REQUIRED: 1. Identify what you consider to be the ‘key’ inherent risk factors that could have an impact on the audit of Coca Cola Amatil for the year ended 30th September 2017 and/or future audits. (Again, remember, for the purposes of this exercise we are assuming the reporting date is the 30th of September, not the 30th of June). For each of the inherent risk factors identified above, describe the risk clearly and state how and why you consider the issue may create the risk of potential material misstatement in the financial statements of Coca Cola for the year ended 30th September 2017. You are expected to identify four (4) critical inherent risks. It is expected that you will identify an appropriate Accounting Standard or mandatory disclosure requirement as part of your discussion of the potential misstatement. You must also identify an appropriate audit objective which you think is relevant to each of the risks you have identified and explain how you arrived at the identification of the audit objective (ie you must justify the identification of the audit objective).
(4 x15 = 60 Marks)
2. Using your understanding of the audit evidence mix, discuss briefly how each of the risks you identified will impact on the evidence mix for the planning of the audit of Coca Cola. When referring to the evidence mix to use, reference should be made to the tests of balances, transactions and analytical procedures and the like (refer to the lectures for a complete list of types of evidence used by the auditor), indicate which specific areas in the accounting system would be critical and comment on the nature and extent of the testing required (see guidance notes in appendix). HINT: You are only required to assess the impact of the individual risk on the nature of the evidence mix. You are not required to identify an overall inherent risk and audit risk assessment for the entity. You are not required to determine an overall evidence mix for the entity. Focus only on the impact of each individual risk on the evidence mix required to assess the impact on each risk you have identified.