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 9 months ago

The owners of ASPRO Sdn Bhd and ASPIA Sdn Bhd decided to combine their business in...

The owners of ASPRO Sdn Bhd and ASPIA Sdn Bhd decided to combine their business in which a new company named ASPRO ASPIA Bhd was formed to take over the businesses of both companies from 1 January 2020. Below are their balance of accounts as at 31 December 2019. Balance of accounts as at 31 December 2019 ASPRO (RM) ASPIA (RM) Property, plant and equipment 400,000 600,000 Investment property 200,000 100,000 Cash 40,000 10,000 Trade receivables 100,000 60,000 Inventories 60,000...

QUESTION 2 Liyala Sdn Bhd is a successful family-run business. The board of directors is led...

QUESTION 2 Liyala Sdn Bhd is a successful family-run business. The board of directors is led by the founder of the company, Liyala who is both chairman and CEO. The other board members, a finance director and two non-executive directors, are also Liyala’s brother and daughter. The members of Liyala family own all the share capital of the company.The company does not have a company secretary, and its auditors are a local firm of accountants in the town where Liyala...

Limpah Kurnia Sdn Bhd (LKSB) is an engineering company that started a new business with an...

Limpah Kurnia Sdn Bhd (LKSB) is an engineering company that started a new business with an opening cash balance of RM85,000. This new business will focus on sales component parts to all potential customers located in Sungkai, Perak. The following are the budgeted data of LKSB for the year 2020. 1. In January 2020, to start a business the company has rented a double storey building for its operation at RM5,000 per month with RM20,000 rental deposit. Rental deposit is...

Assume that Covidabravo Sdn. Bhd. is a large merchandising wholesale business operating in Malaysia. The company...

Assume that Covidabravo Sdn. Bhd. is a large merchandising wholesale business operating in Malaysia. The company is affected by the Covid-19 pandemic. Hence, the top management has called for ideas on potential strategies recommendation to overcome potential negative impact of the pandemic on profitability and solvency of the company. As one of the bright new management executives, you are eager to present your recommendation in the next coming online management meeting. To do that, you need to show some calculations,...

Question 1 Tap Sdn Bhd bought an asset on 5 April 2017 at a cost of...

Question 1 Tap Sdn Bhd bought an asset on 5 April 2017 at a cost of RM180,000. The asset had an expected useful life of 10 years and an expected residual value of RM20,000. The company applies straight-line depreciation to this category of non-current assets. It also charges a full year depreciation in the year of acquisition and no depreciation in the year of disposal. Its financial year ends on 31 December. At 31 December 2018, the company revalued the...

Bintara Sdn. Bhd., a company resident in Malaysia, manufactures microchip. Recently, Prestige Pte. Ltd., a foreign...

Bintara Sdn. Bhd., a company resident in Malaysia, manufactures microchip. Recently, Prestige Pte. Ltd., a foreign company, discovered a new way of processing data at a faster speed. Bintara Sdn. Bhd. approaches Prestige Pte. Ltd. for the transfer of technical know-how. Prestige Pte Ltd agreed to this and demand a payment of RM500,000. This amount is payable on 15 June 2019 and to be paid as follows: I. RM200,000 to be paid to Prestige Pte Ltd branch in Malaysia II....

The Nanjo Van(NV) Sdn Bhd is a private limited company incorporated in Malaysia. Starting its business...

The Nanjo Van(NV) Sdn Bhd is a private limited company incorporated in Malaysia. Starting its business in the last 5 years, NV already employs 70 dispatch staffs for delivery services. The company currently owns 15 vans and 20 motorcycles, some were purchased new, and some were acquired second-hand. Since the pandemic of Covid-19 early 2020, the company suffers from inadequate resources as many trading companies now need transport facilities to sell their products. The company then decides to lease 10...

AFX Sdn Bhd is trying to decide whether to accept a business loan or a lease...

AFX Sdn Bhd is trying to decide whether to accept a business loan or a lease financing facility for an equipment purchase. The equipment cost $60,000 with 3-year economic life, depreciated annually based on MACRS 3-year class with the following rates: Year 1 = 33%; Year 2 = 45%; Year 3 = 15%; Year 4 = 7%. If AFX accepts the business loan option, the 3-year loan will attract an interest rate at 12% interest calculated on a yearly reducing...

TG Sdn. Bhd. is an electrical manufacturing company located in Pagoh. It is a wellestablished company...

TG Sdn. Bhd. is an electrical manufacturing company located in Pagoh. It is a wellestablished company with a favorable reputation for the quality of their products. The company manages to increase its production to meet their customer’s demand. Among the company’s goals is to have a better management in controlling product costs. Presented below is the information for the year ended 31 December 2019: RM Sales 6,300,000 Sales Expenses 210,000 Administration Expenses 135,000 Income Tax Expenses 75,000 Direct Material Purchased...

One of the subsidiary of the company Dronedelivery Sdn Bhd is producing delivery drones. With the...

One of the subsidiary of the company Dronedelivery Sdn Bhd is producing delivery drones. With the existing technology, their variable per unit is $480 and annual fixed cost, including maintenance expenses, total $1,120,000. However, with the proposed new technology variable costs, are projected to be cut in half to $240 per unit while fixed costs are expected to double to $3,240,000. Given the anticipated new costs structure and no change in the pricing structure of the drones, the breakeven level...

Question