Question

In: Accounting

Pleasant Beverages Ltd has the following audit problems: • The company did not update the listing...

Pleasant Beverages Ltd has the following audit problems:

• The company did not update the listing for the changes in shareholding of the company

• The director’s minutes were not prepared for the current year • No annual general meeting (AGM) was held last year

• There was no written consent from the directors to act

• The company did not even justify the reason for not keeping proper records and holding the AGM

Required : For this scenario discuss the audit issues to be considered and what impact these issue would this have on the audit opinion. You may also justify the answer using relevant legislation such as the Corporations Act and relevant auditing standards.

Solutions

Expert Solution

It's the waft of expertly vouched-for information in the marketplace that, when perceived as each dependable and important to funding decisions, offers uninformed and dispersed buyers the boldness to participate in a market as great as that which we experience in the U.S.
Following situations can give upward push to uncertainty
Litigation and claims
Suspicion of fraud
Non compliance with laws and rules
Going concern trouble
Scope problem
The auditor would handle the above uncertainties as follows:

Litigation and claims

The auditor will ought to examine whether or not the litigation and claims constitute contingent liabilities or provisions. If the claims signify contingent liabilities, and the customer has given sufficient disclosure, an emphasis of subject paragraph is required. If no disclosures were made a certified or antagonistic file will issued.
If, within the auditors opinion, the claims will have to be furnished and no provision has been made in the accounts, certified or hostile opinionwill accept.

Suspicion of fraud

If the auditor is precluded with the aid of the entity from acquiring sufficient right audit evidence to evaluate whether or not a fraud has, or is prone to have befell, the auditor must categorical a certified opinion or disclaimer of opinion.

If the auditor is unable to examine whether fraud has took place because of obstacles imposed via the circumstances as an alternative than by using entity, the auditor must recall the outcome on auditors record. Non compliance with laws and regulations If the auditor suspects an non compliance of legal guidelines and regulations however sufficient understanding are not able to be received for the suspected non compliance, the auditor must don't forget the influence of lack of audit proof on auditors report.

Going problem main issue

The auditor will have to investigate if a fabric uncertainty exists which may forged big doubt on the entitys capability to continue as a going main issue.
If enough disclosure is made in the fmancial statements, the auditor must specific an unqualified opinion however add a paragraph emphasizing the subject. If sufficient disclosure will not be made in thefinancial statements the auditor should categorical a certified or opposed opinion.

Scope challenge

When in sizeable doubt as to a fabric account balance and the
auditor can not receive sufficient correct audit evidence, he must categorical a qualified opinion or disclaimer of opinion.

One of the crucial segments of a enterprise has been incurring losses for last zero years. Gear of the phase has a e-book price of Rs. Eight million. E management has made a provision for permanent diminution within the ue of assets amounting to Rs. 2 million. What will be the have an effect on on your audit file?

This is case of gigantic uncertainty and a paragraph emphasizing the shall be in order. Nonetheless, if the auditor concludes that-the business stipulations will not reinforce in future, a lack of Rs. 6 million wishes to be supplied. Full disclosure does not justify non realization of a provision. Consequently the auditor will ought to problem a certified opinion.


Related Solutions

Claytonhill Beverages Ltd. is 100-percent owned by Buzz Bottling. While the company has in the past...
Claytonhill Beverages Ltd. is 100-percent owned by Buzz Bottling. While the company has in the past been profitable, it incurred a loss for the year ended December 31, 2020. The parent company, Buzz Bottling, has indicated that if Claytonhill incurs another loss, it will put the subsidiary up for sale. In response, Claytonhill is looking to expand its market share and therefore its profitability by performing private labelling for a nationwide supermarket chain, ValueFoods Inc. Private labelling involves producing and...
The following audit report was drafted by a trainee on the audit of Golf (Pty) Ltd (“Golf”), a company which manufactures golf clubs.
The following audit report was drafted by a trainee on the audit of Golf (Pty) Ltd (“Golf”), a company which manufactures golf clubs. The trainee was asked to draft the report at the conclusion of the audit for the financial year end 31 March 2017 as part of on-the-job training and you have to evaluate his report. The shareholders of Golf included a clause in the company’s Memorandum of Incorporation which requires that the company’s annual financial statements are extremely...
Webster Company Ltd has compiled the following information.
Webster Company Ltd has compiled the following information. Source of capital Book value Market Value After tax Cost Long-term debt $ 4,000,000 $3,840,000 6.0% Preference share capital 40,000 60,000 13% Ordinary share equity 1,060,000 3,000,000 17% Totals $5,100,000 6,900,000   Calculate the WACC (to the nearest two decimal places) using book value weights.              Calculate the WACC (to the nearest two decimal places) using market value weights.                                      ...
You are the manager in charge of the audit of Marfo Ltd, a company which manufacture...
You are the manager in charge of the audit of Marfo Ltd, a company which manufacture biscuit and confectionery. You wish to employ a junior manager of staff to audit the trade creditors, accruals and provision as shown in the balance sheet at the year end and are in the process of preparing audit programme which clearly explain the purpose and the extent of the work at each stage of the audit. The draft figures for ‘creditors: amount falling due...
Prepare the memo requested by the chief audit executive Westgate Company Ltd.
Prepare the memo requested by the chief audit executive Westgate Company Ltd.
You are the manager in charge of the audit of MtPoint Ltd, a large wholesale company...
You are the manager in charge of the audit of MtPoint Ltd, a large wholesale company operating out of 10 warehouses located in the major centres country wide. This will be the second year in which you have conducted the audit. The company must be audited and prepares its financial statements internally in terms of IFRS. During March your senior commenced planning the audit for the current year (financial year-end is 30 June) by updating the audit file working paper...
You are the senior on the audit of Smartpart (Pty) Ltd, a company which wholesales a...
You are the senior on the audit of Smartpart (Pty) Ltd, a company which wholesales a large range of motor vehicle accessories to garages, panel beating businesses and     specialist accessory shops. The company sells only on credit to account holders. Smartpart (Pty) Ltd has expanded quickly over the past few years and the accounting system related internal controls are proving to be inadequate. You have therefore requested various members of the audit team to document the company's systems to...
Max Petfood Ltd. is preparing an inventory listing for April 30, its fiscal year-end. The following...
Max Petfood Ltd. is preparing an inventory listing for April 30, its fiscal year-end. The following items have been identified: Description Shipment from supplier, arrived in April 29, but inspected, found defective, and will be returned. $ 73,200 Shipment from supplier, in transit April 30, arrived May 2, shipped FOB destination. $ 20,800 Shipment from supplier, in transit April 30, arrived May 10, shipped FOB shipping point. $ 8,300 Shipment to customer, shipped April 29, in transit April 30, FOB...
You are the audit manager of ChefNZ Ltd, a large company, which runs a number of...
You are the audit manager of ChefNZ Ltd, a large company, which runs a number of select gourmet restaurants throughout New Zealand. During the planning phase for the current year audit, you note the following information: Darcy Strong, the general manager has discovered a fraud involving the theft of more than $70,000 of cash. The person(s) who stole the cash were waiters/waitresses who simply pocketed any cash they received from restaurant customers and destroyed the manually generated hard copy bills...
The following listing has the number of U.S. Representatives for each of the 11 states in...
The following listing has the number of U.S. Representatives for each of the 11 states in the Southeast. All questions pertain to the number of representatives for each state. Alabama, 7; Florida, 27; Georgia 14; Kentucky, 6; Louisiana, 6; Mississippi, 4; North Carolina, 13; South Carolina, 7; Tennessee, 9; Virginia, 11; West Virginia, 3 What is the z-score for the number of representatives in North Carolina? Question The following listing has the number of U.S. Representatives for each of the...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT