May Gems Sdn Bhd is a successful jewellery business. The company was recently bought over by...

May Gems Sdn Bhd is a successful jewellery business. The company was recently bought over by Boon who engages his brother-in-law, Wan, to perform the audit. Wan has experience in auditing small business companies but he has no experience or knowledge with the jewellery or gems business. After completing all the steps of the audit process, Wan issues an unqualified opinion that provides reasonable assurance that the company's financial statements contain no material misstatements. Comment on any potential problems with Wan's audit of May Gems Sdn. Bhd.

Expert Solution

We cannot say that Wasn't report will report will have compulsorily potential mistake but there is a chance to have in following areas

1. As we know the wan has no experience about this type of audit so he may make minute mistake in approaching the officials

2. As the bussiness is related to the family members of the wan he may get compromise with the independence of a auditor so that make some mistakes

3. As he don't have proper knowledge about that business so the auditor has to depend on expert advise on that case the expert may misuse his responsibility

4. As the business is dealing with very precious good i.e jewllerry every item is material if wan applies his experience of making his small audit he may miss some material items

5.as he is new ti this type of bussiness he may take much time tho complete audit so if he faces any time limitation so he will be made forcefully to complete audit in less time without making al possible enquiry

Hence, these are some of the situations were wan can make potential mistakes in audit

ekkarill92 answered 8 months ago

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