Ju Ru & Co. is the auditor of RBD Group Berhad (RBD), a Malaysian public-interest entity that
Question:
Ju Ru & Co. is the auditor of RBD Group Berhad (RBD), a Malaysian public-interest entity that is listed on the Australian Stock Exchange (ASX) which extracts, refines and sells refined palm oil and related products. The audit of RBD Group of companies for the year ended 30 June 2021 had the following events:
Date (2021) | Event |
30 August | Notice of Winding-up Order and the appointment of a Liquidator was made in the national newspaper of a major customer representing 12% of the trade receivables on the statement of financial position as at 30 June 2021. |
28 September | The financial statements of RBD for the year ending 30 June 2021were approved by directors. |
29 September | Audit work completed and the auditor’s report signed. |
3 October | Accidental release of toxic chemicals into the nearby river from RBD’s palm oil refinery resulting in severe damage to the environment and was hauled by the authorities for non-compliance with laws and regulations. Management had amended and made adequate disclosure of the event in the financial statements. |
26 October | The 2021 annual report with the audited financial statements for the year ended 30 June 2021 was issued to the members (shareholders) of RBD. |
29 October | A fire at one of RBD’s main palm oil refinery plants destroyed the refinery facilities. Reconstructing a new palm oil refinery plant will take twelve months, with a consequential loss in palm oil refinery production during this time. |
REQUIRED
(a) List the audit procedures that can be used prior to the auditor’s report being signed to identify events that may require adjustment or disclosure in the financial statements.
(b) For each of the following three dates:
- 30 August 2021
- 3 October 2021, and
- 29 October 2021:
(i) State whether the events occurring on those dates are adjusting or non-adjusting according to AASB 110 / IAS 10 Events After the Reporting Period, giving reasons for your decision.
(ii) Explain the auditor’s responsibility and the audit procedures that should be carried out.
(6 + [9 + 18] = 33 marks)
Response Template
3(a) Answer (6 marks) | Marks |
Audit procedures |
3(b)(i) & (ii) | Marks | |||
Date (2021) | Event | (i) Adjusting/Non-adjusting with reasons/ justifications ( 3 x 3 = 9 marks ) | (ii) Auditor’ responsibility and audit procedures to be carried out. ( 6 x 3 = 18 marks ) | |
30 August | A major customer was ordered to be wound up, and a Liquidator was appointed | |||
3 October | Accidental release of toxic chemicals into the nearby river. | |||
29 October | Fire at a major RBD refinery plant | |||
Expert Answer:
Answer and Explanation 3a Answer 6 marks Marks Audit procedures 3bi ii Marks Date 2021 Event i AdjustingNonadjusting with reasons justifications 3 x 3 9 marks ii Auditor responsibility and audit proce... View the full answer
