You are the audit manager on the audit of Triangle Limited, an Australian listed company in the
Question:
You are the audit manager on the audit of Triangle Limited, an Australian listed company in the logistics sector, in Australia and internationally. Triangle Limited has facilities, warehouses and terminals in Queensland, NSW and Victoria, and Hong Kong. The financial year ends on 30 June 2021.
Below are set out two separate circumstances. You are required to advise how these circumstances would affect the finalization of the 2021 audit.
Required
a. On 15 July 2021, it was announced, that access to the port facilities and terminal in Hong Kong would be restricted. The Hong Kong terminal accounts for 30% of the revenue of Triangle Ltd. This will result in a significant reduction in revenue for future years. Explain what impact this will have on the audit of the financial statements for the year ended 30 June 2021.
b. On 1 June 2021, there was a fire in the Brisbane facilities in Queensland. This resulted in the destruction of a significant component of these facilities as well as several trucks. It is expected that operations from Brisbane will be reduced to 20% of normal capacity until these facilities are repaired and trucks replaced. The cost of this has been estimated to be $10 million. As audit manager, you regard this loss as material. Explain the impact of this event on finalization of the 2021 audit.
