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...
-
A passenger on a flight was greeted by a flight attendant whom he had never met and told that she liked his smile and that he would be her #1. During the flight, the flight attendant hit the...
-
Four very lightweight disks of equal radii each have three identical heavy marbles glued to them as shown. Rank in order, from largest to smallest, the moments of inertia of the disks about the...
-
The balance sheet data for Bobs Electronics, Co., November 30, 2010, follow: Requirement 1. The following are three independent assumptions about the business during November. For each assumption,...
-
All of us come into contact with distributed systems almost every day, even if it is only while shopping at Walmart or Sears. Describe a distributed system with which you have come in contact. In...
-
2 cos (1) - x) = sin(x) because they are cofunctions. Here is another "proof" using the subtraction angle formula for cosine. We already know that cos cos(-x) COS 0 B2 )cos(x) + sin(17 2 cos(x) + 1 )...
-
Transform the E-R diagram of Figure 8-23 into a set of 3NF relations. Make up a primary key where needed and one or more nonkey attributes for each entity. Figure 8-23 TOOL ++ Used_on PROJECT Project...
-
An ERP system, such as SAP, uses a normalised database to minimise data redundancy. (a) Explain how this works by using an example from the GBI modules to support your answer. (b) Explain how using...
-
Pretty Paws Salon is the only small business in town to provide pet grooming services. The table shows the demand schedule for the Pretty Kitty service package (bathing, ear cleaning, and nail...
-
Every investment carries the expectation of a return, which is represented as the additional percentage rate that we expect to obtain when investing our money in a financial instrument. It is...
-
Corporation, Inc. has the following income statement (in millions) (2pts.): A1 CORPORATION, INC. Income Statement For the Year Ended December 31, 2026 Net Sales Cost of Goods Sold Gross Profit...
-
1 . What combination of quantitative factors and qualitative factors would you like your potential employer to use as a performance management system? Explain your answer 2 . Which of the...
-
How important is content marketing in the modern age of marketing? When compared with other marketing tools, is content marketing the most important for social media marketing & advertising? Why or...
-
Current Attempt in Progress The following data were taken from the balance sheet accounts of Nash Corporation on December 31, 2024. Current assets $520,000 Debt investments (trading) 567,000 Common...
-
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 thermodynamics?
-
Explain the scope and limitations of thermodynamics.
-
An astronaut weighs \(800 \mathrm{~N}\) on the earth's surface where the acceleration of gravity is \(g=9.83 \mathrm{~m} / \mathrm{s}^{2}\). The mass and the radius of the moon are \(7.4 \times...
Study smarter with the SolutionInn App