Miss Yu is performing the audit on leases of TipuPte Ltd for the year ended 31...

Miss Yu is performing the audit on leases of TipuPte Ltd for the year ended 31 December 2016. From the ledger, Miss Yu noticed that there are three items. which are on lease, i.e. a van, a lathe machine and the oven. As part of the audit, Miss Yu would send standard confirmation letters to the lessors. Two days before the end of the fieldwork, Miss Yu received confirmation from the van's lessor. Miss Yu's client has short taken the van lease by $10,000. Miss Yu sent the second reminder confirmation and managed to receive the confirmation from the lathe machine's lessor. The lease would only start from 1 January 2017. Miss Yu has to yet receive any confirmation pertaining to the leasing of the oven.

Required

a. What should Miss Yu do in the future to make sure that the confirmation letter are received and answered promptly?

b. There are discrepancies to two of the items. What further action should Miss Yu take?

Expert Solution

Miss Yu is performing the audit on leases of TipuPte Ltd for the year ended 31 December 2016.

Ans: a) Miss Yu do in the future to make sure that the confirmation letter are received and answered promptly

Three actions that Miss Yu must take to ensure this doesn't happen are:

1. Miss Yu having gained the experience that holdup can happen in receiving confirmations can occur should ask for confirmations well in advance from next year.

2. Miss Yu can send a second and then third prompt for confirmation if needed.

3) Miss Yu can do a telephonic conversation and ask to send the corroboration.

Ans:b) For the discrepancies Jack would:

1) For 10,000 not paid by his client for lease, he has to declare this to his client & ask him to also correct the liability value or create a new one.

2) The value of the lease has to be paid has to be mention in the auditor's report.

For the other discrepancy:

1) The books include correcting because the lease has not been started this year. For this it has to be struck from the balance sheet of this year.

2) During memo to financial statements, an exposé has to be given. In Auditor's report also this thing would be highlighted.

ekkarill92 answered 6 months ago

Question Jack is performing the audit on leases of Anglo Ltd for the year ended 31...

Question Jack is performing the audit on leases of Anglo Ltd for the year ended 31 December 2019. From the ledger, Jack noticed that there are three items, which are on the lease, i.e. a van, a lathe machine and the oven. As part of the audit, Jack would send standard confirmation letters to the lessors. Two days before the end of the fieldwork,Jack received confirmation from the van’s lessor. Jack’s client has had a short payment of the van...

The financial year of your audit client Pickles Ltd ended on 31 December 2019. Your audit...

The financial year of your audit client Pickles Ltd ended on 31 December 2019. Your audit report was signed on 20 February 2020 and the financial statements were issued on 5 March 2020. Each of the following independent events, which the auditors have discovered after the end of the financial year, have a material effect on the financial statements: 14 February 2020 You found that the audit client had lost a court case for breaching a contract with a supplier....

You are the audit senior responsible for the audit of Spectrum Ltd for the year ended...

You are the audit senior responsible for the audit of Spectrum Ltd for the year ended 30 June 2018. During your initial planning meeting with Justin James, the chief ﬁnancial oﬃcer (CFO), he informs you of the following changes in the company’s operations. (a) To help achieve budgeted sales for the year, Spectrum is about to introduce bonuses for sales staﬀ. The bonuses will be an increasing percentage of the gross sales made by each salesperson above certain monthly targets....

You are the field manager on the audit of Hotshot Ltd for the year ended 30...

You are the field manager on the audit of Hotshot Ltd for the year ended 30 September 2015. You have asked Michelle Psi, a new audit analyst to assist you and you are busy ensuring that she has a proper understanding of the work to be done before she starts. Consider the following procedures, which are included in the audit programmes: Vouch a sample of sales transactions recorded in the sales journal to ensure that they have been appropriately authorised...

During an audit of the inventory records of Winthrop Ltd for the year ended June 30,...

During an audit of the inventory records of Winthrop Ltd for the year ended June 30, 2019, the auditor discovered that the ending inventory balance was overvalued by $180,000. On further investigation, it was discovered that the ending inventory for the previous year was correctly counted and valued, but that the inventory balance as at June 30, 2017, was undervalued by $500,000. Spurred on by the concern for errors undetected in previous periods, a thorough investigation was carried out as...

You are performing an annual audit of a company with a December 31, 20X1 year-end. Your...

You are performing an annual audit of a company with a December 31, 20X1 year-end. Your firm is planning to complete the audit on March 1, 20X2 and release the report on March 31, 20X2. On March 15, 20X2, two material subsequent events occur: • A fire caused extensive damage to the company’s manufacturing plant in New Jersey. • A large customer went bankrupt. At December 31, 20X1, the Company had a receivable of $2,500,000 from this customer; at December...

You are the audit senior of Sparrow Ltd (Sparrow) for the year ended 30 June 2020....

You are the audit senior of Sparrow Ltd (Sparrow) for the year ended 30 June 2020. As is customary in completing your examination, you request that the chief executive officer (CEO) of Sparrow, Michal Theobald, furnish you with a management representation letter. Michael reads the representations that you are requesting that he make, and he refuses to furnish the letter, stating: You are asking me to tell you all kinds of things that I hired you to figure out. For...

Question 1 You are performing the year-end audit of Halvorson Fine Foods Ltd for 31st December...

Question 1 You are performing the year-end audit of Halvorson Fine Foods Ltd for 31st December 2012. The client has prepared the following schedule for fixed assets and related allowance for depreciation accounts. HALVORSON FINE FOODS LTD ANLAYSIS OF FIXED ASSETS FOR THE YEAR ENDED 31 DECEMBER 2012 Description Final Balance, 31 December Additions Retirements Final Balance, 31 December Assets: $ $ $ $ Land 22,500 5,000 27,500 Buildings 120,000 17,500 137,500 Machinery and equip. 385,000 40,400...

You are engaged to audit the Ferrick Corporation for the year ended December 31, 2018. Only...

You are engaged to audit the Ferrick Corporation for the year ended December 31, 2018. Only merchandise shipped by the Ferrick Corporation to customers up to and including December 30, 2018, has been eliminated from inventory. The inventory as determined by physical inventory count has been recorded on the books by the company’s controller. No perpetual inventory records are maintained. All sales are made on an FOB–shipping point basis. You are to assume that all purchase invoices have been correctly...

You are engaged to audit the Ferrick Corporation for the year ended December 31, 2015. Only...

You are engaged to audit the Ferrick Corporation for the year ended December 31, 2015. Only merchandise shipped by the Ferrick Corporation to customers up to and including December 30, 2015, has been eliminated from inventory. The inventory as determined by physical inventory count has been recorded on the books by the company’s controller. No perpetual inventory records are maintained. All sales are made on an FOB–shipping point basis. You are to assume that all purchase invoices have been correctly...

Question