Question $2$

Boyd Ltd $($Boyd$)$

During the external audit of Boyd, it has been identified that a payable amount of $130\mathrm{.}000$ to Junk Ltd $($Junk$)$ one of Boyd's supplier was paid to an unrelated account.

The error was a result of Boyd's purchasing clerk making the payment to an account send by an individual claiming to represent Junk. The individual was thereafter identified as a fraudster.

Boyd believes that no further liability is owed to Junk. Boyd's profit before tax amounted to $843\mathrm{.}000$

Muffin Ltd $($Muffin$)$

During the external audit of Muffin for the year ending $31$ December $2019,$ the audit team discovered correspondence with Cream Ltd $($Cream$)$ stating that Cream will not be renewing its contract with Muffin which is due to expire on $30$ April $2020.$ Cream is a major client for Muffin making up for $80\%$ of its business.

The cash flow forecast examined by the audit team for the year ended $31$ December $2020$ included receipts for Cream beyond the contract expiration date. The cashflow forecasts where assessed in order to evaluate Muffin's ability to operate as a going concern company.

Dutch Ltd $($Dutch$)$

Your firm was appointed by Dutch to perform a limited assurance engagement on Alan Ltd $($Alan$)$ an acquisition target. Alan is a UK firm with considerable portion of its operations taking place in Spain. Your firm's local office in Spain refused to offer you any support which limits your firm's ability to obtain sufficient and appropriate audit evidence.

Requirements

$2\mathrm{.}1$ Outline additional audit procedures to perform for Boyd Limited only

$(3$ Marks$)$

$2\mathrm{.}2$ State with reasons, the implications for your firm's audit or assurance reports.

$(17$ Marks$)$