Item number Description of misstatement Type of misstatement Amount of misstatement ($) 1 Incorrect recognition of revenue
Question:
Item number | Description of misstatement | Type of misstatement | Amount of misstatement ($) |
1 | Incorrect recognition of revenue - where a contract is signed for an entire year, the revenue recognized should only be that earned. Not for the entire contract amount. | Projected | 3,250,000 |
2 | Staff were paid the incorrect wages due to the misapplication of the wrong industry award rate. System was not updated with the correct rate. | Factual | 115,000 |
3 | Unable to locate some property, plant and equipment - potentially lost or broken on productions. Should be written off through the P&L. | Factual | 75,000 |
4 | |||
5 |
Management have determined that they will make the following adjustments:
- Sales revenue - for the full amount requested
They have refused all other adjustments, both quantitative and qualitative adjustments.
What audit opinion should be provided to the client and audit committee? Explain your professional judgment and support your decision with references to any relevant auditing standards (including paragraph references).
Expert Answer:
1 Incorrect recognition of revenue where a contract is signed for an entire year the revenue recogni... View the full answer
