Pleasant Beverages Ltd has the following audit problems: • The company did not u
ID: 2521372 • Letter: P
Question
Pleasant Beverages Ltd has the following audit problems:
• The company did not update the listing for the changes in shareholding of the company
• The director’s minutes were not prepared for the current year • No annual general meeting (AGM) was held last year
• There was no written consent from the directors to act
• The company did not even justify the reason for not keeping proper records and holding the AGM
Required : For this scenario discuss the audit issues to be considered and what impact these issue would this have on the audit opinion. You may also justify the answer using relevant legislation such as the Corporations Act and relevant auditing standards.
Explanation / Answer
It's the waft of expertly vouched-for information in the marketplace that, when perceived as each dependable and important to funding decisions, offers uninformed and dispersed buyers the boldness to participate in a market as great as that which we experience in the U.S.
Following situations can give upward push to uncertainty
Litigation and claims
Suspicion of fraud
Non compliance with laws and rules
Going concern trouble
Scope problem
The auditor would handle the above uncertainties as follows:
Litigation and claims
The auditor will ought to examine whether or not the litigation and claims constitute contingent liabilities or provisions. If the claims signify contingent liabilities, and the customer has given sufficient disclosure, an emphasis of subject paragraph is required. If no disclosures were made a certified or antagonistic file will issued.
If, within the auditors opinion, the claims will have to be furnished and no provision has been made in the accounts, certified or hostile opinionwill accept.
Suspicion of fraud
If the auditor is precluded with the aid of the entity from acquiring sufficient right audit evidence to evaluate whether or not a fraud has, or is prone to have befell, the auditor must categorical a certified opinion or disclaimer of opinion.
If the auditor is unable to examine whether fraud has took place because of obstacles imposed via the circumstances as an alternative than by using entity, the auditor must recall the outcome on auditors record. Non compliance with laws and regulations If the auditor suspects an non compliance of legal guidelines and regulations however sufficient understanding are not able to be received for the suspected non compliance, the auditor must don't forget the influence of lack of audit proof on auditors report.
Going problem main issue
The auditor will have to investigate if a fabric uncertainty exists which may forged big doubt on the entitys capability to continue as a going main issue.
If enough disclosure is made in the fmancial statements, the auditor must specific an unqualified opinion however add a paragraph emphasizing the subject. If sufficient disclosure will not be made in thefinancial statements the auditor should categorical a certified or opposed opinion.
Scope challenge
When in sizeable doubt as to a fabric account balance and the
auditor can not receive sufficient correct audit evidence, he must categorical a qualified opinion or disclaimer of opinion.
One of the crucial segments of a enterprise has been incurring losses for last zero years. Gear of the phase has a e-book price of Rs. Eight million. E management has made a provision for permanent diminution within the ue of assets amounting to Rs. 2 million. What will be the have an effect on on your audit file?
This is case of gigantic uncertainty and a paragraph emphasizing the shall be in order. Nonetheless, if the auditor concludes that-the business stipulations will not reinforce in future, a lack of Rs. 6 million wishes to be supplied. Full disclosure does not justify non realization of a provision. Consequently the auditor will ought to problem a certified opinion.