The draft statement of financial position of Holm PLC includes an amount of GHS 60,000 owed by Paulina PLC. The total assets of Holm PLC are GHS 40 million. The auditor has obtained the following audit evidence: • Paulina PLC is controlled by the chairman of Holm PLC, who is its majority shareholder. • The draft financial statements of Holm PLC do not provide any disclosures about the GHS 60,000 transaction, on the grounds that it is immaterial. • There is no information about the nature of the transaction, but the GHS 60,000 had been included in receivables at the end of the previous financial year. Required What further measures should the auditor take?
The draft statement of financial position of Holm PLC includes an amount of GHS 60,000 owed by Paulina PLC. The total assets of Holm PLC are GHS 40 million. The auditor has obtained the following audit evidence: • Paulina PLC is controlled by the chairman of Holm PLC, who is its majority shareholder. • The draft financial statements of Holm PLC do not provide any disclosures about the GHS 60,000 transaction, on the grounds that it is immaterial. • There is no information about the nature of the transaction, but the GHS 60,000 had been included in receivables at the end of the previous financial year. Required What further measures should the auditor take?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The draft
owed by Paulina PLC. The total assets of Holm PLC are GHS 40 million.
The auditor has obtained the following audit evidence:
• Paulina PLC is controlled by the chairman of Holm PLC, who is its majority
shareholder.
• The draft financial statements of Holm PLC do not provide any disclosures about
the GHS 60,000 transaction, on the grounds that it is immaterial.
• There is no information about the nature of the transaction, but the GHS 60,000 had
been included in receivables at the end of the previous financial year.
Required
What further measures should the auditor take?
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