Question 1 - PART A Yaso plc is a manufacture company and its financial year ended at 31st December 2019. Total assets are £40m and net profit before tax is £12m. Yaso plc’s trade receivables ledger includes a large number of customers. The year-end trade receivables balance is £4m (comparable to £2m in 2018) and the allowance for trade receivables is £400,000 (comparable to £600,000 in 2018). PART A Requirement: • Describe substantive procedures the auditor should perform to obtain sufficient and appropriate audit evidence in relation to Yaso plc’s trade receivables.
Question 1 - PART A
Yaso plc is a manufacture company and its financial year ended at 31st December 2019.
Total assets are £40m and net profit before tax is £12m. Yaso plc’s trade receivables ledger
includes a large number of customers. The year-end trade receivables balance is £4m
(comparable to £2m in 2018) and the allowance for trade receivables is £400,000 (comparable
to £600,000 in 2018).
PART A Requirement:
• Describe substantive procedures the auditor should perform to obtain sufficient and
appropriate audit evidence in relation to Yaso plc’s trade receivables.
QUESTION 1 - PART B
According to ISA 260, it is important for auditors to communicate throughout the audit
with those charged with governance.
PART B Requirement:
• Explain why it is important for auditors to communicate with those charged
with governance.
• Identify three examples of matters which the auditor may communicate to those charged
with governance.
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