You have been the auditor of Data Ltd for two years. Your auditor’s report for Data for the year ended30 June 2018 was unmodified, indicating that in your opinion the financial report gave a true and fairview. In August 2018, Data obtained a large loan from Better Bank Ltd, to provide additional workingcapital. Subsequently Data suffered severe trading difficulties and was placed into liquidation in lateDecember 2018, with insufficient funds to repay the loan to Better Bank.Required:Outline a defense for your audit firm to any legal action taken by Better Bank to recover its loss. ( maximum 600 words)
You have been the auditor of Data Ltd for two years. Your auditor’s report for Data for the year ended30 June 2018 was unmodified, indicating that in your opinion the financial report gave a true and fairview. In August 2018, Data obtained a large loan from Better Bank Ltd, to provide additional workingcapital. Subsequently Data suffered severe trading difficulties and was placed into liquidation in lateDecember 2018, with insufficient funds to repay the loan to Better Bank.Required:Outline a defense for your audit firm to any legal action taken by Better Bank to recover its loss. ( maximum 600 words)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
You have been the auditor of Data Ltd for two years. Your auditor’s report for Data for the year ended
30 June 2018 was unmodified, indicating that in your opinion the financial report gave a true and fair
view. In August 2018, Data obtained a large loan from Better Bank Ltd, to provide additional
capital
December 2018, with insufficient funds to repay the loan to Better Bank.
Required:
Outline a defense for your audit firm to any legal action taken by Better Bank to recover its loss. ( maximum 600 words)
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