QUESTION 3 Khalish is the auditor of Bright Bhd. preparing the final audit for the year ended 30 September 2021 and reviewing the audit working papers. Two issues summarised from the review are as follows: Situation 1: During the year, Bright Bhd. was named as a defendant in a suit for damages by its main supplier, Sunny Sdn. Bhd. for breach of contract. In October 2021, an adverse decision to Bright Bhd. was rendered, and it is required to pay RM2 million sum of damages to Sunny Sdn. Bhd. Situation 2: Bright Bhd. has acquired a new subsidiary, Metal Sdn. Bhd. to supply construction materials. The acquisition was taken place in October 2021, and the first transaction between them was carried out in early November 2021. The management claim that they did not disclose the information on the acquisition and transaction since both activities were carried out after the balance sheet date. In addition, the management keeps on giving excuses when asked about the management's written representation. It is the only thing outstanding before the auditor's signed and dated report. Required: c. Should the audit partner sign the auditor's report before obtaining the written representation from management? Justify your answer.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
QUESTION 3
Khalish is the auditor of Bright Bhd. preparing the final audit for the year ended 30 September
2021 and reviewing the audit working papers. Two issues summarised from the review are as
follows:
Situation 1:
During the year, Bright Bhd. was named as a defendant in a suit for damages by its main
supplier, Sunny Sdn. Bhd. for breach of contract. In October 2021, an adverse decision to
Bright Bhd. was rendered, and it is required to pay RM2 million sum of damages to Sunny
Sdn. Bhd.
Situation 2:
Bright Bhd. has acquired a new subsidiary, Metal Sdn. Bhd. to supply construction materials.
The acquisition was taken place in October 2021, and the first transaction between them was
carried out in early November 2021. The management claim that they did not disclose the
information on the acquisition and transaction since both activities were carried out after the
balance sheet date. In addition, the management keeps on giving excuses when asked about the
management's written representation. It is the only thing outstanding before the auditor's signed
and dated report.
Required:
c. Should the audit partner sign the auditor's report before obtaining the written representation
from management? Justify your answer.
Transcribed Image Text:QUESTION 3 Khalish is the auditor of Bright Bhd. preparing the final audit for the year ended 30 September 2021 and reviewing the audit working papers. Two issues summarised from the review are as follows: Situation 1: During the year, Bright Bhd. was named as a defendant in a suit for damages by its main supplier, Sunny Sdn. Bhd. for breach of contract. In October 2021, an adverse decision to Bright Bhd. was rendered, and it is required to pay RM2 million sum of damages to Sunny Sdn. Bhd. Situation 2: Bright Bhd. has acquired a new subsidiary, Metal Sdn. Bhd. to supply construction materials. The acquisition was taken place in October 2021, and the first transaction between them was carried out in early November 2021. The management claim that they did not disclose the information on the acquisition and transaction since both activities were carried out after the balance sheet date. In addition, the management keeps on giving excuses when asked about the management's written representation. It is the only thing outstanding before the auditor's signed and dated report. Required: c. Should the audit partner sign the auditor's report before obtaining the written representation from management? Justify your answer.
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education