Wooden Co., a limited liability company, produces numerous electronic products which it sells to both wholesalers...

 

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Wooden Co., a limited liability company, produces numerous electronic products which it sells to both wholesalers and retailers. The statement of financial position for the years ended 2020 and 2019 are set out below. Last year, materiality for the financial statements as a whole was set at $10,000. Non-current assets Tangible non-current assets Investments Current assets Inventory Receivables Cash at bank Cash in hand Total assets Current liabilities Trade payables Bank loan Long-term liabilities Bank loan Provision Wooden Company Statement of Financial Position As of December 31, 2020, and 2019 Instructions: 52 78 12 1 143 121 5 126 (Amounts are in thousands) Capital and reserves Share capital Reserves Total liabilities *The provision of $20,000 consists entirely of a warranty provision. 20 2 165 20 20 2 (3) 165 179 136 34 1 350 133 5 138 21 2 373 25 2 208 373 1. Explain audit risk. 2. Discuss whether the materiality level for the financial statements as a whole used in 2019 will be appropriate for this year's audit, giving reasons for your answer. 3. Review the statement of financial position given above and state the areas in which audit work should be concentrated, giving reasons in each case. Wooden Co., a limited liability company, produces numerous electronic products which it sells to both wholesalers and retailers. The statement of financial position for the years ended 2020 and 2019 are set out below. Last year, materiality for the financial statements as a whole was set at $10,000. Non-current assets Tangible non-current assets Investments Current assets Inventory Receivables Cash at bank Cash in hand Total assets Current liabilities Trade payables Bank loan Long-term liabilities Bank loan Provision Wooden Company Statement of Financial Position As of December 31, 2020, and 2019 Instructions: 52 78 12 1 143 121 5 126 (Amounts are in thousands) Capital and reserves Share capital Reserves Total liabilities *The provision of $20,000 consists entirely of a warranty provision. 20 2 165 20 20 2 (3) 165 179 136 34 1 350 133 5 138 21 2 373 25 2 208 373 1. Explain audit risk. 2. Discuss whether the materiality level for the financial statements as a whole used in 2019 will be appropriate for this year's audit, giving reasons for your answer. 3. Review the statement of financial position given above and state the areas in which audit work should be concentrated, giving reasons in each case.

Answer rating: 100% (QA)

1 Audit Risk Explanation Audit risk involves the potential that auditors may issue an inappropriate ... View the full answer