GROUP ASSIGNMENT
1. To an external observer, financial audits and forensic audits may look similar. Both
types of audit closely examine and confirm accounting records, using fairly similar
methods. However, this could be as far as the similarities go”.
The above statement was extracted from a presentation made during one of the
conferences held by the Institute of Chartered Accountants, Ghana.
Required:
Evaluate three key differences between “financial audits” and “forensic audits”.
2. As the engagement partner, you have reviewed the audit working papers of Apricot
Engineering Limited (AEL). The audit team has highlighted the following matters in
the working papers.
a. The company has issued a bank guarantee to one of its related parties after the balance
sheet date. No disclosure in this regard has been made in the draft financial statements.
b. Subsequent to the year end, a major debtor has declared bankruptcy. The company
expects to recover only 20% of the outstanding amount. The management has refused
to make a provision but is ready to disclose the fact by way of a note.
c. With effect from January 1, 2015, AEL has changed the method of charging
depreciation on its fixed assets from the ‘straight line’ to the ‘diminishing balance’; and
revised its estimate of useful lives of vehicles from 6 years to 4 years.
Required:
Discuss the impact of each of the above matters on your audit report.