You are an audit manager for C.K. Chartered Accountants and are currently finalising your 30 June...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are an audit manager for C.K. Chartered Accountants and are currently finalising your 30 June 2010 audits. Company A Company A is a listed company with 3 subsidianies, Company B, Company C and Company D. Another firm D.K. Chartered Accountants act as the auditors of Company D and have qualified their audit report on the basis that continued financial support from Company A is required for Company D to continue as a going concern. In auditing Company A and the economic entity, you are satisfied that the going concern basis of preparing the financial report is appropriate. In addition, you are satisfied that the carrying value in Company A's financial report of the investment in Company D of S200 is not stated above its recoverable amount. The company and the economic entity made profits for the year. Company H The audit of Company H was extremely difficult as the client did not maintain appropriate books and records during the year. Although the statutory registers were maintained, the accounting records were not updated for the first 9 months of the year as the company was without an accountant during this period. An accountant was employed in April 2010 and she tried to reconstruct records from the details of receipts and payments available. The accountant has been unable to reconcile the bank account and you are not satisfied that all transactions which occurred during the year are reflected in the financial report. The operating loss by Company H in the current year is $22 190. Company G Company G, a property developer, holds freehold property purchased for development and resale which is classified as inventories. This property, as disclosed in the financial report at Note 10, has been valued at cost, which is $5 000 000. In your audit you found that in the current market the net realisable value of the property is $3 500 000. Although material, the client does not consider that the value of the property should be written down as future development will result in the property being worth more than the current book value. The write-down would have no tax effect. The financial report audited, including the Directors' Declaration, spans pages 5 to 38. The company made a profit for the year. Company G has other assets of $25 000 000 and liabilities of $7 000 000. Required: Discuss the type of audit opinion that you intend to issue for cach of the above companies for the year ending 30 June 2010. You are the audit manager of a new client. Management of the new client has prepared its accounts in accordance with generally accepted accounting principles but you believe that the overall view presented by this financial report is not true and fair. Briefly outline your partner the approach that should be taken in these a) (12 marks) b) circumstances. [8 marks] You are an audit manager for C.K. Chartered Accountants and are currently finalising your 30 June 2010 audits. Company A Company A is a listed company with 3 subsidianies, Company B, Company C and Company D. Another firm D.K. Chartered Accountants act as the auditors of Company D and have qualified their audit report on the basis that continued financial support from Company A is required for Company D to continue as a going concern. In auditing Company A and the economic entity, you are satisfied that the going concern basis of preparing the financial report is appropriate. In addition, you are satisfied that the carrying value in Company A's financial report of the investment in Company D of S200 is not stated above its recoverable amount. The company and the economic entity made profits for the year. Company H The audit of Company H was extremely difficult as the client did not maintain appropriate books and records during the year. Although the statutory registers were maintained, the accounting records were not updated for the first 9 months of the year as the company was without an accountant during this period. An accountant was employed in April 2010 and she tried to reconstruct records from the details of receipts and payments available. The accountant has been unable to reconcile the bank account and you are not satisfied that all transactions which occurred during the year are reflected in the financial report. The operating loss by Company H in the current year is $22 190. Company G Company G, a property developer, holds freehold property purchased for development and resale which is classified as inventories. This property, as disclosed in the financial report at Note 10, has been valued at cost, which is $5 000 000. In your audit you found that in the current market the net realisable value of the property is $3 500 000. Although material, the client does not consider that the value of the property should be written down as future development will result in the property being worth more than the current book value. The write-down would have no tax effect. The financial report audited, including the Directors' Declaration, spans pages 5 to 38. The company made a profit for the year. Company G has other assets of $25 000 000 and liabilities of $7 000 000. Required: Discuss the type of audit opinion that you intend to issue for cach of the above companies for the year ending 30 June 2010. You are the audit manager of a new client. Management of the new client has prepared its accounts in accordance with generally accepted accounting principles but you believe that the overall view presented by this financial report is not true and fair. Briefly outline your partner the approach that should be taken in these a) (12 marks) b) circumstances. [8 marks]
Expert Answer:
Answer rating: 100% (QA)
Solution Ans a Company A In the standard audit report of CK Chartered Accountants an explanatory language needs to be added to the below effect We did ... View the full answer
Related Book For
Financial accounting
ISBN: 978-0136108863
8th Edition
Authors: Walter T. Harrison, Charles T. Horngren, William Bill Thomas
Posted Date:
Students also viewed these accounting questions
-
Net sales Cost of goods sold Selling and administrative expense Interest expense Income before taxes Net income Cash and cash equivalents Receivables, net Inventories Year ended 12/31/2021 $8,099...
-
Rachel Sells is unable to reconcile the bank balance at January 31. Rachel's reconciliation is shown here. Cash balance per bank $4,297.20 Add: NSF check 595.00 Less: Bank service charge 51.50...
-
The first audit of the books of Fenimore Company was made for the year ended December 31, 2012. In examining the books, the auditor found that certain items had been overlooked or incorrectly handled...
-
Gabriele Enterprises has bonds on the market making annual payments, with seven years to maturity, a par value of $1,000, and selling for $974. At this price, the bonds yield 7.2 percent. What must...
-
The IRS is actively encouraging individuals to file their taxes electronically in order to increase accuracy and reduce expenses. The following data show the percentage of tax re-turns filed...
-
The most dangerous particles in polluted air are those with diameters less than 2.5 mm because they can penetrate deeply into the lungs. A 15-cm-tall closed container holds a sample of polluted air...
-
The process of knowledge acquisition, organizational retention, and information distribution and interpretation is called ____________. (a) vicarious learning (b) experience (c) organizational...
-
For the current year ending March 31, Jwork Company expects fixed costs of $440,000, a unit variable cost of $50, and a unit selling price of $75. a. Compute the anticipated break-even sales (units)....
-
Required: 1. Enter all cells that contain question marks in worksheet '1st Part'. 2. Complete the following requirments in worksheet '2nd Part'. The company has put tired a sew marketing manager who...
-
Lox, Stock and Bagel Company (LSB) is determining its cost of capital. It uses a risk free, medium term bank loan and equity financing. Part a: The current balance on the bank loan is $8,000,000. It...
-
Exercise 16-12A (Algo) Determining the payback period LO 16-4 Franklin Airline Company is considering expanding its territory. The company has the opportunity to purchase one of two different used...
-
Identify and discuss one specific method for carrying out cyberbullying, online harassment, or cyberstalking. For instance, the use of a specific social media site. In your response, be sure to...
-
The previous year had an inflation rate of 5.9%, nominal GDP of $22.8 trillion, and real GDP of $21.5 trillion. If the inflation rate changes to 4.1% and output remains constatnt, what is the current...
-
Part A The space shuttle is in a 250-mile-high orbit. You may want to review (Page). For help with math skills, you may want to review: Operations with Radicals What is the shuttle's orbital speed?...
-
George owns 100% of equity of a company. . If George works 6 hours per day, the company's EBIT will be 335,000 dollars per year, in perpetuity. If, instead, he works 12 hours per day, the firm's EBIT...
-
Define and explain General Victimology. Define and explain Critical Victimology . Define and explain Victim Precipitation. Explain and discuss Feminist Criminology and Victimization. Explain and...
-
Denzel Brooks opened a Web consulting business called Venture Consultants and completes the following transactions in March. March 1 Brooks invested $190,000 cash along with $25,000 in office...
-
I frequently use NY Times and CNN and am aware of Fox News but I never use it. I visit these sites, NY Times and CNN, a few times a week whenever I have to research something or see something on...
-
Northeastern Energy Companys balance sheet includes the asset Iron Ore. Northeastern Energy paid $2.5 million cash for a lease giving the firm the right to work a mine that contained an estimated...
-
Assume that Computer City Stores completed the following foreign currency transactions: Sep 9 Purchased DVD players as inventory on account from Sona, a Japanese company. The price was 800,000 yen,...
-
Worthy Hills Corporation reported the following current accounts at December 31, 2010 (amounts in thousands): Cash................................................ $1,800...
-
What is the logical result of a successful hostile buy-up of shares on the market?
-
What market authorities concern is addressed by a suspension of trading after notice of an offer has been filed?
-
On the basis of financial theory, how can the role of an investment bank in a deal be summarised?
Study smarter with the SolutionInn App