Solution Library

Installation of New Machines Affecting Audit Plans


Your accounting firm is the auditor of FNU Limited, which is a large public company whose year-end is 30 June 2010. FNU operates three divisions: entertainment, hospitality, and tourism and leisure. Each division is run as a separate business, with its own accounting system and management team. While planning the audit of FNU, you become aware of the following independent and material situations:

Entertainment division

(i) The entertainment division owns the largest chain of cinemas in Australia. Owing to changes in technology in the USA, movie distributors will shortly begin releasing films using a recording system that is incompatible with the movie projectors used by FNU.

Approximately 70 per cent of the movies the entertainment division screens are sourced from the USA. The movie projectors currently have an estimated useful life of four years. FNU has sufficient financial resources to purchase and install new movie projectors without interrupting cinema operations.

(ii) In March 2010 the entertainment division introduced a new general ledger system.
Apart from a few teething problems the system seems to be functioning well and now produces a range of management reports that were not previously available. Owing to an oversight by your firm’s computer audit division, no audit staff was present during the conversion process


For each of the situations (i) to (vi):
(1) Discuss and explain how the situation may affect your audit plan?
(2) Discuss and explain further information you consider necessary to obtain prior to finalising your audit program?


The question belongs to Accounting and it is about audit plan for a group of companies named FNU Ltd. FNU Ltd has an entertainment section offering movies. In a new move, most distributors are offering movies which are incompatible with the present projectors. The company has sufficient financial resources to purchase new projectors without interrupting cinema operations. The affect on the ledger has been explained in the solution in detail.

Total Word Count 647

Download Full Solution


  • HWA

    this is a very good website

  • HWA

    I have 50 questions for the same test your page is showing only 28

  • HWA

    hi can you please help or guide me to answer my assignments. thanks

  • HWA

    hi can anyone help or guide me to my assignments. thanks

  • HWA

  • HWA

    This solution is perfect ...thanks

  • HWA

    Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

  • HWA

    Perfect bank of solution. 

  • HWA

    great !

  • HWA
    Paul Brandon-Fritzius

    thanks for the quick response. the solution looks good. :)

  • HWA
    tina Johnson

    thnx for the answer. it was perfect. just the way i wanted it. 

  • HWA

    works fine.