Your firm is the auditor of EFG Pte Ltd (EFG) for the year ended 31 December 2020.
Question:
Your firm is the auditor of EFG Pte Ltd ("EFG") for the year ended 31 December 2020. You have just completed your audit fieldwork when the Finance Director of EFG sent you an email on the following situation. On 18 January 2021, EFG received a legal letter from a customer to claim for damages on a batch of product it purchased on 31 October 2020. The customer complained to EFG on 8 November 2020 about the defective product shipped.
(a) Discuss and describe the two (2) typical audit procedures you would have carried out on the review of subsequent event(s).
(b) Assume that the situation is material and you are scheduled to issue your audit report on 31 March 2021. Determine whether the event would require adjustment or disclosure in the 31 December 2020 financial statements.
Expert Answer:
a In the audit of subsequent events two typical procedures include 1 Inquiry and Confirmation Discus... View the full answer
