QUESTION 3Khalish is the auditor of Bright Bhd. preparing the final audit for the year ended 30 September2021 and reviewing the audit working papers. Two issues summarised from the review are asfollows:Situation 1:During the year, Bright Bhd. was named as a defendant in a suit for damages by its mainsupplier, Sunny Sdn. Bhd. for breach of contract. In October 2021, an adverse decision toBright Bhd. was rendered, and it is required to pay RM2 million sum of damages to SunnySdn. Bhd.Situation 2:Bright Bhd. has acquired a new subsidiary, Metal Sdn. Bhd. to supply construction materials.The acquisition was taken place in October 2021, and the first transaction between them wascarried out in early November 2021. The management claim that they did not disclose theinformation on the acquisition and transaction since both activities were carried out after thebalance sheet date. In addition, the management keeps on giving excuses when asked about themanagement's written representation. It is the only thing outstanding before the auditor's signedand dated report.Required:b. Before Khalish completes the audit, critically analyse Bright Bhd.'s financial statementsfrom situations 1 and 2.

An auditor when performs the audit on the financial statements of the company have to give or in…

Answered: Before Khalish completes the audit,…

Business

Accounting

Before Khalish completes the audit, critically analyse Bright Bhd.'s financial statements from situations 1 and 2.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Mention and describe the service(s) that the auditing firm will offer to Bananera The Farm Ltd.

A: According to the general public, the purpose of the audit is to verify the authenticity of the…

Q: List three relevant facts about Apollo Shoes that you think might have an impact on the financial…

A: Step 1: Identify High Inventory LevelsHigh inventory levels at year-end could lead to several audit…

Q: You are auditing the balance in the prepaid insurance account for your audit client. a) Name and…

A: Prepaid Insurance : It is a type of current Asset which is shown in the Balance Sheet of a Company…

Q: basic step in auditing unclaimed salaried and wages is to verify disposition of the account…

A: Auditing means the independent checking of company operation by outsider. Auditor is a qualified and…

Q: Select the necessary words from the list of possibilities to complete the following statements. 1.…

A: There were two types of audit risks that auditor should assess before conducting an audit. Inherent…

Q: Think about the accounting courses you have taken to date. Assets, Liabilities, Stockholders Equity…

A: When appraising a company or assessing an investment opportunity, fundamental analysts usually start…

Q: After engaging Lakeside, your firm begins an analytic review. 1. Why do we begin an audit with an…

A: The audit firm would be responsible for conducting the audit engagement and performing the necessary…

Q: Assume that you are an auditor of a company. Explain any THREE categories of assertions that you…

A: While auditing financial statements of an entity the auditor is required to make assertions at…

Q: For my Auditing class: what type of test would I use to assess appropriate assertions for designated…

A: Auditing is the process of arriving at a conclusion or opinion towards the compliance of the…

Q: Describe the audit procedures you would use to learn about each of the situations listed. Begin…

A: Audit procedures are procedures adopted by auditors to obtain sufficient and appropriate audit…

Q: statement would appear in the: a. Engagement letter.

A: The right answer is option c. Management representation letter.

Q: our controls. (Present the answer in three columns, headed “Risk”, “Control” and

A: This commonplace establishes necessities concerning the method of characteristic and assessing risks…

Q: Case 4 - Audit of Non-Current Liabilities Ford Corporation issued 15-year, 10%, P6,000,000 note…

A: A note payable may be issued on a discount or a premium. The interest expense is recorded at the…

Q: Identify the primary concernsin the audit of owners’ equitytransactions.

A: Owner’s equity: Owner’s equity referred as the proportion of total worth of a corporation’s assets…

Q: audit procedures

A: S1 is true because the audit procedures are usually conducted by the audit staff. The auditor just…

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

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Audit procedures for items of Financial Statement

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

What are key audit matters? How do these affect the format of the audit report? b) Stewart Jones is reviewing the results of the subsequent events audit procedures. Stewart iswriting a report for his audit partner based on these results and will be attending a meetingtomorrow with the partner and representatives of the company to discuss them. The issue will bewhether the financial report should be amended, or additional notes included for thesesubsequent events.Many of the items are not material and Stewart will recommend that no action be taken withrespect to these. However, there are several items that Stewart believes are material and shouldbe discussed at the meeting. These are as follows.(a) The board is planning to issue shares in a private placement on 15 August. (b) The share issue is to fund the purchase of a 60 per cent stake in another company. Thenegotiations are in the final stages and although the contract is not yet signed it will be signedby 15 August. (c) A writ was…
What should occur if the audit report has already been issued and the auditor becomes aware of a situation that was present as of the Balance Sheet date (a subsequent event)?
a) What are key audit matters? How do these affect the format of the audit report? b) Stewart Jones is reviewing the results of the subsequent events audit procedures. Stewart is writing a report for his audit partner based on these results and will be attending a meeting tomorrow with the partner and representatives of the company to discuss them. The issue will be whether the financial report should be amended, or additional notes included for these subsequent events.Many of the items are not material and Stewart will recommend that no action be taken with respect to these. However, there are several items that Stewart believes are material and should be discussed at the meeting. These are as follows.(i) The board is planning to issue shares in a private placement on 15 August. (ii) The share issue is to fund the purchase of a 60 per cent stake in another company. The negotiations are in the final stages and although the contract is not yet signed it will be signedby 15 August.(iii)…
reflect on your experience completing an audit. Include thoughts on the process, whether you are interested in pursuing an audit career, or anything else that you would like to share about your experience in this auditing course.
Ryan is an audit manager in a reputed tax and audit firm. He is incharge of the firm's engagement's objectives, scope, action plans and audit recommendations. He has to release the final audit results for the financialyear along with the internal auditor's options/ results. Which approach will best help him to furnish the details? A) Using external source and process reports B) Using assignment and feedback charts C) Using visualization and interactive reports D) Using accounts payable and receivable reports