(a) Mr Anderson Jones is the audit partner in charge of the audit of Moonshine Manufacturing Plc in 2020. Describe ANY FIVE (5) matters Mr Anderson Jones should communicate with those charged with governance. 

(b) You are the audit manager of Lybroos & Co and are in the finalisation stage of the audit of Sparkling Drinks Plc. You are briefing your audit team on the steps to take in relation to uncorrected misstatements in the draft financial statements for period ending 31 March 2021 with a reported profit before tax of £20m. The following uncorrected misstatements have been detected when finalising the audit.

1. Depreciation was calculated on both the land and building whereas it was charged only on buildings in prior years. This resulted in a total depreciation of £5m, of which £1.4m related specifically to land.

(ii) Sparkling Drinks Plc uses a computerised payroll system and all wages are daily backed up. Due to software problems, the wages records and back-up for 64 days were corrupted and inaccessible. Wages and salaries amounted to £2.4m in those 64 days.                                                                                                                                  

(iii). A lawsuit of £10m has being brought against the company by a former staff who was made redundant following a permanent disability from industrial hazard. This case cannot be finalised before the audited financial statements will be signed off, but it is correctly disclosed as a contingent liability.                                                       

 

Required:

Discuss each of the above issues and describe their impacts on the audit report if they remain unresolved.

Answer rating: 100% (QA)

a Matters That Mr Anderson Jones should communicate with those charged with governance are as under 1 Circumstances that affect the form and content o... View the full answer