02/09/2021, 14:50

152.BLACKBERRY

a.According to Isa 240,an error is an unintentional misstatement that arise in the financial
statement while a fraud is an intentional misstatement.An auditor has the roles of making
reasonable assurance that the financial statement is free from material misstatement but they
are not responsible for detection of fraud as this identification rest with the person in charge of
governance.

b.

Audit risk Auditor response

The company is planning to conduct inventory
The company need to make proper inventory
count on 2,3,4 April each year. So if inventory
count more frequently in order to know the
were stolen or destroyed during the year no
correct amount of inventory. So as to make
one will know.Thus inventory value can be
correct inventory valuation.
overstated which can increase profit.

Blackberry co paid 1.1m for the purchase of

patent that yield a competitive advantage for
three years and it has account all the cost in
one year only instead of applying the matching
concept and record it as an expense.Thus
profit can be overstated.
Thus the auditor need to check the benefits
that will generate in the first year and match it
with its cost.In order to determine the correct
value of amortisation.

Blackberry co paid 1.1m for the purchase of

patent.So the company can account the cost of So the company auditor need to check if the
patent as an intangible assets even before patent meet the criteria of being an intangible
compare it with the criteria of being an intagible assets and if proper record was made.
assets.

On 31 January 2018, Blackberry co decided to

transferred its credit system with a service
organisation.Thus if the impact of the teeming
and lading fraud was badly estimated. This can
lead to understatement or overstatement of
receivables.
So the auditor need to compare the receivables
ledger before and after the fraud in order to
know the extent of the fraud and make
necessary adjustment.

After working for 9 years,the financial

accountant has been dismissed and is sueing
the company.So the accountant and
management need to create a provision in the
financial statement and a proper amount
should be recorded.
No supplier statement and payables ledger
control account reconciliation was made. Thus
The auditor need to check the extent to which
the firm can lose or win the case. In order to
verify if the proper record was made in the
financial statement.
The auditor need to put an emphasis on the
calculation of payables reconciliation and it

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if any error was made.This can lead payables should be done everytimes to check for errors.
being overstated and understated.
That most of its creditor would pay a 40% pay
Thus the auditor need to check the amount of
out.Thus a current assets of $360000 was
receivables and if the current assets figure is
created.But if there was any errors in
correctly calculated and if the records was
calculating the amount of receivables this can
done correctly.
result in current assets being badly evaluated.
The cost include the cost of purchase of raw
materials and the conversion cost including So the auditor need to determine the exact cost
labour,production and general overheads. Thus of general overheads per unit and thus make
the inclusion of the general overheads can lead necessary adjustment in order to exclude it
to inventory being overstated and thus profit from cost of inventory.
can be badly evaluated.

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