Consider each of the following independent situations which have come to your attention. Ineach of the following independent and material situations assume that the client is areporting entity and that a general-purpose financial report has been prepared and audited:Event 1: Part of Steel Limited's operations are in South America. Recent changes ofgovernment have made it impossible for you to verify the key accounts of inventory, fixedassets and cash and related income statement balances(50 -80 words)Event 2: The management of Surf Limited's has refused to disclose a few, director relatedtransactions on the grounds of commercial confidentiality. The financial controller remindsyou that no other errors have been found in the financial report and states that thetransactions are immaterial and therefore irrelevant to the users of the financial report. (50 -80 words)Event 3: The annual report of Ranger Limited includes a detailed graph showing revenue forthe last 10 years. You note that there are some inconsistencies between the graph and thefigures in the audited financial report. Management does not want to change the graphbecause it would involve increased printing costs. (50 -80 words)Event 4: Upon review of the recent history of their specialised mining equipment MincoLimited changed the service lives for depreciation purposes on this equipment from five yearsto three years. This change resulted in a material amount of additional depreciation.
Consider each of the following independent situations which have come to your attention. In
each of the following independent and material situations assume that the client is a
reporting entity and that a general-purpose financial report has been prepared and audited:
Event 1: Part of Steel Limited's operations are in South America. Recent changes of
government have made it impossible for you to verify the key accounts of inventory, fixed
assets and cash and related income statement balances(50 -80 words)
Event 2: The management of Surf Limited's has refused to disclose a few, director related
transactions on the grounds of commercial confidentiality. The financial controller reminds
you that no other errors have been found in the financial report and states that the
transactions are immaterial and therefore irrelevant to the users of the financial report. (50 -80 words)
Event 3: The annual report of Ranger Limited includes a detailed graph showing revenue for
the last 10 years. You note that there are some inconsistencies between the graph and the
figures in the audited financial report. Management does not want to change the graph
because it would involve increased printing costs. (50 -80 words)
Event 4: Upon review of the recent history of their specialised mining equipment Minco
Limited changed the service lives for
to three years. This change resulted in a material amount of additional depreciation.
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