Key Misstatements

Description

(1)

Funds under management (FUM) contained errors in calculation which resulted an overstatement of the accounts.

Amount

$25,000

Management Action

Management corrected the accounts in the final Financial Reports

(2)

ABC is also involved in a court case brought by clients suing the company for data breaches. To date, the audit evidence obtained is a verbal confirmation from ABC's management that they have received a claim of $90,000 against the firm. ABC's legal adviser believes it is probable that the company will be found guilty and will have to pay the amount. The $90,000 has not been recognised as a provision in the financial statements for the year ended 30 June 2020.

Amount

$90,000

Management action

Management disagreed with the advice from the legal adviser. As such, they have not altered the accounts in the final Financial Statements.

The audit team believes this amount should be recorded in the financial statements at 30 June 2020.

What action auditor should take ?