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Auditing? Assignment #2 Requirements: Auditing Problem/Answer Creation Requirements: The purpose of this assignment is to enhance your familiarity with substantive audit procedures and audit programs

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Auditing? Assignment #2 Requirements: Auditing Problem/Answer Creation

Requirements: The purpose of this assignment is to enhance your familiarity with substantive audit procedures and audit programs. You are to create a single auditing problem and solution based on the specific auditing procedures in the CPA Canada Professional Engagement Guide on Knotia (or comparable substantive testing audit program in the textbook or PPT slides). Other than the audit procedure(s) which you adapt from the audit program, this problem and solution must be your own individual, original work. To direct you to the audit programs in Knotia, select “Professional Engagement Guide https://eduknotia?ca.cyber.usask.ca/Knowledge/Home.aspx?productID=920” rather than the CPA Canada Standards and Guidance Collectio n which you normally do to access the assurance standards. This guide(volume 1, 2, etc.) is like a textbook for advanced auditing students and auditing practitioners. Now that you are approaching the end of your auditing course, you should be able to read the guide and understand its contents within your knowledge of assu rance. On the left-hand side of the screen, select: “Practice Aids” > “Audit Engagements” > “Forms”. You may create your question and solution based on any of the “Part 3 - AUDIT  PROCEDURES”  (i.e.,  substantive procedures) section of any of the documents contained in: (a) A-Z Assets, (b) AA-ZZ  Liabilities and Equity, or (c) 700-799 Income Statement  EXCEPT CASH!

Whereas your prior assignment #1 focused on the theory within the CASs, this assignment (assignment #2) focuses on the practicalities of applying substantive audit procedures. This assignment requires you to create a short audit scenario mini- case (1-page single spaced word document maximum). This mini-case scenario should introduce the reader to a hypothetical auditee and illustrate to the reader a potential problem within the company or industry that could lead to a misstatement in a specific account of the financial statements (whatever balance sheet or income statement account you like from the variety of audit programs listed in the Canada Professional Engagement Guide with the exception of cash). Although not explicitly specified in the scenario, the reader should be able to identify the specific account and managerial assertion which has elevated risk of material misstatement (hint to consider: what is the expected directionality of misstatement). In addition to the mini-case scenario, if you choose, you may also include up to two (2) excel worksheets in a single excel document that contains data relevant to the scenario (e.g.,  hypothetical transactions and/or records of the company). Please do not go overboard on the number of columns/rows included in the spreadsheet worksheets – sufficient to illustrate and infuse a degree of realism but not exhaustive (I suggest less than 50 rows and 10 columns per worksheet!). Finally, a second page of the word document (1-page single spaced word document maximum) should contain a solution to the audit problem. The solution must: (a) identify the account and managerial assertion of elevated risk of material misstatement flowing naturally from the mini-case scenario, (b) explain the reasoning of your identified account and assertion, (c) identify the exact audit procedure (or procedures) necessary to test the account/assertion, (d) where you located this procedure (which should be from the audit programs discussed above), and (e) explain the specific results of the procedure if you chose to include hypothetical data in the excel document file (e.g., which items are misstated, how did you arrive at that conclusion etc.). 

Submission: One word document (maximum 2 pages with one page being the mini-case scenario and the second page being the solution) as well as one (optional) excel file (maximum 2 worksheets with both worksheet having less than 50 rows and 10 columns) is to be submitted for assignment #2.

Assessment: Your assignment will be marked along multiple dimensions including technical correctness, evidence of your discovery of pertinent/unique/nuanced information in the standards, and clarity of written communication. Clearly, there will be a degree of subjectivity and professional judgment when assessing your assignment.