Please answer both questions with explanation.I will really upvote. Thanks Assume, Mr. Abdul Wasey is appointed as auditor in Galaxy Marbles Company. During the audit,he observed that the company is seriously violating tax laws. He observed that the companyunderstated its sales to mitigate the VAT (Value Added Tax). The actual sales of the company areOMR 700,000 but they were under stated as OMR 600,000. The rate of VAT is 2%.RequiredQ1. What would the auditor do to report this irregularity?Q2. How much tax is mitigated by the company by understating sales?

The misstatement due to violation of tax laws will suppress the actual income and the liability to…

Answered: auditor do to report this irregularity

Business

Accounting

auditor do to report this irregularity

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and applied at the planning stage of audit after determining audit objectives, scope, approach, and risk assessment.

Question

Please answer both questions with explanation.

I will really upvote. Thanks

Assume, Mr. Abdul Wasey is appointed as auditor in Galaxy Marbles Company. During the audit,
he observed that the company is seriously violating tax laws. He observed that the company
understated its sales to mitigate the VAT (Value Added Tax). The actual sales of the company are
OMR 700,000 but they were under stated as OMR 600,000. The rate of VAT is 2%.
Required
Q1. What would the auditor do to report this irregularity?
Q2. How much tax is mitigated by the company by understating sales?

Expert Solution

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Misstatements due to violation of tax laws

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Q1. The matter to be reported by the auditor regarding the irregularity

VIEW

Q2. The amount of tax mitigated by the company

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Audit procedures for items of Financial Statement

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