Melissa is the recently appointed engagement partner of the audit of Brumby Ltd. Melissa has just taken over the audit from Ken Leo, who rotated off the audit after a five-year period as the engagement partner.

Ken had a small portfolio of clients and was able to complete most substantive testing for Brumby at year-end. Melissa is unable to do this because she is facing difficulties with two of her other large clients. These clients have just been advised that their financing arrangements with US-based banks may not be renewed, raising doubts about their ability to continue as a going concern. The US banks will make their financing decisions very close to the clients’ year-end, forcing Melissa to spend considerable time in this period with these clients.

The financing problems at Melissa’s existing clients have created demands on Melissa’s audit team that she must resolve. The audit firm cannot provide her with the additional staff she has requested for the year-end period because several other partners’ clients are also facing financing difficulties due to the credit crisis in the United States.

The audit firm’s ethical rules do not allow Ken to remain as the auditor of Brumby and it is too late to find new partners for any of her other clients, so Melissa must find a way to continue with the audit and still meet all professional and legal standards. So far, the audit team has conducted the preliminary risk assessment for Brumby and early control testing results confirm that Brumby has excellent controls.

Melissa calls a meeting with her senior audit team members to discuss the issue.

Required

Explain how Melissa could vary the timing of the substantive testing at Brumby to help her meet her audit obligations. Specifically:

(a) Give examples of substantive procedures that could be performed prior to year-end

(b) Explain how Melissa will use roll-forward procedures to complete the audit

(c) Explain any other considerations that would affect the timing of substantive procedures for Brumby.