It is 15 January 2023. Winchester Equipment Ltd (Winchester) sells mechanical equipment such as lawnmowers and chainsaws to landscaping companies. It does not sell directly to the public. Its year end was 31 October 2022. You are an audit senior at Ladle & Co and the final audit is due to commence shortly. Total assets are £43.2m and profit before tax is £7.2m. The following matter has been brought to your attention. The bank and cash figure included in Winchester’s draft financial statements is comprised of a number of bank account balances: an overdraft of £5.1m which is the company’s main current account and £0.2m relating to several savings accounts. The finance director has informed the audit manager that all accounts have been reconciled as at the year end. The overdraft of £5.1m has increased significantly since the prior year when it was £1.2m. The directors have informed you that the overdraft facility, which the company requires in order to operate on a daily basis, is due for renewal in February 2023 and that they are confident it will be renewed.

(a) Describe EIGHT audit procedures the auditor should perform in assessing whether or not Winchester is a going concern.

Answer rating: 100% (QA)

Step 11 1 Reviewing Management Representations The auditor should ask management for a letter statin... View the full answer