Jonas Worth is the engagement partner for the financial report audit of Caufield Ltd for theyear ended 31 December, 20X7. The following material events or transactions have come toWood's attention before he is scheduled to issue his report on 28 February, 20X8.a) On 3 January, 20X8, Caufield Ltd received a shipment of raw materials from korea. Thematerials had been ordered in October 20X7, and shipped FOB shipping point inNovember 20X7 . (50 -80 words)b) On 15 January, 20X8, the company settled and paid a personal injury claim of a formeremployee as the result of an accident that occurred in March 20X0. The company hadnot previously recorded a liability for the claim (50 -80 words)c) On 25 January, 20X8, the company agreed to purchase for cash the outstanding sharesof La Trobe Electrical Ltd. The acquisition is likely to double the sales volume of CaufieldLtd (50 -80 words)d) On 1 February, 20X8, a plant owned by Caufield Ltd was damaged by a flood, resultingin an uninsured loss of inventory (50 -80 words)Required:For each of the above events or transactions, discuss audit procedures that should havebrought the item to the auditor's attention, and indicate the treatment required in the financial report. Give reasons for your decision.Client Accounting Treatment Justificati
Jonas Worth is the engagement partner for the financial report audit of Caufield Ltd for the
year ended 31 December, 20X7. The following material events or transactions have come to
Wood's attention before he is scheduled to issue his report on 28 February, 20X8.
a) On 3 January, 20X8, Caufield Ltd received a shipment of raw materials from korea. The
materials had been ordered in October 20X7, and shipped FOB shipping point in
November 20X7 . (50 -80 words)
b) On 15 January, 20X8, the company settled and paid a personal injury claim of a former
employee as the result of an accident that occurred in March 20X0. The company had
not previously recorded a liability for the claim (50 -80 words)
c) On 25 January, 20X8, the company agreed to purchase for cash the outstanding shares
of La Trobe Electrical Ltd. The acquisition is likely to double the sales volume of Caufield
Ltd (50 -80 words)
d) On 1 February, 20X8, a plant owned by Caufield Ltd was damaged by a flood, resulting
in an uninsured loss of inventory (50 -80 words)
Required:
For each of the above events or transactions, discuss
brought the item to the auditor's attention, and indicate the treatment required in the financial report. Give reasons for your decision.
Client Accounting Treatment Justificati
Step by step
Solved in 3 steps
