- 10 Marks
AA – May 2021 – L2 – Q4a and b – Completion Procedures and Reporting
Discuss whether the financial statements require amendment and audit procedures to conclude on the amendment.
Question
Fafa Ltd operates a chain of food wholesalers across the Volta Region of Ghana, and its year-end was 30 September, 2019. The final audit is nearly complete, and it is proposed that the financial statements and audit report will be signed on 13 December, 2019. Revenue for the year is GHS 79 million, and profit before taxation is GHS 8.5 million. The following event occurred after the year-end.
Receivable:
A customer of Fafa Ltd has been experiencing cash flow problems, and its year-end balance is GHS 0.8 million. The company has just become aware that its customer is experiencing significant going concern difficulties. Fafa Ltd believes that as the company has been trading for many years, they will receive some, if not full, payment from the customer, hence they have not adjusted the receivable balance.
Required:
i) Discuss whether the financial statements require amendment. (1 mark)
ii) Describe THREE (3) audit procedures that should be performed to form a conclusion on the amendment.
(3 marks)
b) Describe management’s responsibility for subsequent events occurring between:
i) The year-end date and the date the Auditor’s report is signed. (3 marks)
ii) The date the Auditor’s report is signed and the date the financial statements are issued. (3 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Audit Procedures, Financial Statement Amendment, IAS 10, Receivable, Subsequent Events
- Level: Level 2
- Topic: Completion Procedures and Reporting
- Series: MAY 2021