2020年ACCA考试会计师与企业财经词汇汇编(6)

(b) You are the audit manager of Petrie Co, a private company, that retails kitchen utensils. The draft financial

statements for the year ended 31 March 2007 show revenue $42·2 million (2006 – $41·8 million), profit before

taxation of $1·8 million (2006 – $2·2 million) and total assets of $30·7 million (2006 – $23·4 million).

You are currently reviewing two matters that have been left for your attention on Petrie’s audit working paper file

for the year ended 31 March 2007:

(i) Petrie’s management board decided to revalue properties for the year ended 31 March 2007 that had

previously all been measured at depreciated cost. At the balance sheet date three properties had been

revalued by a total of $1·7 million. Another nine properties have since been revalued by $5·4 million. The

remaining three properties are expected to be revalued later in 2007. (5 marks)

Required:

Identify and comment on the implications of these two matters for your auditor’s report on the financial

statements of Petrie Co for the year ended 31 March 2007.

NOTE: The mark allocation is shown against each of the matters above.

3 Susan Paullaos was recently appointed as a non-executive member of the internal audit committee of Gluck and

Goodman, a public listed company producing complex engineering products. Barney Chester, the executive finance

director who chairs the committee, has always viewed the purpose of internal audit as primarily financial in nature

and as long as financial controls are seen to be fully in place, he is less concerned with other aspects of internal

control. When Susan asked about operational controls in the production facility Barney said that these were not the

concern of the internal audit committee. This, he said, was because as long as the accounting systems and financial

controls were fully functional, all other systems may be assumed to be working correctly.

Susan, however, was concerned with the operational and quality controls in the production facility. She spoke to

production director Aaron Hardanger, and asked if he would be prepared to produce regular reports for the internal

audit committee on levels of specification compliance and other control issues. Mr Hardanger said that the internal

audit committee had always trusted him because his reputation as a manager was very good. He said that he had

never been asked to provide compliance evidence to the internal audit committee and saw no reason as to why he

should start doing so now.

At board level, the non-executive chairman, George Allejandra, said that he only instituted the internal audit committee

in the first place in order to be seen to be in compliance with the stock market’s requirement that Gluck and Goodman

should have one. He believed that internal audit committees didn’t add materially to the company. They were, he

believed, one of those ‘outrageous demands’ that regulatory authorities made without considering the consequences

in smaller companies nor the individual needs of different companies. He also complained about the need to have an

internal auditor. He said that Gluck and Goodman used to have a full time internal auditor but when he left a year

ago, he wasn’t replaced. The audit committee didn’t feel it needed an internal auditor because Barney Chester believed

that only financial control information was important and he could get that information from his management

accountant.

Susan asked Mr Allejandra if he recognised that the company was exposing itself to increased market risks by failing

to have an effective audit committee. Mr Allejandra said he didn’t know what a market risk was.

Required:

(a) Internal control and audit are considered to be important parts of sound corporate governance.

(i) Describe FIVE general objectives of internal control. (5 marks)

(b) Briefly explain the two types of informal communication known as the grapevine and rumour. (6 marks)

(b) Explain the meaning of the term ‘Efficient Market Hypothesis’ and discuss the implications for a company if

the stock market on which it is listed has been found to be semi-strong form. efficient. (9 marks)