e auditor do to report this irregularity

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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?
Transcribed Image Text: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?
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