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COSO framework, Audit risk model, Audit assertion, Audit experience needed

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Answer the following 4 questions, each questions should have about 300-400 words. No citation needed, no reference page needed.

Sales and Receivables Process

Your audit client manufactures and sells equipment. One of their primary products is a set of equipment for a complete manufacturing process, which consists of Equipment A, B, and C. Your client does not sell Equipment A, B, or C separately; however, their competitors do sell the same equipment separately and there is a market for used equipment.

Your client sold two complete manufacturing processes (Equipment A, B, and C) in December. They delivered Equipment A and C on December 20, but did not deliver Equipment B until January 6. Without Equipment B, the customer does not have use of Equipment A and C. However, there is an active market for new Equipment A, B, and C on a separate basis, as the equipment is often bought separately from other vendors as replacements become necessary. The contract provides that if all pieces of equipment are not delivered, the customer may return Equipment A and C and have no liability to your client. The contract requires delivery of all equipment prior to February 1, and your client has sufficient production capacity and inventory to deliver the equipment prior to that contractual deadline.

Required:

  1. What are the general ledger accounts, the most relevant assertions, and an audit risk model for these transactions, and why?
  2. What is the Accounting Codification Section related to these transactions?
  3. What procedure(s) would you perform to test these assertions? Include how you would select transactions.

Purchases and Inventory Process

Your audit client manufactures and sells equipment. They use job order costing and standard costs for the accumulation of inventory costs. They calculate material, labor and overhead variances at the end of each quarter. All overhead variances are booked to Cost of Goods Sold.

Required:

  1. What are the general ledger accounts, the most relevant assertions, and an audit risk model for these variance transactions, and why?
  2. What is the Accounting Codification Section related to these transactions?
  3. What procedure(s) would you perform to test these assertions? Include how you would select transactions.


Investment Securities

Your audit client manufactures and sells equipment. Monthly, they sweep their cash account into their brokerage account. The brokerage account is managed by an outside investment advisor, meaning that your client does not select the types of investments purchased. The broker sends the client their brokerage statement each month with the activity and the market value of each investment held. The client uses the brokerage statement to book any realized and unrealized gains or losses. Unrealized gains are in OCI.

Required:

  1. What are the general ledger accounts, the most relevant assertions, and an audit risk model for these transactions, and why?
  2. What is the Accounting Codification Section related to these transactions?
  3. What procedure(s) would you perform to test these assertions? Include how you would select transactions.

PPE and Intangible Assets

Your audit client manufactures and sells equipment. The client purchased a company during 2018. The purchase price was in excess of the identifiable fixed assets and identifiable intangible assets. The purchased company is struggling to make profits since their acquisition.

Required:

  1. What are the general ledger accounts, the most relevant assertions, and an audit risk model for these transactions, and why?
  2. What is the Accounting Codification Section related to these transactions?
  3. What procedure(s) would you perform to test these assertions? Include how you would select transactions.

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