The Turing Test reflects Alan Turing's belief that a computer can be called intelligent if:Single choice
A
It employs real human reasoning processes
B
It exhibits behaviour characteristic of intelligence
C
It learns from past experiences through data
D
It solves problems efficiently
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You are an audit senior with Chen & Partners and you are working on the final audit of Ferndale Ltd for the year ended 30 April 2026. Ferndale Ltd is a commercial property management and building maintenance company, providing facilities management, cleaning and repair services to office buildings, shopping centres and industrial parks. Ferndale Ltd’s draft profit before tax is $6.3 million (2025: $5.1 million) and total assets are $48.5 million (2025: $41.2 million). You have been provided with the following information regarding the draft financial statements. Plant and equipment and disposals On 1 January 2026, Ferndale Ltd replaced 15 of its industrial floor-cleaning machines used across its managed properties. The old machines had a carrying amount of $1.6 million, as recorded in the non-current assets register and were given in part-exchange against new machines costing $3.8 million. $3.1 million was also paid in cash. Trade receivables Ferndale Ltd’s finance manager, who was responsible for reviewing the monthly aged receivables report and following up overdue accounts, was dismissed in February 2026 for misconduct and the role has only recently been filled. The trade receivables collection period increased from 48 days as at 31 December 2025 to 68 days as at 30 April 2026. An allowance for year-end trade receivables of $185,000 (2025: $140,000) has been recognised. Potential breach of environmental regulations In January 2026, a neighbouring business complained to the environmental protection authority that Ferndale Ltd has been improperly disposing of hazardous cleaning chemicals at several of its managed properties. The environmental protection authority has launched an investigation but the directors of Ferndale Ltd are not intending to disclose this issue or make any provision as they do not believe that the potential fine, which is $45,000 per incident, is material.[Fill in the blank] Discuss and explain THREE (3) substantive procedures the auditor should perform to obtain sufficient and appropriate audit evidence in relation to Ferndale Ltd’s plant and equipment additions and disposals.[Fill in the blank] Discuss and explain THREE (3) substantive procedures the auditor should perform to obtain sufficient and appropriate audit evidence in relation to the valuation of Ferndale Ltd’s trade receivables.[Fill in the blank] Discuss and explain TWO (2) procedures the auditor should perform to obtain sufficient and appropriate audit evidence in relation to the potential breach of environmental regulations by Ferndale Ltd.[Fill in the blank]
You are an audit manager with Harper & Associates responsible for planning the final audit of Summit Ltd for the year ending 30 September 2025. Summit Ltd specialises in the design and installation of commercial solar energy systems for industrial and commercial buildings. The audit partner recently met with Summit Ltd’s finance director and has provided you with the following notes: Planning meeting notes Summit Ltd has a forecast revenue of $30.2 million (2024: $24.8 million) and total assets are expected to be $35.4 million (2024: $29.6 million). The directors receive a bonus of $150,000 each if the company achieves its budgeted revenue target of $30 million for the year. The finance director has confirmed that all directors expect to receive the bonus. Summit Ltd has incurred expenditure of $1.8 million on the development of a proprietary remote monitoring software system that enables real-time performance tracking of installed solar panels. Of this, $0.5 million has been written off to the statement of profit or loss as research expenditure. The remaining $1.3 million has been capitalised as development expenditure. The software is currently in beta testing with two pilot clients and has not yet been made commercially available. In August 2025, Summit Ltd took delivery of specialist solar panel testing equipment costing $3.2 million. A deposit of $1.5 million was paid on ordering in May 2025, with the balance paid on delivery. The equipment is currently being installed and commissioned on site and is expected to be operational by December 2025. The full $3.2 million has been capitalised as property, plant and equipment. To partly finance the equipment, Summit Ltd made a rights issue to existing shareholders at a price of $0.80 for each $0.50 share. Approximately 75% of the rights were exercised, with the remainder lapsing. Summit Ltd is currently undertaking the installation of solar energy systems at 14 sites across the country. All installations are built to client specifications. Clients pay a 15% non-refundable booking fee on signing the contract and a further 35% progress payment at the halfway completion point, with the balance due on handover. At 30 September 2025, several projects have reached the halfway point but the client completion certificates have not yet been signed. Revenue has been recognised for these projects up to the progress payment stage. The interim balance of work in progress (WIP) at 30 June 2025 is $6.8 million in respect of installations under construction across the 14 sites. A WIP count and valuation will be carried out at all sites on 30 September 2025. Arrangements have been made for the audit team to attend only three of the WIP counts. Two of the sites not being attended represent approximately 55% of the total WIP by value. During the year, Summit Ltd extended its warranty period from two years to four years in order to remain competitive. The warranty provision has been calculated at 2% of revenue, unchanged from the prior year, despite the extension of the warranty period. Summit Ltd’s directors have disclosed their base salary and cash bonus details in the forecast financial statements. However, during the year, the directors were also granted share options as part of a new long-term incentive plan. The directors have not disclosed the share options on the basis that they have not yet vested. Both accounting standards and local legislation require disclosure of all forms of directors’ remuneration, including share-based payments. Summit Ltd’s payroll function was handled in-house until March 2025. From April 2025, the payroll function was outsourced to an external service organisation, Nexus Ltd, which is now responsible for all elements of payroll processing and maintenance of payroll records. The in-house payroll system has been decommissioned.[Fill in the blank] Discuss SIX audit risks, and explain the auditors’ response to each risk, in planning the audit of Summit Ltd. Response Template - There is a table/template in the response textbox to assist in entering the answer. If you accidentally delete it, you may copy the template below and paste it into the response textbox. You must answer this question in the response textbox. [table] Audit risk (2 marks) | Auditor’s response (2 marks) 1. | 2. | 3. | 4. | 5. | 6 | [/table][Fill in the blank] Describe TWO substantive procedures the auditor should perform to obtain sufficient and appropriate audit evidence in relation to Summit Ltd’s warranty provision.[Fill in the blank] The audit engagement partner for Summit Ltd, Ms Chen, has been the lead engagement partner on the Summit Ltd audit for seven consecutive years. In addition, Ms Chen’s son was recently employed by Summit Ltd as a graduate accountant in the finance department. Explain the TWO safeguards which Harper & Associates should implement to address the familiarity threats arising from this situation.[Fill in the blank]
Choose the correct letter, a, b, c, or d. 10. The purpose of the article is to
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