You are an Audit Senior currently planning the 30 June 20X9 audit of Technology Limited, an Australian-owned company that produces and exports computer chips to China. At a recent planning meeting with Technology Limited’s senior staff, you obtained the following overview of this year’s operations: Tight checks by Australian custom officials have delayed several shipments of computer chips. These delays have angered Chinese customers who are threatening to deduct 20% from the amounts owing as compensation for lost production time. One of Technology Limited’s customers, Blue Chip Limited, is claiming that the latest batch of computer chips it received was found to be faulty. Blue Chip Limited is refusing to pay its account, which is allegedly seven months overdue. Technology Limited has claimed to have launched an investigation into the allegations, but as yet not been able to substantiate them. Technology Limited has suffered significant cash flow problems because another major customer, Creative Limited (Creative), is experiencing financial difficulties. As a result, Creative is taking well over 120 days to pay outstanding amounts, despite Creative’s terms of trade being payment within 30 days. Creative makes up 40 per cent of Technology Limited’s sales and the board has been reluctant to take any action that might adversely affect those sales. Consequently, Technology Limited has had to increase its dependency on its line of credit, and this has caused it to temporarily breach the debt to equity ratio required in its loan covenant with Big Bank Limited. One of Technology Limited’s major suppliers went bankrupt one month ago, causing major product shortages. To overcome the problem, Peter James, the husband of the finance director, Natalie James, provided electronic components used in the production of computer chips to Technology Limited through his private company Norton Limited. Norton Limited demands payment in $US prior to the electronic components being supplied. There is no formal agreement in place with Peter James, however, the goods are being provided at competitive prices. You are concerned about the electronic components that Peter James’ company is supplying, because his products are new to the market and you have heard some of Technology Limited’s staff complaining that they are of poor quality. Due to increased competitive pressure, Technology Limited has recently moved the manufacture of some of its computer chips to Bangladesh. Technology Limited saves around 25 per cent in costs compared to the equivalent Australian made items. However, the manufacturing process takes longer and on a few occasions late delivery from Bangladesh has resulted in lost sales. Last month, a protester suffered a broken leg, allegedly because he was hit by a company truck. The protester is now suing Technology Limited for damages, claiming the contractor was in fact an employee of Technology Limited at the time of the accident, and was acting on Technology Limited’s instructions. Technology Limited is fighting the case and appears to have a reasonable chance of winning; however, the adverse publicity being generated is making the company nervous about its sales in the future. During the period, the Australian dollar has remained steady against the Chinese Yuan, although it fell by about 3% against the US dollar. Debtors are invoiced in $US at the time of shipment, and payment is received in $US one month after the shipment is delivered. It takes around six weeks for the charter vessels to travel from Technology Limited’s shipyard at Bigmantle Bay to China. A recent downturn in the Chinese economy is affecting forward orders, which have fallen by 15%. Required: Prepare a memorandum to the audit manager, outlining your risk assessment relating to Technology Limited. When making your risk assessment: (a) Identify two (2) balance sheet accounts from the information provided that are subjected to an increase in audit risk. Briefly explain what factors increase the audit risk associated with the two (2) account balances identified. In your explanation, please mention the key assertion(s) at risk of material misstatement and the components of the audit risk model affected for each account balance identified. (b) Identify how the audit plan will be affected and recommend specific audit procedures to address the risks associated with each account balance identified.

QUESTION 1

Which of the following pairs a concept with the correct theorist?

QUESTION 2

Dr. Robertson develops a psychological scale to measure persuasiveness. He gives it to 300 salespeople to see if those who score high on his measure of persuasiveness are more successful. Dr. Robertson is investigating:

QUESTION 3

Research on this suggests that the fear of confirming a stereotype can cause people to do poorly.

QUESTION 4

This involves using two words to convey an idea, such as "Want down" for "I want to get down."

QUESTION 5

With regard to Freud's theory, slips of the tongue are categorized as:

QUESTION 6

Dr. Rodriguez says, "Introverts tend to have higher arousal levels, which is why they seek quiet environments." This is consistent with:

QUESTION 7

The cohabitation effect is thought to be partially due to selection. What does selection mean?

QUESTION 8

Which of the following typically occurs in adolescence?

QUESTION 9

Which of the following is a disadvantage of cross-sectional designs?

QUESTION 10

Which of the following is a true statement about prenatal development?

The following information is available for a corporation:

January 1st, 2020 Shares outstanding: 1,250,000

April 1, 2020 Shares Issued: 200,000

July 1, 2020 Purchased Treasury Stock 75,000

October 1, 2020 Issued a 2 for 1 stock split

The number of shares to be used in computing earnings per common share for 2020 is

A) 2,737,500

B) 2,825,500

C) 2,725,000

D) 1,706,250

“SoftBank Plans $4.8 Billion Share Buyback Following Pressure From Elliott; The proposed share buyback isn't as large as the one urged by the activist shareholder Wall Street Journal; New York, N.Y. [New York, N.Y] 13 Mar 2020. TOKYO—SoftBank Group Corp. said it would spend as much as ¥500 billion ($4.8 billion) to buy back up to 7% of its own shares, following plunging stock prices and a pressure campaign from one of the world's most aggressive activists. ”Stock-Buyback Plans Shrink"; The new coronavirus may threaten companies' buyback plans— though a down market could also create a buying opportunity Wall Street Journal (Online); New York, N.Y. 09 Mar 2020. U.S. corporations are signalling a reduced appetite for stock buybacks this year, undermining a pillar of support for stocks at a time of heightened volatility. Companies authorized around $122 billion in future buybacks through February, according to data compiled by equity research firm Birinyi Associates, marking a nearly 50% drop from the same period a year ago and representing the slowest pace in three years…”

Required: Discuss the benefits of share buybacks. While having lots of firms suspend buybacks under current market conditions, advise with reasonings if SoftBank should suspend their share buyback plan?

“SoftBank Plans $4.8 Billion Share Buyback Following Pressure From Elliott; The proposed share buyback isn't as large as the one urged by the activist shareholder
Wall Street Journal; New York, N.Y. [New York, N.Y] 13 Mar 2020.
TOKYO—SoftBank Group Corp. said it would spend as much as ¥500 billion ($4.8 billion) to buy back up to 7% of its own shares, following plunging stock prices and a pressure campaign from one of the world's most aggressive activists.”
“Stock-Buyback Plans Shrink; The new coronavirus may threaten companies' buyback plans—though a down market could also create a buying opportunity
Wall Street Journal (Online); New York, N.Y. 09 Mar 2020.
U.S. corporations are signalling a reduced appetite for stock buybacks this year, undermining a pillar of support for stocks at a time of heightened volatility.
Companies authorized around $122 billion in future buybacks through February, according to data compiled by equity research firm Birinyi Associates, marking a nearly 50% drop from the same period a year ago and representing the slowest pace in three years…”
Required:
Discuss the benefits of share buybacks. While having lots of firms suspend buybacks under current market conditions, advise with reasonings if SoftBank should suspend their share buyback plan?

“JP. Morgan Plans $4.8 Billion Share Buyback Following Pressure From Elliott; The proposed share buyback isn't as large as the one urged by the activist shareholder
Wall Street Journal; New York, N.Y. [New York, N.Y] 13 Mar 2020.
TOKYO—JP. Morgan said it would spend as much as ¥500 billion ($4.8 billion) to buy back up to 7% of its own shares, following plunging stock prices and a pressure campaign from one of the world's most aggressive activists.”
“Stock-Buyback Plans Shrink; The new coronavirus may threaten companies' buyback plans—though a down market could also create a buying opportunity
Wall Street Journal (Online); New York, N.Y. 09 Mar 2020.
U.S. corporations are signalling a reduced appetite for stock buybacks this year, undermining a pillar of support for stocks at a time of heightened volatility.
Companies authorized around $122 billion in future buybacks through February, according to data compiled by equity research firm Birinyi Associates, marking a nearly 50% drop from the same period a year ago and representing the slowest pace in three years…”
Required:

Discuss the benefits of share buybacks. While having lots of firms suspend buybacks under current market conditions, advise with reasonings if JP. Morgan should suspend their share buyback plan?

Fox Ltd has purchased a truck on 1 July 2018. The list price of the truck was $200,000 but Fox Ltd was invoiced and paid only $180,000. Fox Ltd did have to pay for an inspection costing $30,000 on 1 July 2018 before the truck could be used for the first time. In addition, the company purchased an annual insurance policy for the truck costing $24,000 (recorded using the asset approach). The truck will be depreciated using the reducing balance method at a rate of 10% per annum.

On 1 September 2018, the truck broke down and Fox Ltd spent $40,000 to get it back to working condition.

On 1 July 2019, Fox Ltd decided to replace the engine in the truck with a newer model costing $61,000 that uses considerably less petrol and makes the truck more powerful so that it could also haul a trailer. The 10% reducing balance rate of depreciation is still applied.

Required:

Prepare the general journal entries for the years ended 30 June 2019 and 30 June 2020 related to the truck, taking into account the information provided above. Narrations are not required. Justify your entries.

The Egyptian Pound (EGP) went through some volatility since it was floated in November 2016 until today. This could be broken down in 4 main phases as follows:

Phase 1: From floatation till June 2018

Phase 2: From June 2018 – December 2018

Phase 3: From January 2019 – February 2020

Phase 4: Coronavirus worldwide outbreak

Required:

1. Analyze what happened during each of the above 4 phases and explain in full details how these factors impacted the EGP exchange rate versus the Dollar.

• What made the EGP appreciate / depreciate. Your analysis should be based on how the BOP components impacted the exchange rate.
• What actions (if any) were taken by the Central Bank of Egypt in response to these market changes. What was the intended outcome which made CBE take such actions?
• What major actions related to interest rates on EGP saving instruments were taken by the largest public sector banks (National Bank of Egypt and Banque Misr). Why do you think these actions were taken?

2. What do you think will happen to the EGP exchange rate against the Dollar by end of 2020? (EGP will appreciate / Depreciate or remain the same at the current level of US$ / EGP 15.7). Justify your expectation based on the BOP components analysis.

“SoftBank Plans $4.8 Billion Share Buyback Following Pressure From Elliott; The proposed share buyback isn't as large as the one urged by the activist shareholder
Wall Street Journal; New York, N.Y. [New York, N.Y] 13 Mar 2020.
TOKYO—SoftBank Group Corp. said it would spend as much as ¥500 billion ($4.8 billion) to buy back up to 7% of its own shares, following plunging stock prices and a pressure campaign from one of the world's most aggressive activists.”
“Stock-Buyback Plans Shrink; The new coronavirus may threaten companies' buyback plans—though a down market could also create a buying opportunity
Wall Street Journal (Online); New York, N.Y. 09 Mar 2020.
U.S. corporations are signalling a reduced appetite for stock buybacks this year, undermining a pillar of support for stocks at a time of heightened volatility.
Companies authorized around $122 billion in future buybacks through February, according to data compiled by equity research firm Birinyi Associates, marking a nearly 50% drop from the same period a year ago and representing the slowest pace in three years…”
Required:
Discuss the benefits of share buybacks. While having lots of firms suspend buybacks under current market conditions, advise with reasonings if SoftBank should suspend their share buyback plan?