The minutes of the board of directors of Martin Catalogue Company Ltd for the year ended 31 December 20X3 are provided to you. (The company has a 31 December year-end.)
MEETING OF 15 FEBRUARY 20X3
Ruth Jackson, chair of the board, called the meeting to order at 4 pm. The following directors were in attendance:
John Aronson....................Karen Phillips
Fred Brick....................Lucille Reynolds
James Carlson........................J.T. Smith
Ian Jackson....................Raymond Werd
Ruth Jackson....................Ronald Wilder
The minutes of the meeting of 11 October 20X2 were read and approved.
Ian Jackson, managing director, discussed the new marketing plan for wider distribution of catalogues in Australia's eastern States. He made a motion for approval of increased expenditures of approximately $500 000 for distribution costs that was seconded by Wilder and passed unanimously.
The unresolved dispute with the Australian Taxation Office over the tax treatment of leased office buildings was discussed with Cecil Mackay, solicitor. In Mr Mackay's opinion, the matter will not be resolved for several months and may result in an unfavourable settlement.
J.T. Smith moved that the computer equipment that was no longer being used in the Kingston office, because of new equipment acquired in 20X2, be donated to the Kingston vocational school for use in its repair and training program. John Aronson seconded the motion and it was passed unanimously.
Annual cash dividends were unanimously approved as being payable 30 April 20X3, for shareholders registered on 15 April 20X3, as follows:
Class A ordinary-$10 per share
Class B ordinary-$5 per share
Officers' bonuses for the year ended 31 December 20X2 were approved for payment 1 March 20X3, as follows:
Ian Jackson-Managing Director...............................$130 000
Lucille Reynolds-Assistant Manager............................60 000
Ronald Wilder-Financial Controller.............................60 000
Fred Brick-Company Secretary..................................45 000
Meeting adjourned 6.30 pm.
MEETING OF 16 SEPTEMBER 20X3
Ruth Jackson, chair of the board, called the meeting to order at 4 pm. The following directors were in attendance:
John Aronson...........................Karen Phillips
Fred Brick...........................Lucille Reynolds
James Carlson...............................J.T. Smith
Ian Jackson...........................Raymond Werd
Ruth Jackson...........................Ronald Wilder
The minutes of the meeting of 15 February 20X3 were read and approved as a correct record of proceedings.
Ian Jackson, managing director, discussed the improved sales and financial condition for 20X3. He was pleased with the results of the catalogue distribution and cost control for the company. No action was taken.
The nominations for officers were made as follows:
Managing Director-Ian Jackson
Assistant Manager-Lucille Reynolds
Financial Controller-Ronald Wilder
Company Secretary-Fred Brick
The nominees were elected by unanimous voice vote.
Salary increases of 5%, exclusive of bonuses, were recommended for all officers for the year 20X4. Ian Jackson moved that such salary increases be approved, seconded by J.T. Smith and unanimously approved.

Ronald Wilder moved that the company consider adopting a profit-sharing plan for all employees as a way to provide greater incentive for employees to stay with the company. Considerable discussion ensued. It was agreed without adoption that Wilder should discuss the legal and tax implications with solicitor Cecil Mackay and a public accounting firm reputed to be knowledgeable about superannuation and profit-sharing plans-Able & Better, public accountants.
Ronald Wilder discussed expenditure of $58 000 for acquisition of a new computer for the Kingston office to replace equipment that was purchased in 20X2 and has proven ineffective. A settlement has been tentatively reached to return the equipment for a refund of $21 000. Wilder moved that both transactions be approved, seconded by Jackson and unanimously adopted.
Fred Brick moved that a loan of $360 000, from the Kingston Commonwealth Bank, be approved. The interest is floating at 2% above Australian Government Savings Bonds. As security for the loan, the company is to agree to the condition that the loan account balance is not to exceed 75% of current accounts receivable.
Seconded by Phillips and unanimously approved.
Lucille Reynolds, chair of the audit committee, moved that the public accounting firm of Moss & Lawson be selected again for the company's annual audit and related tax work for the year ended 31 December 20X3. Seconded by Aronson and unanimously approved.
Meeting adjourned 6.40 pm.
REQUIRED
a. How do you, as the auditor, know that all minutes have been made available to you?
b. Read the minutes of the meetings of 15 February and 16 September. Use the following format to list and explain any information that may be relevant to the 20X3 audit:
Information relevant to 20X3 audit Audit action required
1
2
c. Read the minutes of the meeting of 15 February 20X3. Did any of that information pertain to the 31 December 20X2 audit? Explain what the auditor should have done during the 31 December 20X2 audit with respect to the 20X3 minutes.

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Salary 20X3 20X4 lan Jackson, Managing Director Lucille Reynolds, Assistant Manager Ronald Wilder, Financial Controller Fred Brick, Company Secretary $240000 160000 160000 120000 $252000 168000 168000 126000