Question

Assume you are an SMC Hotel Manager for and an Interview has been conducted for You

Answer the following questions in Brief

4. State and explain any three (3) significant errors you identified during the audit of SMC hotel?

5. Discuss any 2 situations in which the auditor can be sued or liable?

6. State and explain any 3 qualities of an auditor?

7. Explain how you used interviews and listening skills during your audit of SMC hotel?

Answer 1

Please find the Answers:

1. Three Siginficant errors during the audit of SMC Hotels are:

- Revenue Bookings: Hotel having revenue sources from Room rents, Laundry sevices, Bars, Banquettes, Other amenities, all these need to be adequately recorded in their own ledger head with proper tax application and compliances. Booking in wrong will not impact the finacial statement as a whole but may lead to the wrong planning for future , which may furthure impact the business cycle and its growth.

- Purchases: Booking of purchases either in cash / credit and proper suporting documents to substantiate the same is very important. Booking without documenst, Non booking when received in cash which may lead to misrepresentation and chance of fraud may be higher than.

- Tips offered at various level of operation: Here the organisation need to very expedite in its action both on compliance front as well as its recording or its management at organisational level. Whether TIP need to be accounted if yes, how the organisation have control, by keeping it centralized at the counter against the person earns the appreciation.

- Increments or Incentives: Calculation on the basis of Sale turnover , performance of sale person, it is difficult to manage the same in hotel industry and chance s are very high in this kind of industry.

2. Situation where Auditor can be held laible are:

- Breach of Contract: If Auditor knowingly breach the contract can be held liable and summon in the eyes of law.

- Fraud and Negligence: Known the fraud and negligently issued incorrect audit report.

3. Three Qualities of Auditor:

- Requisite Experience: If Auditor having less relevant experience but having experience in different sector , then Auditor is seems to have appropriate experience in the field of Audit.

- Independence: The Auditor need not to be related with the organisation in past, current or upcoming future as it may hamper or impact the audit opinion.

- Objectivity and professional skepticism: It means that Auditor should know the objective need to be accomplished and while delivering the objectivity should perform professional skepticism.

4. Interview and Listening skills : Interview and Listening skills help to understand the organisational structure, Process flow and Policies within the organisation. The level of significance of error. It means that upto which level same can ignored or seems insignificant. The acceptable level of error. It helps to understand the changes which is required into the process flows and Listening helps to understan dthe problem being faced by the employees while delivering the services to the customers.