Your firm is the external auditor of Letterbox Group Ltd (Letterbox) for the year ended 30 November 20X4. Letterbox is an international trading group with a head office in Kuala Lumpur. 

On 1 November 20X4, Letterbox acquired 100% of the ordinary share capital of Pampas Holdings (Pampas), a company operating in South America, which is audited by Santos, another firm of external auditors. Your enquiries have found that Santos will not grant your firm access to its external audit working papers nor provide any other information in respect of their audit of Pampas. 

The directors of Letterbox have stated that your firm will not be given access to the accounting records of Pampas and have refused to disclose further information about the activities of Pampas. Letterbox's draft financial statements show consolidated profit before tax for the year ended 30 November 20X4 of RM19.2 million. Included within this figure is profit before tax of RM2.4 million in respect of one month's trading for Pampas. 

Requirements: 

(a) Discuss the implications of the above for the auditor's report on the consolidated financial statements of Letterbox for the year ended 30 November 20X4.

(b) Discuss whether or not its appropriate for your firm to continue to act as letterbox's external auditor.

Answer rating: 100% (QA)

a The review working papers were the property of the reviewer In the given situation Santos has a ri... View the full answer