necessary adjustments. However, the directors refuse to amend the financial statements toSimon and Co has been engaged to perform an audit for High Trendy Sdn Bhd forthat the difference is due to an adjustment to inventory that had not been reflected in thedraft financial statements. After reviewing the inventory adjustment, you have made thethe year ended 31 December 20xx. While finalizing the audit, you noted that the net profitis MYR 350,000 in the directors' report compared with MYR 500,000 in the StatementCASE 15JonComprehensive Income. Based on your discussion with the management, you find oute the difference is due to an adjustment to inventory that had not been reflected in theocessary adjustments. However, the directors refuse to amend the financial statements toreflect the adjustment.Required:Discuss the type of audit opinion and draft an auditor's report to accompany the abovesituation.

A qualified opinion is expressed when the financial statements namely the income statement,…

Jon Simon and Co has been engaged to perform an audit for High Trendy Sdn Bhd for the year ended 31 December 20xx. While finalizing the audit, you noted that the net profit s MYR 350,000 in the directors' report compared with MYR 500,000 in the Statemnent of Comprehensive Income. Based on your discussion with the management, you find out that the difference is due to an adjustment to inventory that had not been reflected in the draft financial statements, After reviewing the inventory adjustment, you have made the necessary adjustments. However, the directors refuse to amend the financial statements to refiect the adjustment. Required: Discuss the type of audit opinion and draft an auditor's report to accompany the above iruation.

Jon Simon and Co has been engaged to perform an audit for High Trendy Sdn Bhd for the year ended 31 December 20xx. While finalizing the audit, you noted that the net profit s MYR 350,000 in the directors' report compared with MYR 500,000 in the Statemnent of Comprehensive Income. Based on your discussion with the management, you find out that the difference is due to an adjustment to inventory that had not been reflected in the draft financial statements, After reviewing the inventory adjustment, you have made the necessary adjustments. However, the directors refuse to amend the financial statements to refiect the adjustment. Required: Discuss the type of audit opinion and draft an auditor's report to accompany the above iruation.

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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During the audit of BAC Company's 2029 financial statements, the auditors discovered that the 2029 ending inventory had been understated by $12,000 and that the 2029 beginning inventory was overstated by $9,000. Before the effect of these errors, 2029 pretax income had been computed as $115,000. What should be reported as the correct 2029 pretax income? A) $112,000 B) $94,000 C) $118,000 D) $136,000 E) $103,000
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