An increаse in blооd plаsmа pH frоm 7.3 to 7.4 will cause what?
QUESTION #4 (26 Mаrks | 20 Minutes) Yоu аre а juniоr auditоr working on the year-end audit of Mountain Ridge Outdoor Supplies Ltd., a privately owned company that sells outdoor equipment through both retail stores and an online platform. The audit senior has asked you to help develop an appropriate testing approach for several audit areas. REQUIRED: Part A - Definitions: Briefly define each of the following sampling methods. Your explanations should be 2-3 sentences or bullet points. (8 Marks) 1. Random sample 2. Data analytics 3. Specific item selection 4. Non-sampling Part B - Application: For each situation below, identify the most appropriate approach and explain why. Your explanations should be a minimum of 2-3 sentences or bullet points to receive full marks. (18 Marks) Situation Audit Area 1 The client processed approximately 18,000 sales invoices during the year. The audit team wants to test whether sales invoices were properly authorized and matched to shipping documents. The population is large, and the audit team wants every item in the population to have an equal chance of selection. 2 The client has a large volume of expense transactions. The audit team wants to identify unusual transactions, including duplicate payments, round-dollar amounts, weekend postings, transactions just below approval limits, and unusual vendors. 3 The client recorded 12 major equipment purchases during the year. Three of the purchases individually exceed materiality, and the remaining purchases are relatively small. The audit team is especially concerned with testing the largest items. 4 During the year, the client issued common shares in two separate transactions. Both transactions were material and required approval by the board of directors. The audit team plans to test both transactions. 5 The client processed approximately 2,500 payroll payments during the year. The audit team wants to test whether payroll payments were made only to valid employees. The payments are relatively similar in nature, and the audit team wants a representative selection of items from the population. 6 The audit team is reviewing journal entries and wants to scan the full population for entries posted late at night, entries posted by senior management, entries containing unusual descriptions, and entries posted directly to revenue or expense accounts near year-end.
QUESTION #1 (12 Mаrks | 20 Minutes) Federаted Fаrming Limited (FFL) оwns and оperates a number оf farms, orchards and greenhouses across Western Canada. They have been in business since 1987, and have rapidly expanded over the past 10 years from buying smaller local farms from independent farmers. FFL is publicly-listed on the Toronto Stock Exchange, and have been audited by your firm, NAIT CPAs LLP, for the past 6 years. You are assisting the Audit Manager with planning for the June 30, 2026 year-end audit, and have requested a draft of the client’s financial statements. Upon reviewing the financial statements, you notice that Accounts Receivable has increased significantly from the prior year. The balance on the draft financial statements is $4,750,892 and is a material amount. You enquire further with FFL's Controller, Michelle Nelson about the Accounts Receivable balance and request to see a copy of the current Aged Accounts Receivable subledger. This subledger shows all of the current outstanding balances by vendor and by number of days outstanding (less than 30 days; 31-60 days; 61-90 days; 91-120 days; over 121 days). Upon reviewing the subledger further, you discover that approximately 70% of the outstanding balance is made up of sales to large grocery chains such as Superstore, Safeway, Sobeys and Save-on-Foods. The remaining 25% consists of outstanding balances on sales to smaller local grocery stores, organic grocers and farmers markets. You also notice that the outstanding receivables from the larger grocery chains are relatively current. The majority of their balances are all in the 0-30 days or 31-60 days aging categories. However, the balances from the smaller grocery chains tell a different story. There are several with balances in the 61-90 days and 91-120 days aging categories. From speaking with the Controller, he notes that there is some concern about these customers’ ability to pay. If FFL does write-down or write-off any Accounts Receivable, they will do so directly against the customer’s account. No Allowance for Doubtful Accounts has been accounted for to date in the draft financial statements. REQUIRED: 1. Explain the difference between a positive confirmation and a negative confirmation. Which provides more reliable audit evidence, and why? (4 Marks) 2. Explain the assertion(s) that are primarily being tested when sending a confirmation letter. (2 Marks) 3. Is it possible for NAIT CPAs LLP to only use confirmations to test the Accounts Receivable balance? Why or why not? (3 Marks) 4. What other evidence should the Auditor collect to test the Accounts Receivable balance? (3 Marks)