Happy Fly Plc is an airline company located in Antarctica and is a new audit client of
Question:
Happy Fly Plc is an airline company located in Antarctica and is a new audit client of London@audit – a firm of Chartered Accountants based in South London. You are responsible for the audit of the financial statements for the year ended 31 December 2020. The draft financial statements recognise revenue of £160 million and total assets of £270 million.
During the year, Happy Fly plc purchased large plots of land located near major airports at a cost of £12.5 million. The land is currently rented out and is classified as investment property, which is recognised in the draft financial statements at a fair value of £14.5 million. The audit partner has suggested the use of an auditor's expert to obtain evidence in respect of the fair value of the land given that the firm has no in-house expertise in matters relating to land.
Required:
In respect of the land recognised as investment property:
(i) Explain ANY FIVE (5) pieces of additional information which you require to plan the audit of the land. (10 marks)
(ii) Explain the FOUR (4) matters to be considered in assessing the reliance which can be placed on the work of an auditor's expert. (10 marks)
(c) Confidentiality is an important aspect of the professional accountants’ Code of Ethics. However, there are circumstances when a professional accountant may be required to disclose confidential information obtained from a client.
Required:
Describe three of these circumstances, giving an example for each.
Auditing and Assurance services an integrated approach
ISBN: 978-0132575959
14th Edition
Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley