MAA303 代写 XYZ Chartered Accountants MCC Ltd

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Introduction
In September 2014, Michelle Jackson, an audit partner at XYZ Chartered Accountants (XYZ)— a second-tier auditing firm based in Melbourne—evaluatedand recommended accepting a new audit client, MCC Ltd (MCC). MCC is a medium sized unlisted retail trading company operating in several parts of Victoria. Michelleevaluated the client and assessed XYZ’s independence as well as competence to properly complete the audit. XYZ issued an engagement letter and started the audit MCC’s audit for the year 2014. Alex Jones was assigned as an audit manager in charge of planning and supervising the conduct of the MCC audit.
MCC’s background
MCC is a retailer of skincare products. It operates with seven warehouses all over Victoria. The company was established as a small family business in 1989 and has since grown in size.MCC has a large amount of long-term loan from SouthEastBank. The loan agreement puts certain restrictions on further borrowing possibilities of MCC. It also requires MCC to submit its audited financial statements to SouthEast Bank by January 31 of every year until the loan is fully paid.
MCC has a board of directors comprising five members. Two of the members of the board of directors were newly assigned to replace two former directors who resigned during the current financial year. The company does not have an audit committee. MCC’s internal audit director reports to the board of directors. MCC has a clear and detailed organizational structure for its size and all major transaction classes, i.e., sales, purchases, payroll, etc. are supported by of-the-shelf software packages that have been sufficiently tested in the market. MCC employees receive necessary training on the computer systems before being assigned to duty.
MCC markets its products by emphasizing that it is a socially responsible organisationand highlighting its moral commitment to sell only products not tested on animals. This policy was introduced largely because a major shareholder with a controlling vote has advocated for it. This shareholder also contributes major input on all policy decisions of MCC.
MCC has two major product lines: (a) makeup, which includes a range of cosmetics and (b) gifts, including handmade soaps, shampoos and a range of other handmade products produced in developing countries from recycled materials. MCC sells its products through mail-order catalogue, retail stores, personal selling and online via its website. In recent years,MCC experienced a trend of decreasing sales through mail-order and personal selling whereas online sales has been on the rise.
MCC pays higher prices for some of its products for which alternative products with better value-for-money could be found in the market. MCC pursues this strategy in order to maintain its commitment with its suppliers who also depend on MCC. With this spirit, the company also pays to its suppliers in advance of placing purchase orders. This business practice has resulted in a large amount of advance payments to increasing number of suppliers worldwide.
 
Financials
Alex and his team of three staff auditors formulated the audit plan during the first half of November 2014. This task involved conducting risk assessment, determination of the overall audit strategy, setting a materiality threshold and identification of key areas of audit attention. The audit team updated the audit plan as additional information was obtained during the audit. Exhibits 1 and 2 below present information extracted from the working paper for MCC audit.
 
 
 
 
 
 
 
 
 
 
Exhibit 1. Comparative financial statement information

MCC Ltd
Statement of financial position
At 31 December 2014
			2014 $'000	2013 $'000	2012 $'000
Current Assets
Cash			1600	1240	1546
Inventory			14912	11230	8230
Prepayments			2857	1983	1568
Trade Receivables			3170	2352	1420
Total current assets			22539	16805	12764
Non-current assets
Property, plant and equipment			14506	4120	3470
Long-term receivable			3420	4569	5450
Total non-current assets			17926	8689	8920
Total assets			40465	25494	21684
Current Liabilities
Trade Payables			6555	5465	4554
Provisions			7521.2	6269.3	4500
Total current liabilities			14076	11734	9054
Non-current liabilities
Long-term loan payable			15689	5085	4084
Total liabilities			29765	16819	13138
Net assets			10700	8675	8546
Shareholder's equity
Share capital			2500	2500	2500
Retained earnings			8200	6175	6046
Total Shareholders' equity			10700	8675	8546

 

MCC Ltd Income Statement For the Year ended 31 December 2014
Income Statement			2014 $'000	2013 $'000	2012 $'000
Net sales			29,366	25,605	20,073
Cost of sales			23,321	21,919	15,930
Gross profit			6,045	3,686	4,143
Depreciation			2,422	1,521	1,209
Inventory obsolescence			484	531	166
Marketing expense			25	80	35
Administrative expense			1,434	1,136	1,334
Interest expense			565	220	150
Total expense			4,930	3,488	2,894
Profit before tax			1,115	198	1,249
Tax expense			390	69	437
Profit after tax			725	129	812
Exhibit 2:  Key ratios identified by the audit team   MCC's Key financial ratios*   Industry Averages   2014 2013 2012 2014 2013 2012 Current ratio (Note 1)       2.01 2.03 2.11 Quick ratio (Note 2)       1.15 1.01 1.1 Debt-to-equity ratio (Note 3)       0.65 0.52 0.49 Times interest earned (Note 4)       4.00 5.00 6 Ave. Coll. period (days) (Note 5)       32.00 31.00 30 Ave. pay. period (days) (Note 6)       30.00 22.00 22 Days to sell inventory (Note 7)       50.00 48.00 46 Gross profit Margin (Note 8)       24.00 25.00 30 Net profit Margin (Note 9)       6 7.5 9.2                 * MCC’s ratios are intentionally omitted. You are expected to calculate and interpret them as necessary.   Notes:
1. Current ratio = (Total current assets/Total current liabilities )
2. Quick ratio = (Cash + trade receivable)/(total current liabilities)
3. Debt to equity ratio = (Total liabilities)/total shareholders' equity
4. Times interest earned = (profit before interest and tax)/ interest expense
5. Ave. Collection period (days) = 365/[(Net sales)/(Trade receivables balance)]
6. Ave. payment period (days) = 365/[(Cost of Goods sold)/(Trade payables balance)]
7. Days to sell inventory = 365/[(Cost of Goods sold)/(inventory balance)]
8. Gross profit Margin = (Gross profit)/Net Sales
9. Net profit Margin = (profit after tax)/Net sales

Required:Assuming that you were in the position of Alex Jones, prepare an audit planning memo addressed to Michelle Jackson. Your memo should include:

1. A discussion of risk factors present in this audit engagement;

(If sufficient information is notprovided in the case study, indicate possible sources of information you would use.)

2. Your overall assessment of the RMM (risk of material misstatement), i.e., combined assessment of inherent risk and control risk, according to the relevant auditing standard;
3. Identification of key areas that merit special audit attention;
4. Your recommended overall audit strategy appropriate for this engagement (with justification); and
5. Your preliminary quantitative materiality threshold(at the financial statement level), and explanation of how your calculated materiality level informs your audit planning.

 
 
Part B - Evidencing Critical Thinking and Problem Solving (10%)
 

Objective

 
The objective of Part B of this assessment is to consider, justify and then evidence your development of Critical Thinking and Problem Solving Skills in relation to Auditing, based on what you have done to address complete Part A of the assessment task.
 

Task

 
Youarerequiredtoconsider and provide evidence of how the work you completed through the case study analysis in Part A demonstrates your Critical Thinking and Problem Solving skills.Complete this task as a narrative.
 
Consider you are applying for a Graduate Auditor position and you would like to demonstrate your Critical Thinking and Problem Solving skills by citing as evidence what you have done in completing Part A of this assessment.
 
Critical Thinking:is defined in the Oxford Dictionary as an objective analysis and evaluation of an issue in order to form a judgment.  This involves distinguishing between fact and opinion and evaluating the validity of information, theory and sources of information.
 
Within the Accounting Profession, Critical Thinking is defined as exercising judgment to solve problems using social, ethical, economic, regulatory and global perspectives (altc, 2010).
Resources - https://www.youtube.com/watch?v=6OLPL5p0fMg#t=139
 
Problem Solving:is defined in the Oxford Dictionary as the process of finding solutions to difficult or complex issues.  It is the process of working through the details of a problem, in order to reach a solution, in a systematic way.  To read more, access http://www.businessdictionary.com/definition/problem-solving.html#ixzz3CsrSNims
 
Identify parts of your case study responses that provide evidence you have developed skills in Critical Thinking and Problem Solving.
 
Provide a brief background to the excerpt selected so your audience understands the situation.
Justify why you have selected these examples as evidence of your Critical Thinking and Problem Solving learning.  How do you think that these excerpts showcase your Critical Thinking and Problem Solving skills?
 
Oftenstudents can findreflectivewriting challenging and areunsure of how todothis andwhy it is important. Beforeattempting this sectionit is recommended that youreview theresource available at:
http://www.powtoon.com/show/dN8w6Vy9RAS/critical-thinkng/#/
 

Submissionrequirements

 
Eachstudentwill needtosubmitboth Part A and Part B in one document, via thesubmissiondropboxby the duedate(Monday 12January 2015, 11.59pm). This will beavailableintheAssessmentareaofCloudDeakin
 
Reference
 
Hancock, P, Freeman, M and Associates 2010, Learning and Teaching Academic Standards Project Business, Management and Economics. Learning and Teaching Academic Standards Statement for ACCOUNTING, Australian Learning and Teaching Council, Australia, <http://www.olt.gov.au/resource-accounting-ltas-statement-altc-2010>.
 
Marking Criteria and Rubric
 
The following will be used in making this assessment:

Criterion*	Weight (%)
Evaluation of information (Part A)	30
Use of Existing Knowledge (Part A)	30
Analysis (Part A)	30
Reflection (Part B)	10
Overall	100
* Also refer to the detailed marking rubric below.