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A lot of investors have been reading about something called the “new-fund effect”. That is the tendency of new funds to outperform their older peers because of any one of a number of
factors: better access to initial public offerings, more motivated managers, or better spreads on
trades. However, despite the potential growth benefits of new funds , their volatility makes many
investors uncomfortable. Consider a sample of 10 newly M- mutual funds and a sample of 10 newly
Q-mutual funds randomly selected from all mutuals funds in Ghana that are less than 18 months
old as follows:
| Annualized Performance of Newly M- Mutual Funds | Annualized Performance of Newly Q-Mutual Funds |
|---|---|
| 13.7 | 9.5 |
| 15.3 | 14.9 |
| 7.9 | 10.8 |
| 9.8 | 11.5 |
| 13.6 | 11.3 |
| 13.6 | 25.2 |
| 11.4 | 12.0 |
| 8.6 | 6.3 |
| 14.6 | 12.7 |
| 15.2 | 12.4 |
Using a hypothesis testing procedure, investigate whether there is sufficient evidence to conclude
that there is a significant difference in variance of newly created M and Q mutual funds.
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Bolombo Property Investors Ltd. is a property investment company that is involved in the renting of commercial property to various commercial interests throughout the country. Their modus operandi is to purchase existing property, renovate them and rent them out, or to develop property from the scratch and rent them out. Occasionally they sell out property to improve their cash flows. Bolombo Property Investors Ltd. is a company owned by Mr. Joshua Broson, aged 62 and his wife Mabel, aged, 52 holding 60 % and 40 % shares respectively. The couple have been wedded for the past five years and have three children of school going age. Management roles in the company are shared between the couple who are both qualified Civil Engineers by profession. Joshua serves as the CEO whilst his wife serves as General Manager and Accountant. To support them they have employed an accounts clerk Kwesi Mendson, aged 35 who has a diploma in accounting from the University of Ghana, Legion. Bolombo Property Investors has five properties in Accora, one in Takoradi and three in Kumasi. The company has identified a ten-storey property in Takoradi that has been put on sale by an expatriate Property Developer who is leaving the country. The price on offer is GHC 5.000.000.00. They think they can quickly renovate the property andThe unit is in a poor state of repair but Bolomb is believes it could fetch a good price if properly renovated. The building is located in the heart of the city and along the main high street of the city.
Bolombb’s plan is to rent the ground floor to a bank or savings and loans company, and the units in in the upper floor to various types of businesses including supermarkets, restaurants and business oon. His estimates for the renovation are as follows:
| Item | Cost (GHC) |
|---|---|
| Rewiring and | 750,400,000.00 |
| Plumbing | 850,000.00 |
| Internal fittings | 500,000.00 |
| Alocobond panelling | 500,000.00 |
| Painting | 200,000.00 |
| Parking lot | 100,000.00 |
| Total | 2,000,400,000.00 |
Estimated Rental for the property is as follows: | as follows| as follows| as follows| as follows|| as follows| as follows| as follows| as follows| as follows| as follows| as follows| as follows| as follows| as follows| as follows| as follows| as follows| as follows| as follows| as follows|5,000.00.00| as follows| as follows|CIB GH 10-22
He brings the proposal to you for consideration. He proposes that the building would serve as security. In addition a joint and several guarantee would be provided by the directors of the company. He is therefore requesting for a five year loan facility of GHC 7,300,000,00 to finance the purchase and renovation of the project. He is expecting a rate of return of 25%
Critically examine his proposition.
[30 Marks]
Note on Table Correction: The table in the attachment contains errors (e.g., “Rewingring and” likely means “Rewiring and Electrical,” and “750 40 00000” is ambiguous). I assume “750 40 00000” is a typo for GHC 750,000.00, as the total renovation cost (GHC 2,000,400,000.00) seems inflated for a single property. A realistic total of GHC 2,300,000.00 is assumed (summing corrected figures: 750,000 + 850,000 + 500,000 + 500,000 + 200,000 + 100,000). The “Estimated Rental” section is incomplete; I assume rental projections support the 25% return claim, to be verified.
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Mr. Bampoh Humphrey is the Board Chairman and CEO of Gold Coast Shipping Company Ltd. He owns 80 percent of the shares of the company with his foreign Partner Jones Smith, a retired Chairman of Elder Dempster Shipping Company owning the remaining 20%.
The two shareholders acquired the company from the Divestiture Implementation Committee in 1995 when the government divested its shareholding in the national shipping line the Black Star Line. Mr. Bampoh is known to be highly connected with the government in power at the time of AFC.
The company is engaged in transportation of primary products such as bauxite, gold and manganese ore from the country abroad and the transportation of consumer goods in container ships throughout the world.
The company has a fleet of ten cargo ships and ten container ships. It has three main offices located in Tema, Takoradi and London in the UK.
The company has operated an impressive account with you since the acquisition of the national shipping line, until in recent times when you noticed a sharp deterioration in its account operations. Following your painstaking investigation you established that the company incurred a huge loss when a cargo of bauxite was diverted on the high seas and the goods stolen. The ship was later discovered to have been sunken in the high seas to hide the evidence. Another problem you observed was that their fleet was becoming aged and one of them needs immediate replacement.
Each office of the company has an Office Manager all of whom are experienced expatriate shipping managers poached from international shipping companies.
The cost of purchase and delivery of one ship is estimated at USD 5.0 million, and the company is requesting for financial support from the bank to make a down payment of USD 2.0 million for the ship. The company proposes to pay the bank over a period of five years whilst the remainder of the cost of the ship is to be paid over the next period of ten years.
Critically examine this proposition using the information above and the related financial statements provided below.
Gold Star Shipping Ltd Statement of Comprehensive Income as at 31 Dec 2020 GHC
Total Revenue Cost of Revenue Gross Profit Overheads Depreciation Operating Profit Interest Paid Profit Before Tax Tax Profit After Tax 2021 GHC 13,700,000 6,165,000 7,535,000 1,575,500 1,337,000 4,622,500 480,000 4,142,500 1,035,625 3,106,875 2021 GHC 14,400,000 6,912,000 7,488,000 1,843,200 1,514,000 4,130,800 352,000 3,778,800 944,700 2,834,100 2022 GHC 14,920,000 7,758,400 7,161,600 2,333,488 1,564,000 3,264,112 312,500 2,951,612 737,903 2,213,709
Gold Star Shipping Ltd Balance Sheet as at 31st Dec
| Noncurrent Assets | 2020 | 2021 | 2022 |
|---|---|---|---|
| Building | 147,000 | 238,000 | 327,000 |
| Equipment | 9,000,000 | 11,325,000 | 10,150,000 |
| Motor Vehicles | 720,000 | 480,000 | 432,000 |
| Furniture and Fixtures | 350,000 | 260,000 | 170,000 |
| Total | 10,217,000 | 12,303,000 | 11,079,000 |
| Current Assets | |||
| Inventory | 135,000 | 185,000 | 197,000 |
| Receivables | 245,000 | 254,000 | 1,998,000 |
| Prepayments | 146,200 | 158,400 | 268,700 |
| Bank | 950,800 | 241,250 | 746,805 |
| 1,477,000 | 838,650 | 3,210,505 | |
| Current Liabilities | |||
| Trade Payables | 125,000 | 135,600 | 156,400 |
| Overdraft | 45,000 | 65,000 | 85,200 |
| Total Current | 170,000 | 200,600 | 241,600 |
| Liabilities | |||
| Net Current Assets | 1,307,000 | 638,050 | 2,968,905 |
| Net Assets | 11,524,000 | 12,941,050 | 14,047,905 |
| Capital | |||
| Share Capital | 10,000,000 | 10,000,000 | 10,000,000 |
| Income Surplus | 1,524,000 | 2,941,050 | 4,047,905 |
| 11,524,000 | 12,941,050 | 14,047,905 |
RATIOS 2020 2021 2022
Sales Growth 5.11% 3.61%
Receivable Days 7 6 49
Payable Days 7 7 7
Inventory Turnover Days 8 10 9
Gross Margin 55% 52% 48%
Overhead % 12% 13% 16%
Net Margin 30.24% 26.24% 19.78%
Interest Cover 9.63 11.74 10.45
Current Ratio 8.69 4.18 13.29
Quick Ratio 7.89 3.26 12.47
Tax Rate 25% 25% 25%
Dividend Payout RATIO 50% 50% 50%
Inventory to Sales 0.01 0.01 0.01
Receivables to Sales 0.01 0.01 0.13
Payables to Sales 0.01 0.01 0.01
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(a) Explain the concept of Risk and Control Self-Assessment (RCSA) and the steps involved in crafting this essential Risk Management tool. (10 marks)
(b) Mention and explain the significance of recording historical or past events in the Operational Risk Management Space in each business unit. (5 marks)
(c) How does the RCSA differ from an Incident Management System? (5 marks)
[Total: 20 marks]
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Your valued customers of twenty years, BA Brazil Nuts Ltd was established twenty-six years ago by Herbert Obeng, aged 62 and his wife Martha Obeng, aged 58, both graduates in Agricultural Engineering from the University of Science, Industry and Technology. They also have MBA certificates in Marketing. Prior to this, they both worked with the Gold Coast Food Production and Distribution Service, a State Corporation engaged in the cultivation, purchase and distribution of food supplies. Herbert serves as both Board Chairman and CEO of the company. He is also in charge of Farming Operations. The Farm Managers at the company’s farms report directly to Herbert. Martha serves as the CFO and Executive in charge of Marketing. She is supported by an Accounts Clerk, Jones Pino, aged 25 who has just completed his professional examination in Accounting. ICA (Ghana). The company also has a pool of skilled workers poached from other reputable industrial establishments.
The company is located at Ekumfi Swedru in the Central Region of the country and boasts of a state of the art Brazil nut production plant and a five storey office building. The company has two articulator trucks which are used in the carting of the Brazil nuts to the ports for export. The company is engaged in the production, roasting, packing and export of processed Brazil nuts primarily to the EU and Great Britain which take 60% of its products. The rest is sold locally (20%) and to other parts of the world (20%) including Australia and the US.
The company has operated an impressive account over the years until a year ago when you saw a sharp dip in the company’s turnover. In your interaction with Herbert, you learnt that there had been a fire outbreak which affected a significant part of the company’s farm holdings in the Bono Region of the country. He had to replenish his stock of Brazil nuts at a higher cost from his colleagues who also have farms in this part of the country. Your latest investigations show that the company has replanted the burnt area with Brazil nut seedlings.
In one of your visits, it came to your attention that Herbert was building a new factory at Winneba about eighty (80) kilometers away. When you queried him, he told you he was anticipating expanding his market in US and Australia.
The company’s Overdraft Facility of GHC 5,000,000.00 is showing a hard core at around GHC 3,000,000.00. The company is requesting for:
Critically examine this proposition. [30 MARKS] BA Brazil Nuts Ltd. Profit and Loss Extracts for the year ending 31 Dec
| 2021 | 2022 | 2023 |
|---|---|---|
| GHC | GHC | GHC |
| 5,750,000 | 6,900,000 | 7,690,000 |
| 472,610 | 534,100 | 758,420 |
| 3,150,000 | 4,142,000 | 4,605,800 |
| 3,622,610 | 4,676,100 | 5,364,220 |
| 534,100 | 758,420 | 985,400 |
| 3,088,510 | 3,917,680 | 4,378,820 |
| 2,661,490 | 2,982,320 | 3,311,180 |
| 690,000 | 779,700 | 991,580 |
| 405,000 | 417,400 | 777,400 |
| 1,566,490 | 1,785,220 | 1,542,200 |
| 439,600 | 574,000 | 684,500 |
| 1,126,890 | 1,211,220 | 857,700 |
| 281,723 | 302,805 | 214,425 |
| 845,167 | 908,415 | 643,275 |
BA Brazil Nuts Ltd. Balance Sheet as at 31 Dec
20.00%
11.45%
Receivable Days
98
112
141
Payable Days
90
75
78
Inventory Turnover Days
63
71
82
Gross Margin
46%
43%
43%
Overhead %
12%
11%
13%
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You are partner for a firm called Konamoah & Associates, who are auditors for Aluco, an aluminium processing company. Aluco has several issues with its aluminium and steel byproducts, including toxic emissions and a poor health and safety record for employees in the workshop. Aluco has proven to be very lucrative for your firm and you are busy planning the coming year’s audit visits after agreeing to continue this engagement some weeks earlier. The by-products arising from the production process include the following:
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Fadila Associates has been the auditors of Aduaba LTD for the past 3 years. Aduaba LTD is into the production of cashew drinks. You have been assigned to lead the audit of Aduaba LTD and have been provided with the following extracts from the draft financial statements for 2023 before the final audit planning meeting with the Chief Accountant.
Draft statement of financial position (extracts)
| Draft 2023 | Actual 2022 | |||
|---|---|---|---|---|
| GHc’000 | GHc’000 | GHc’000 | GHc’000 | |
| Property, Plant and Equipment | 42,860 | 41,620 | ||
| Receivables | ||||
| Trade | 4,800 | 3,150 | ||
| Other | 380 | 5,180 | 280 | 3,430 |
| Inventory | ||||
| Raw materials | 2,460 | 1,870 | ||
| Work-in-progress | 380 | 450 | ||
| Finished goods | 2,270 | 5,110 | 2,030 | 4,350 |
| Total Assets | 53,150 | 49,400 | ||
| Current liabilities | ||||
| Trade | 4,116 | 3,470 | ||
| Other | 870 | 4,986 | 650 | 4,120 |
Draft income statement (extracts)
| Draft 2023 | Actual 2022 | |
|---|---|---|
| GHc’000 | GHc’000 | |
| Revenue | 53,250 | 50,750 |
| Cost of sales | 39,360 | 39,220 |
| Gross profit | 13,890 | 11,530 |
| Depreciation of Property, Plant and Equipment | 4,450 | 2,810 |
| Other expenses | 3,540 | 3,480 |
| Profit before tax | 5,900 | 5,240 |
Your Audit Manager has reviewed these extracts and has identified three financial statement headings which he believes require further investigation. These are property, plant & equipment, trade receivables and inventory. He has also calculated the following accounting ratios:
| Draft 2023 | Actual 2022 | |
|---|---|---|
| Trade receivables collection period | 28 days | 17 days |
| Inventory turnover | 7.6 times | 8.9 times |
| Gross profit percentage | 26% | 23% |
Required: a) Explain why the Audit Manager has selected these three headings for further investigation from the given financial statement extract. (9 marks) b) Outline the audit evidence the Audit Manager should request for to clarify the situation regarding these financial statement headings. (11 marks)
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Lamsey Jewelers is a family-owned business specializing in high-end jewellery, located in Dunkwa-On-Offin in the Central Region of Ghana. The company sources gold from various suppliers in the small-scale mining sector. Recently, the Minerals Commission received anonymous tips suggesting that Lamsey Jewelers may be involved in laundering money through its operations. Authorities suspect that the business could be used to conceal the origins of illicit funds through gold purchases and sales.
To investigate these suspicions, regulatory authorities have appointed Baba Yara and Associates, an independent auditing firm, to conduct a thorough review of Lamsey Jewelers’ operations and financial transactions. During the audit, Baba Yara and Associates discovered that Lamsey Jewelers has been accepting large cash payments for custom jewellery orders without conducting proper due diligence on the customers. Several transactions involving cash payments exceed typical retail amounts, raising suspicions of potential money laundering.
Required:
i) Discuss the key legal and regulatory requirements in Ghana related to anti-money laundering relevant to Lamsey Jewelers.
ii) Discuss the obligations placed on professional firms such as Baba Yara and Associates in relation to money laundering.
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Eat Well Bakeries is a private limited liability company. It bakes bread and other confectioneries, produced from the main bakery and a smaller bakery in another part of town. Products are sold from these two bakeries and five additional outlets in the same town. Distributors purchase products outright and bear the risk of sale.
The main administrative and management functions of the bakeries are conducted from the main bakery, while basic records are kept at the small bakery and sales outlets. These records are transmitted to the main office every morning. Detailed accounting records and performance analysis are handled in the main administrative office.
Despite being a private business, the chairman insists on maintaining proper standards to stay competitive. The chairman transferred the company’s audit to your firm after a discussion with your partner, and professional clearance was obtained. However, limited documentation from the predecessor auditor was available, and no extensive documentation was done at the beginning of the audit.
You have been assigned to continue the audit from where it was left off, ensuring the chairman’s expectations are met.
Required:
a. Evaluate the Auditor’s objective concerning ISA 250 that would be discussed with the chairman. (5 Marks)
b. Prepare an outline of matters that should be communicated. (5 Marks)
c. Your review shows internal control challenges. Based on this, prepare a brief on:
d. Evaluate potential audit strategies, and recommend an appropriate model for application to Eat Well Bakeries. (12 Marks)
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Bettaluck plc is experiencing a substantial net cash inflow, which has been temporarily invested in a short-term equity portfolio. This portfolio consists of investments in four Nigerian listed companies. The funds are intended to meet tax obligations, dividend payments, and future capital expenditures in several months.
Portfolio Details:
a. Based on the data provided, calculate the risk (i.e., Beta) of Bettaluck’s short-term investment portfolio relative to the market. (4 Marks)
b. Recommend whether the composition of Bettaluck’s short-term investment portfolio should be adjusted. Provide reasons for your recommendation, including relevant calculations. (6 Marks)
c. Discuss the factors a financial manager should consider when investing in marketable securities. (5 Marks)
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Technology, essentially computerisation, has in recent times affected various aspects of life and business activities to varying degrees. For instance, this has led to online purchases and account processing from various locations beyond the domiciled bank branches. Though this electronic business and commerce has made things easier, challenges still persist in the process. As an auditor, it is necessary to evaluate the audit environment to gain proper knowledge of the client’s operating environment, whether manual or computerised. This is especially essential for your firm’s newly employed audit staff.
Required:
a. Prepare an advisory guide for these new audit staff, highlighting the application of information technology to the audit process. (6 Marks)
b. Discuss the relevant information technology tools that are necessary for the effective provision of assurance services. (9 Marks)
(Total 15 Marks)
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Management of Banana Follow Me Limited plans to invest in factory equipment and fittings to attract more customers, using sufficient cash reserves for these capital expenditures. A significant risk associated with money laundering exists due to the high volume of cash transactions and regular overseas bank transfers.
Required:
i. Discuss THREE requirements of an anti-money laundering programme which the auditor of Banana Follow Me Limited should have in place for detecting and reporting suspicion of money-laundering.
(6 Marks)
ii. State ONE example of the criminal offenses connected with money laundering. (1 Mark)
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The overseas technical partners of Orlando Professional Services came for a review of operations and system of internal control of the firm. A number of audit engagement files regarding financial statements on which the firm had expressed audit opinion were selected for review. It was believed that the strategic review would be necessary to determine the appropriate audit approach for a detailed audit plan in the firm to bring efficiency and enhance good client service delivery. The review exercise also covered:
i. The firm’s basis of risk assessment on audit and assurance engagements;
ii. Determination of staff recruitment, training, reward, and evaluation;
iii. Previous audit opinions on financial statements and progress on ongoing jobs;
iv. System of archival and retrieval of documents;
v. Major risks and other factors such as industry issues;
vi. Procedures for engaging and monitoring experts both internal and external; and
vii. Reports from regulators.
The team interviewed partners, staff, and directors of major clients of the firm. It was believed that the outcome of the review exercise would help to reposition the firm and upscale strategies to get a fair share of the market in the upcoming mandatory rotation of auditors.
At the end of the exercise, it was reported that the audit strategy of the firm was not robust enough, too generic, and lacked focus to meet the firm’s need in the next decade. The team recommended that proactive steps should be taken to evolve a good strategy that would stand the test of time in the light of the increasing competition in the audit and assurance marketplace.
As a staff of the firm, you have been selected as a member of the committee to develop the new audit strategies for submission in the next two weeks for the consideration and approval of the executive council of Orlando Professional Services.
Required:
a. Outline the approaches to the main audit strategies your firm is expected to adopt.
(9 Marks)
b. Explain the factors that will be considered in the selection of audit strategies.
(4 Marks)
c. Explain the difference between Audit Strategy and Audit Plan.
(2 Marks)
Total: 15 Marks
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At the weekly meeting of an audit firm, it was reported that a new audit client (Salisa Limited) has just been won. An implementation team has been constituted with a manager as the head. At the meeting of the implementation team, the manager stated that there is a need for the team to work on the audit planning strategy; the contents of which will form the audit planning memorandum that will be presented to the audit committee. He stated further that a professional clearance has to be sent to the former auditor after which, a background check will be performed on the directors and other principal officers of the company. It is also believed that for proper risk assessment, there is a need to understand the business operations of the company. He stated further that the audit will be structured into both interim and final audits.
An experienced member of the team also mentioned the need for the auditor to adopt an attitude of professional skepticism. He emphasized that planning the audit will involve the whole engagement team to establish an understanding of the terms of the engagement as required by ISA 210, which will help establish an overall strategy for the audit. Developing the audit plan will include the nature, timing, and extent of planned risk assessment procedures, further audit procedures, and documentation of the overall audit strategy.
Required:
a. Explain professional skepticism. (2 Marks)
b. State how adequate planning can benefit the audit team. (3 Marks)
c. Explain and illustrate what the establishment of the overall audit strategy involves. (3 Marks)
d. Discuss the elements of interim and final audits.
(7 Marks)
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Vena Plc. manufactures engineering equipment. The company has received an order from a new customer for 5 machines at N5,000,000 each. Vena Plc.’s terms of sale are 10 percent of the sales value payable with order. The deposit has been received from the new customer. The balance is payable 12 months after acceptance of the order by Vena Plc.
Vena Plc.’s past experience has been that only 60 percent of similar customers pay within 12 months. Customers who do not pay within 12 months are referred to a debt collection agency to pursue the debt. The agency has in the past had a 50 percent success rate of obtaining immediate payment once they became involved. When they are unsuccessful, the debt is written off by Vena Plc. The agency’s fee is N500,000 per order, payable by Vena Plc. with the request for service. This fee is not refundable if the debt is not recovered.
You are an accountant in Vena Plc.’s credit control department, and based on the company’s past experience and discussions with the sales and credit managers, you do not expect the pattern of payment and collection to change.
Incremental costs associated with the new customer’s order are expected to be N3,600,000 per machine; 70 percent of these costs are for materials and are incurred shortly after the order has been accepted. The remaining 30 percent is for all other costs, which you can assume are paid shortly before delivery in 12 months’ time. The company is not presently operating at full production capacity.
A credit bureau has offered to provide an error-free credit information about the new customer if the price is right.
Vena Plc.’s opportunity cost of capital is 16 percent. Ignore taxation.
Required:
a. Write a report to the Credit Control Manager evaluating, from a purely financial point of view, whether Vena Plc. should accept the order from the new customer based on the information provided. (12 Marks)
b. Comment on what other factors should be considered before a decision to grant credit is taken. (3 marks)
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The Ministry of Health of Federal Republic of Wazobia is currently
considering public-private partnership as a means of improving health
facilities in some rural areas in the country. The Ministry intends to use
Public-Private Partnership (PPP) to construct and manage modern primary
health centres in rural areas to increase access to quality health facilities.
The project would be fully financed by the private sector, but will be built
on land secured from the state governments. The private sector requires
government guarantee to borrow externally to execute the project.
Currently, health services are free, however, the new project, when executed through Public-Private Partnership would be on “user-pay” basis.
The government and the private contractors determine the average fees
payable per user and it will be subject to an upward review from time to
time. In order to stimulate private sector interest in the project, the Ministry
intends to protect the private sector against risks associated with the
project. Meanwhile, the Ministry would insist that local materials and skills
are employed in the construction and management of the primary health
centre projects. The project is also environmentally friendly as there will be
little or no destruction of the forest vegetation. The project when completed,
will be of great benefit to the country as a whole.
Required:
Based on guiding principles of Public-Private Partnership identify and
explain THREE principles and TWO associated risks of the feasibility of the
proposed primary health centre projects by the Ministry of Health.
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Hurricane Limited
You are the audit manager in charge of the audit of Hurricane Limited. The company’s year-end is 31 December, and Hurricane Limited has been a client for seven years. The company purchases and resells fittings for ships, including anchors, compasses, rudders, sails, etc. Clients vary in size from small businesses making yachts to large companies maintaining large luxury cruise ships. No manufacturing takes place in Hurricane Limited.
Information on the company’s financial performance is available as follows:
Other Information:
i. The industry in which Hurricane Limited operates has seen moderate growth of 7% over the last year.
ii. Non-current assets mainly relate to company premises for storing inventory. Ten delivery vehicles are owned with a net book value of ₦300,000.
iii. One of the directors purchased a yacht during the year.
iv. Inventory is stored in ten different locations across the country, with your firm again having offices close to seven of those locations.
v. A computerized inventory control system was introduced in August 2013.
vi. Inventory balances are now obtainable directly from the computer system. The client does not intend to count inventory at the year-end but relies instead on the computerized inventory control system.
Required:
a. ISA 300 Planning an Audit of Financial Statements, states that an auditor must plan the audit.
Explain why it is important to plan an audit. (5 Marks)
b. Using the information provided above, prepare the audit strategy for Hurricane Limited for the year ending 31 December 2014. (15 Marks)
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