent risk
Where,
Control Risk: This is the risk do to presence or lack of controls, which causes incorrect financial statements.
Detection Risk: The risk of failure by the auditor to find out a material misstatement
Inherent Risk: The risk due to error or omission.
Question 4
The controls of the company seemed strong but on the discussion with the employees of the company GT Limited, it was found that the controls systems in the company were very weak and poor nit only at the level of the employees but at the senior level of management. This will significantly increase the overall risk as calculated and the auditor will have to reassess the methods of mitigating such risk along with...