Puan Yaya is the senior partner of Yaya & Co, a Chartered Accountants firm, which consists...

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Puan Yaya is the senior partner of Yaya & Co, a Chartered Accountants firm, which consists of five partners and 20 audit staff. Recently, the audit firm has been appointed as the external auditor of nation's leading jewelers "Habaib Jewelries Bhd." located at Kuala Lumpur. In order to complete this audit assignment within a month, a new audit team has been formed comprising Miss Zaza, a senior partner as the team leader and four other audit staff to assist him in the completion of the audit. Habaib Jewelries import almost ninety percent of their diamond and gold jewels requirement from overseas manufacturers. Apart from their Kuala Lumpur headquarter they also have four branches situated in important towns for the sale of their goods. In addition, their marketing division exports all types of their products to Japan, China, Hong Kong, Taiwan and South Korea. Despite the fact that no member of this audit team has previous experience in the audit of jewelries, the team members chartered out an audit program, planned to review their progress weekly and commenced their audit work. In fact one of their team members, Sarah, her husband has been working in Habaib Jewelries Bhd. as the Finance Manager and this helped the team to a great extent to obtain relevant records and information from the management. During the review of accounts receivables balance En.Anuar the audit staff noticed that nearly RM4 million has been over due from a customer in Hong Kong for more than three years as of the balance sheet date. On enquiry, the management replied in writing that they are more confident of collecting the dues even though they have stopped exporting their products three years ago to this customer. This matter has been discussed in the weekly review meeting and the team leader accepted the management reply. An examination of the balance sheet by En.Khairul the audit staff reveals that the jewelers disclosed RM1.2 billion inventories in the form of diamond and gold jewels. Despite the fact that the team members have no knowledge on how to place value on jewels, which normally requires the assistance of special technicians called jewel appraisers, it has been decided in the weekly review meeting to accept the inventory value furnished by the directors in their representation letter. At the end of one month the audit firm has issued a clean report to their client. Required b. (i) Discuss whether the auditors had been negligent in performing their duty by inventory valuation as declared in the management accepting the representation letter. Puan Yaya is the senior partner of Yaya & Co, a Chartered Accountants firm, which consists of five partners and 20 audit staff. Recently, the audit firm has been appointed as the external auditor of nation's leading jewelers "Habaib Jewelries Bhd." located at Kuala Lumpur. In order to complete this audit assignment within a month, a new audit team has been formed comprising Miss Zaza, a senior partner as the team leader and four other audit staff to assist him in the completion of the audit. Habaib Jewelries import almost ninety percent of their diamond and gold jewels requirement from overseas manufacturers. Apart from their Kuala Lumpur headquarter they also have four branches situated in important towns for the sale of their goods. In addition, their marketing division exports all types of their products to Japan, China, Hong Kong, Taiwan and South Korea. Despite the fact that no member of this audit team has previous experience in the audit of jewelries, the team members chartered out an audit program, planned to review their progress weekly and commenced their audit work. In fact one of their team members, Sarah, her husband has been working in Habaib Jewelries Bhd. as the Finance Manager and this helped the team to a great extent to obtain relevant records and information from the management. During the review of accounts receivables balance En.Anuar the audit staff noticed that nearly RM4 million has been over due from a customer in Hong Kong for more than three years as of the balance sheet date. On enquiry, the management replied in writing that they are more confident of collecting the dues even though they have stopped exporting their products three years ago to this customer. This matter has been discussed in the weekly review meeting and the team leader accepted the management reply. An examination of the balance sheet by En.Khairul the audit staff reveals that the jewelers disclosed RM1.2 billion inventories in the form of diamond and gold jewels. Despite the fact that the team members have no knowledge on how to place value on jewels, which normally requires the assistance of special technicians called jewel appraisers, it has been decided in the weekly review meeting to accept the inventory value furnished by the directors in their representation letter. At the end of one month the audit firm has issued a clean report to their client. Required b. (i) Discuss whether the auditors had been negligent in performing their duty by inventory valuation as declared in the management accepting the representation letter. Puan Yaya is the senior partner of Yaya & Co, a Chartered Accountants firm, which consists of five partners and 20 audit staff. Recently, the audit firm has been appointed as the external auditor of nation's leading jewelers "Habaib Jewelries Bhd." located at Kuala Lumpur. In order to complete this audit assignment within a month, a new audit team has been formed comprising Miss Zaza, a senior partner as the team leader and four other audit staff to assist him in the completion of the audit. Habaib Jewelries import almost ninety percent of their diamond and gold jewels requirement from overseas manufacturers. Apart from their Kuala Lumpur headquarter they also have four branches situated in important towns for the sale of their goods. In addition, their marketing division exports all types of their products to Japan, China, Hong Kong, Taiwan and South Korea. Despite the fact that no member of this audit team has previous experience in the audit of jewelries, the team members chartered out an audit program, planned to review their progress weekly and commenced their audit work. In fact one of their team members, Sarah, her husband has been working in Habaib Jewelries Bhd. as the Finance Manager and this helped the team to a great extent to obtain relevant records and information from the management. During the review of accounts receivables balance En.Anuar the audit staff noticed that nearly RM4 million has been over due from a customer in Hong Kong for more than three years as of the balance sheet date. On enquiry, the management replied in writing that they are more confident of collecting the dues even though they have stopped exporting their products three years ago to this customer. This matter has been discussed in the weekly review meeting and the team leader accepted the management reply. An examination of the balance sheet by En.Khairul the audit staff reveals that the jewelers disclosed RM1.2 billion inventories in the form of diamond and gold jewels. Despite the fact that the team members have no knowledge on how to place value on jewels, which normally requires the assistance of special technicians called jewel appraisers, it has been decided in the weekly review meeting to accept the inventory value furnished by the directors in their representation letter. At the end of one month the audit firm has issued a clean report to their client. Required b. (i) Discuss whether the auditors had been negligent in performing their duty by inventory valuation as declared in the management accepting the representation letter. Puan Yaya is the senior partner of Yaya & Co, a Chartered Accountants firm, which consists of five partners and 20 audit staff. Recently, the audit firm has been appointed as the external auditor of nation's leading jewelers "Habaib Jewelries Bhd." located at Kuala Lumpur. In order to complete this audit assignment within a month, a new audit team has been formed comprising Miss Zaza, a senior partner as the team leader and four other audit staff to assist him in the completion of the audit. Habaib Jewelries import almost ninety percent of their diamond and gold jewels requirement from overseas manufacturers. Apart from their Kuala Lumpur headquarter they also have four branches situated in important towns for the sale of their goods. In addition, their marketing division exports all types of their products to Japan, China, Hong Kong, Taiwan and South Korea. Despite the fact that no member of this audit team has previous experience in the audit of jewelries, the team members chartered out an audit program, planned to review their progress weekly and commenced their audit work. In fact one of their team members, Sarah, her husband has been working in Habaib Jewelries Bhd. as the Finance Manager and this helped the team to a great extent to obtain relevant records and information from the management. During the review of accounts receivables balance En.Anuar the audit staff noticed that nearly RM4 million has been over due from a customer in Hong Kong for more than three years as of the balance sheet date. On enquiry, the management replied in writing that they are more confident of collecting the dues even though they have stopped exporting their products three years ago to this customer. This matter has been discussed in the weekly review meeting and the team leader accepted the management reply. An examination of the balance sheet by En.Khairul the audit staff reveals that the jewelers disclosed RM1.2 billion inventories in the form of diamond and gold jewels. Despite the fact that the team members have no knowledge on how to place value on jewels, which normally requires the assistance of special technicians called jewel appraisers, it has been decided in the weekly review meeting to accept the inventory value furnished by the directors in their representation letter. At the end of one month the audit firm has issued a clean report to their client. Required b. (i) Discuss whether the auditors had been negligent in performing their duty by inventory valuation as declared in the management accepting the representation letter.

Answer rating: 100% (QA)

Based on the given information it appears that the auditors may have been negligent in accepting the ... View the full answer