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In an audit of Malakat Mall Hypermarket for the financial year ended 30 June 2020, you discovered sufficient and reliable evidence on the following highly material independent subsequent events. An audit report was issued on 12 September 2020 and the client publishes its financial statement by 25 September 2020. State the appropriate alternative action for the situation. The alternative actions are as follows: • Adjust the June 30, 2020, financial statements. • Disclose the information in a footnote of the June 30, 2020, financial statements. • Request the client to recall the June 30, 2020, statements for revision • No action is required.

In an audit of Malakat Mall Hypermarket for the financial year ended 30 June 2020, you discovered sufficient and reliable evidence on the following highly material independent subsequent events. An audit report was issued on 12 September 2020 and the client publishes its financial statement by 25 September 2020. State the appropriate alternative action for the situation. The alternative actions are as follows: • Adjust the June 30, 2020, financial statements. • Disclose the information in a footnote of the June 30, 2020, financial statements. • Request the client to recall the June 30, 2020, statements for revision • No action is required.

FINANCIAL ACCOUNTING
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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In an audit of Malakat Mall Hypermarket for the financial year ended 30 June 2020, you discovered sufficient and reliable evidence on the following highly material independent subsequent events. An audit report was issued on 12 September 2020 and the client publishes its financial statement by 25 September 2020. State the appropriate alternative action for the situation. The alternative actions are as follows: • Adjust the June 30, 2020, financial statements. • Disclose the information in a footnote of the June 30, 2020, financial statements. • Request the client to recall the June 30, 2020, statements for revision • No action is required. The events are as follows. iv. On September 15, 2020, the auditor discovered that Ahsan-Ventures Incorporated, a wholly-owned subsidiary of Malakat Mall Hypermarket issued AED5 million, 10-year Sukuk at a 6 percent profit sharing rate in 2018. Malakat Mall was listed as a guarantor for the Sukuk. Since the spread of the Covid-19 outbreak, Ahsan- Venture's business was severely affected and unable to honor the profit-sharing payments due on 30 June and 31 December 2020. Select one: a. • Adjust the June 30, 2020, financial statements. • Request the client to recall the June 30, 2020, statements for revision C. • Disclose the information ina footnote of the June 30, 2020, financial statements. • No action is required.
Transcribed Image Text:In an audit of Malakat Mall Hypermarket for the financial year ended 30 June 2020, you discovered sufficient and reliable evidence on the following highly material independent subsequent events. An audit report was issued on 12 September 2020 and the client publishes its financial statement by 25 September 2020. State the appropriate alternative action for the situation. The alternative actions are as follows: • Adjust the June 30, 2020, financial statements. • Disclose the information in a footnote of the June 30, 2020, financial statements. • Request the client to recall the June 30, 2020, statements for revision • No action is required. The events are as follows. iv. On September 15, 2020, the auditor discovered that Ahsan-Ventures Incorporated, a wholly-owned subsidiary of Malakat Mall Hypermarket issued AED5 million, 10-year Sukuk at a 6 percent profit sharing rate in 2018. Malakat Mall was listed as a guarantor for the Sukuk. Since the spread of the Covid-19 outbreak, Ahsan- Venture's business was severely affected and unable to honor the profit-sharing payments due on 30 June and 31 December 2020. Select one: a. • Adjust the June 30, 2020, financial statements. • Request the client to recall the June 30, 2020, statements for revision C. • Disclose the information ina footnote of the June 30, 2020, financial statements. • No action is required.
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