Learning Outcome 4: Develop and utilize procedures for assurance engagements
Scenario[1]
Active Living Inc. has been in operation in Regina since early 2000, and now owns and operates
50 rental retirement properties across Saskatchewan and Manitoba. It has a total of 8,000 one-
bedroom and 4,000 two-bedroom rental units. Tenants pay rent monthly by giving a cheque to
their respective property manager. The manager deposits the cheques at the bank and sends the
deposit information and tenant listing to Active Livings head office where the Accounting
Manager enters the information into the sales journal and general ledger. The Accounting
Manager reconciles the bank statements monthly.
You are a junior Auditor at Audit Compilation Corporation and have been asked to audit Active
Livings revenues and receivables for its 2021 year-end. Active Livings draft financial statements
report rental revenues of $106.2M, tenant receivables of $451,000, and net income of $7.9M.
Task 1
Draw a simple flowchart of the procedures, described in the scenario. Appendix 2 includes the
common flow chart symbols.
Include 2-3 sentences indicating if there are any concerns you have with procedures or controls,
if there are no concerns be sure to document this as well.
Task 2
In 2-3 sentences, indicate whether you would use a substantive or a combined approach to audit
Active Livings revenues, and include your reasons for this decision.
Task 3
Using, the template in Appendix 1 list 5 audit procedures to provide sufficient appropriate
evidence that the rental revenues or receivables in the companys 2021 financial statements are
not materially misstated..
Learning Outcome 4 Develop and utilize procedures for assurance eng.pdf
1. Learning Outcome 4: Develop and utilize procedures for assurance engagements
Scenario[1]
Active Living Inc. has been in operation in Regina since early 2000, and now owns and operates
50 rental retirement properties across Saskatchewan and Manitoba. It has a total of 8,000 one-
bedroom and 4,000 two-bedroom rental units. Tenants pay rent monthly by giving a cheque to
their respective property manager. The manager deposits the cheques at the bank and sends the
deposit information and tenant listing to Active Livings head office where the Accounting
Manager enters the information into the sales journal and general ledger. The Accounting
Manager reconciles the bank statements monthly.
You are a junior Auditor at Audit Compilation Corporation and have been asked to audit Active
Livings revenues and receivables for its 2021 year-end. Active Livings draft financial statements
report rental revenues of $106.2M, tenant receivables of $451,000, and net income of $7.9M.
Task 1
Draw a simple flowchart of the procedures, described in the scenario. Appendix 2 includes the
common flow chart symbols.
Include 2-3 sentences indicating if there are any concerns you have with procedures or controls,
if there are no concerns be sure to document this as well.
Task 2
In 2-3 sentences, indicate whether you would use a substantive or a combined approach to audit
Active Livings revenues, and include your reasons for this decision.
Task 3
Using, the template in Appendix 1 list 5 audit procedures to provide sufficient appropriate
evidence that the rental revenues or receivables in the companys 2021 financial statements are
not materially misstated.
![Learning Outcome 4: Develop and utilize procedures for assurance engagements
Scenario[1]
Active Living Inc. has been in operation in Regina since early 2000, and now owns and operates
50 rental retirement properties across Saskatchewan and Manitoba. It has a total of 8,000 one-
bedroom and 4,000 two-bedroom rental units. Tenants pay rent monthly by giving a cheque to
their respective property manager. The manager deposits the cheques at the bank and sends the
deposit information and tenant listing to Active Livings head office where the Accounting
Manager enters the information into the sales journal and general ledger. The Accounting
Manager reconciles the bank statements monthly.
You are a junior Auditor at Audit Compilation Corporation and have been asked to audit Active
Livings revenues and receivables for its 2021 year-end. Active Livings draft financial statements
report rental revenues of $106.2M, tenant receivables of $451,000, and net income of $7.9M.
Task 1
Draw a simple flowchart of the procedures, described in the scenario. Appendix 2 includes the
common flow chart symbols.
Include 2-3 sentences indicating if there are any concerns you have with procedures or controls,
if there are no concerns be sure to document this as well.
Task 2
In 2-3 sentences, indicate whether you would use a substantive or a combined approach to audit
Active Livings revenues, and include your reasons for this decision.
Task 3
Using, the template in Appendix 1 list 5 audit procedures to provide sufficient appropriate
evidence that the rental revenues or receivables in the companys 2021 financial statements are
not materially misstated.](https://image.slidesharecdn.com/learningoutcome4developandutilizeproceduresforassuranceeng-230328123806-0548beaa/85/learning-outcome-4-develop-and-utilize-procedures-for-assurance-engpdf-1-320.jpg)
