Write an audit memo that explains how quality control for an audit engagement will affect your audit of Starbucks using the following standards Au 220 (independence) and Auditing Standard 7 (Engagement Quality Review) The memo should be addressed to the Audit Committee Chair, the members of the audit committee, and the CFO. Audit Chair: Mellody Hobson Members: Robert M. Gates Jorgen Vig Knudstorp Joshua Cooper Ramo Javier G. Teruel Craig E. Weatherup CFO: Scott Maw Reference the standard by number. The memo should be the explanation of the pertinent standard. Solution have been auditing Vehicles For Hope Limited (VHL) for the last five years, however during my recent meeting with the accountant I was informed of several changes that have taken place during the last one year. I am writing this memo to apprise you of these changes and seek your feedback on audit planning. Significant Donations: Two months ago a long standing board member donated land, building and equipment to help VHL accept more applicants for the training. In …show more content… Accounting Software: The accountant has raised several issues in regards to excel based accounting process. He is of the opinion that a new off the shelf software be implemented however is worried about the cost of implementation. I have recommended some off the shelf software’s however I have advised him that as an auditor I cannot provide any significant consulting or process improvement. Even though he was interested in me helping him implement the new software, I had to say no as that may create a conflict of interest. Do you think that we could play a more active role in accounting software implementation? Key Performance Measures One of the board members have asked to create a report of the key performance measures number of new applicants and projections for the future given that they have new building and land. This report will be given to all parties who will receive the annual report and the board has asked me to comment on the suitability of such report. Even though most commonly required information is provided in the audited annual financial statements VHL is free to use special purpose reports like the key performance measures to meet the needs of its donors. However I have advised the board that these will not be a part of the audit process and we will not be certifying them. Please advise if my approach is appropriate. Expense Report I have been advised that during the last one year VHL had several issues CPA, CGA Subject: I have been auditing Vehicles For Hope Limited (VHL) for the last five years, however during my recent meeting with the accountant I was informed of several changes that have taken place during the last one year. I am writing this memo to apprise you of these changes and seek your feedback on audit planning. Significant Donations: Two months ago a long standing board member donated land, building and equipment to help VHL accept more applicants for the training. In .

1. Write an audit memo that explains how quality control for an audit engagement will affect your
audit of Starbucks using the following standards Au 220 (independence) and Auditing Standard
7 (Engagement Quality Review)
The memo should be addressed to the Audit Committee Chair, the members of the audit
committee, and the CFO.
Audit Chair: Mellody Hobson
Members: Robert M. Gates
Jorgen Vig Knudstorp
Joshua Cooper Ramo
Javier G. Teruel
Craig E. Weatherup
CFO: Scott Maw
Reference the standard by number. The memo should be the explanation of the pertinent
standard.
Solution
have been auditing Vehicles For Hope Limited (VHL) for the last five years, however during my
recent meeting with the accountant I was informed of several changes that have taken place
during the last one year. I am writing this memo to apprise you of these changes and seek your
feedback on audit planning.
Significant Donations: Two months ago a long standing board member donated land, building
and equipment to help VHL accept more applicants for the training. In …show more content…
Accounting Software: The accountant has raised several issues in regards to excel based
accounting process. He is of the opinion that a new off the shelf software be implemented
however is worried about the cost of implementation. I have recommended some off the shelf
software’s however I have advised him that as an auditor I cannot provide any significant
consulting or process improvement. Even though he was interested in me helping him implement
the new software, I had to say no as that may create a conflict of interest. Do you think that we
could play a more active role in accounting software implementation?
Key Performance Measures One of the board members have asked to create a report of the key
performance measures number of new applicants and projections for the future given that they
have new building and land. This report will be given to all parties who will receive the annual
report and the board has asked me to comment on the suitability of such report. Even though
most commonly required information is provided in the audited annual financial statements VHL

2. is free to use special purpose reports like the key performance measures to meet the needs of its
donors. However I have advised the board that these will not be a part of the audit process and
we will not be certifying them. Please advise if my approach is appropriate.
Expense Report I have been advised that during the last one year VHL had several issues
CPA, CGA Subject: I have been auditing Vehicles For Hope Limited (VHL) for the last five
years, however during my recent meeting with the accountant I was informed of several changes
that have taken place during the last one year. I am writing this memo to apprise you of these
changes and seek your feedback on audit planning. Significant Donations: Two months ago a
long standing board member donated land, building and equipment to help VHL accept more
applicants for the training. In addition to this he also made a cash donation of $ 300,000
earmarked for providing toolkits for graduating mechanics. The accountant was not sure of the
treatment of these transactions and has therefore not recorded them. VHL uses the deferral
method for accounting and follows the accounting for not-for profit organizations (part 111).
These donations are material transactions and not recording them in the financial statements and
may result in a qualified audit report. Land and building should be recorded in the books at fair
market value at the time of donation. The building should be amortized by estimating the
remaining useful life. The $ 300,000 is an externally restricted contribution. The portion of this
contribution used in current financial year should be shown as revenue and the remaining will be
called a Deferred Contribution. These deferred contributions should be taken into revenue to
match the expenditure on toolkits during that period. Since there is an encumbrance made on
these amounts a special account should be created to track the use of these transactions. I can
provide my suggestions on the accounting treatment to the accountant however he will need to
complete the accounting process before I can start the audit. One of my concerns is the level of
advice I can provide to an audit client and would appreciate any feedback from you in this
regard. These deferred contributions should be taken into revenue to match the expenditure on
toolkits during that period. Since there is an encumbrance made on these amounts a special
account should be created to track the use of these transactions. I can provide my suggestions on
the accounting treatment to the accountant however he will need to complete the accounting
process before I can start the audit. One of my concerns is the level of advice I can provide to an
audit client and would appreciate any feedback from you in this regard. Accounting Software:
The accountant has raised several issues in regards to excel based accounting process. He is of
the opinion that a new off the shelf software be implemented however is worried about the cost
of implementation. I have recommended some off the shelf software’s however I have advised
him that as an auditor I cannot provide any significant consulting or process improvement. Even
though he was interested in me helping him implement the new software, I had to say no as that

3. may create a conflict of interest. Do you think that we could play a more active role in
accounting software implementation? Key Performance Measures One of the board members
have asked to create a report of the key performance measures number of new applicants and
projections for the future given that they have new building and land. This report will be given to
all parties who will receive the annual report and the board has asked me to comment on the
suitability of such report. Even though most commonly required information is provided in the
audited annual financial statements VHL is free to use special purpose reports like the key
performance measures to meet the needs of its donors. However I have advised the board that
these will not be a part of the audit process and we will not be certifying them. Please advise if
my approach is appropriate. Expense Report I have been advised that during the last one year
VHL had several issues with the expense reports submitted by the board. These claims were
submitted late and on several occasions without appropriate documentation. During my latest
visit I have noticed most expenses were appropriate however several expense reports did not
have proper supporting documentation. The detection risk would become high if sufficient
backup information is not available making the total audit risk high. I have documented this into
the audit file and I will need to allocate more time looking into the expenses claimed by the
board. I also noticed that there have been several purchases made by the chair made in early
December that include expensive clothing and jewelry. The receipts of these just provide the
total amount, taxes and the vendor name. The accountant has advised me that these are
appreciation gifts for volunteers, however no such purchases have been made in prior years. I
have informed the board that I need to investigate these expenses in detail and would require
further information. The board has not responded to this request and on my follow-up the
treasurer has informed me that these expenses were discussed in a recent board meeting and were
not an issue. The minutes of the board are not very clear on the discussions that took place when
approving these expenses. The board adheres to the provincial conflict of interest act and under
this act the board member should recuse himself/herself from voting on matter that may cause a
conflict of interest situation. The chair had recused him from the meeting when these expenses
were discussed and approved. There was no information of why the chair declared a conflict of
interest and no minutes were made to show what actually got discussed in this meeting. I am
planning to inform the board that in order to complete the audit it is very critical for me to get the
complete information of these expenses.