審計學

第二題 (17 points)

You are the engagement manager of Orion & Co., a mid-tier audit firm applying the International Standards on Auditing (ISA). Your firm is planning the audit of Helios BioTech Co., Ltd. (Helios) for the year ended December 31, 20X5. Orion & Co. has audited Helios for the past two years.

Helios is a publicly listed pharmaceutical company engaged in biologics and vaccine development. The company operates in a highly regulated environment and derives a substantial portion of its revenue from long-term government supply contracts that include milestone-based payments. Helios capitalizes certain development expenditures as intangible assets under IFRS.

During 20X5, Helios reported 28% revenue growth, narrowly meeting analysts' earnings expectations after two consecutive years of operating losses.

Instructions

1. Preliminary Risk Classification: Based only on the information provided below, assess the effect of each information item (a ~ e) on the risk of material misstatement (RMM) at the financial statement or assertion level. Please apply professional judgment and consider materiality and changes from the prior year.
   For each item, indicate whether it would most likely:
   • Increase (I) the risk of material misstatement
   • Decrease (D) the risk of material misstatement
   • Have No Effect (NE) on the risk of material misstatement
   
   Each classification may be used more than once or not at all.

Information Items:

a. In March 20X5, Helios appointed a new Chief Financial Officer (CFO) with prior experience in multinational pharmaceutical firms. Shortly after appointment, the CFO revised the company's revenue recognition methodology for milestone-based government contracts, asserting closer alignment with IFRS 15. The change significantly increased fourth-quarter revenue and was approved by the board; however, no retrospective analysis or external technical consultation was performed.

b. Helios continues to lease its primary laboratory facility from an entity owned by the CEO's family. This lease was entered into five years ago, and the terms—including the fixed annual rent increase—were audited and confirmed as arm's-length in prior periods. There have been no modifications to the contract, no new leases with this entity, and no changes in the use of the facility during 20X5.

c. Internal audit identified deficiencies in IT access controls over the revenue system, noting that certain finance personnel could modify customer master data and milestone completion dates. Management asserts that such changes are reviewed retrospectively by senior staff, but the audit team observed that these reviews are informal and not supported by documented evidence.

d. Helios processes payroll on a biweekly basis using the same outsourced payroll service organization as in prior years. The service organization provides an ISAE 3402 Type II report covering the entire financial year, and prior audits identified no payroll-related control deficiencies or misstatements.

e. After two consecutive years of operating losses, Helios returned to profitability in 20X5. This turnaround was driven primarily by increased government vaccine funding. Senior management compensation includes earnings-based bonuses, and external analysts have publicly emphasized Helios's ability to meet market expectations as a key indicator of improved performance.

For the following Questions 2~8, select your response from the list of options provided below. Identify ALL applicable responses; each option may be used more than once or not at all.

1. Which actions should the auditor take in response to the identified revenue-related risks?
2. After identifying deficiencies in internal control over revenue, and before determining the nature, timing, and extent of substantive procedures, which of the following actions are the auditor required or permitted to take in fulfilling responsibilities related to internal control?
3. Assuming the auditor has concluded that controls over revenue will not be relied upon, which of the following actions are appropriate assertion-level responses when designing further audit procedures?
4. When evaluating management judgment embedded in revenue recognition and capitalization decisions, and before considering financial statement disclosures or auditor reporting, which of the following auditor responses are required or appropriate?
5. Which of the following actions/evaluations should the auditor consider when evaluating Helios's return to profitability and financing structure?
6. Which matters identified in this case are most likely to be reported as Key Audit Matters?
7. Based on the audit circumstances described, identify appropriate auditor's opinions that would be issued under the specified conditions. Assume that each condition is independent of the others.

List of Options for Questions 2~8

• A. Increase professional skepticism and reassess fraud risk as an overall audit response
• B. Perform additional substantive procedures focused on cut-off and timing
• C. Rely primarily on analytical procedures
• D. Modify the audit opinion due to scope limitation
• E. Communicate a significant deficiency to those charged with governance
• F. Matters that required significant auditor attention due to significant management judgment in revenue recognition and related estimation uncertainty.
• G. Reassess materiality thresholds
• H. Obtain written representations as the primary source of audit evidence
• I. Evaluate management's assumptions for bias
• J. Include an Emphasis of Matter paragraph
• K. Perform tests of controls before relying on them
• L. Assess the adequacy of disclosures related to uncertainty
• M. Withdraw from the engagement
• N. Evaluate the feasibility of management's plans to mitigate events or conditions that may cast significant doubt on the entity's ability to continue as a going concern
• O. Matters that involved heightened audit risk and required expanded substantive procedures, but did not involve significant management judgment or complex estimates
• P. Matters for which management disclosures were considered particularly important to users' understanding of the financial statements, but which did not require significant auditor judgment
• Q. An unmodified (unqualified) opinion would be appropriate if the auditor has obtained sufficient appropriate audit evidence, concludes that the financial statements are free from material misstatement, and determines that disclosures regarding significant judgment and uncertainty are adequate.
• R. A qualified opinion would be appropriate if the auditor concludes that a material misstatement exists related to revenue recognition, but the effects are material but not pervasive to the financial statements.
• S. A disclaimer of opinion would be appropriate if the auditor identifies significant judgment and estimation uncertainty in revenue recognition, even though sufficient appropriate audit evidence has been obtained.

Your answers should be provided using the following format; otherwise you will not get any points.

1. Classification Table