1. The auditor noted that its lessor client waived certain rental collections from its tenants due to COVID-19, as such, the client's management accounted the rental waivers as lease modification under PFRS 16. Was the Management correct?
2.  
   To test the completeness of the population of the lease contracts for 2022 and check the accuracy of lease/rent expense, Auditor AAA requested its audit client BBB Realty to provide the list of lease agreements in 2022 and prior years as well where rent expense have been recognized. BBB  Realty refused on the ground that since the subject of the Audit is year 2022, the prior year lease contracts shall serve no use. Was BBB Realty's argument valid?
3.  
   Auditor CCC, in its examination of DDD Realty's Financial Statements disclosure on Contingent Liabilities arising from claims of EEE Company, consulted with the outside counsel of EEE Company. Was this a valid audit procedure?
4. 
   It is becoming probable that the customers X, Y and Z of WWW Realty will enter bankruptcy. Can the receivable from X, Y and Z be considered as credit-impaired?
   Auditor CCC noted that its client FFF Realty made changes on its revenue recognition in view of the fact that the historical customer cancellations and back-outs no longer support its current threshold of customers' equity before commencing revenue recognition. Auditor CCC advised that historical customer cancellations and back-outs are no longer relevant since collectability has already been assessed considering the past good historical relationship with the customer, age and pricing of the property. Is the auditor correct?
5.  
   A particular lot of a real estate company has a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. However, these portions cannot be sold separately as of the financial reporting date. How shall these be reported in the FS?
6.  
   Auditor AAA of C Realty Company is tracing the cost incurred but not yet billed costs and then tracing the same to supporting documents such as invoices and accomplishment reports from the contractors and official receipts. (a) Were these valid tests of controls? (b) What particular account is primarily being tested here, revenue, cost of sales, contingencies, investment property, or inventory?
7.  
   May the accrued interest receivable pertaining to interest earned on contracts receivables and advances to officers and employees which pertain to unliquidated cash advances that are due within one year be reported as "Other Receivables" of a real estate company?

Answer rating: 100% (QA)

1The auditor noted that its lessor client waived certain rental collections from its tenants due to COVID19 as such the clients management accounted the rental waivers as lease modification under PFRS ... View the full answer