Active Living Inc. has been in operation in Regina since early 2000, and now owns and operates 50 rental retirement

Active Living Inc. has been in operation in Regina since early 2000, and now owns and operates 50 rental retirement

Question:

Active Living Inc. has been in operation in Regina since early 2000, and now owns and operates 50 rental retirement properties across Saskatchewan and Manitoba.  It has a total of 8,000 one-bedroom and 4,000 two-bedroom rental units.  Tenants pay rent monthly by giving a cheque to their respective property manager.  The manager deposits the cheques at the bank and sends the deposit information and tenant listing to Active Living’s head office where the Accounting Manager enters the information into the sales journal and general ledger. The Accounting Manager reconciles the bank statements monthly. You are a junior Auditor at Audit Compilation Corporation and have been asked to audit Active Living’s revenues and receivables for its 2021 year-end.  Active Living’s draft financial statements report rental revenues of $106.2M, tenant receivables of $451,000, and net income of $7.9M. Task 1Draw a simple flowchart of the procedures, described in the scenario. Appendix 2 includes the common flow chart symbols. Task 2In 2-3 sentences, indicate whether you would use a substantive or a combined approach to audit Active Living’s revenues, and include your reasons for this decision.Task 3Using, the template in Appendix 1 list 5 audit procedures to provide sufficient appropriate evidence that the rental revenues or receivables in the company’s 2021 financial statements are not materially misstatedmake a flow chart of these three tasks

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