备考P7的那些题(一)

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备考P7的那些题(一)
Dec 2012 Q2
Answer:
Briefing Notes
To: Jasming Berry
From: Audit Manager
Subject: Audit completion issues to other matters for discussion with audit committee. Introduction:
Audit implications of matters raised by audit senior.
1) Audit work on inventory
● Potentially obsolete inventory=130,000
●Individually the amount is immaterial- even if the accounting treatment is incorrect.
●IAS 2 inventory to be valued as lower of cost and NRV.
●Implication is that this inventory has Nil valuation
－Probably cannot be recycle
－Plastic covered
●Additional audit procedures could be performed to identify whether the training manual…were just covered in plastic…with contents recyclable, or whether all contents were covered in plastic.
●Written reports have been requested (IAS 580) to confirm training materials can be recycles…Not yet been received. BUT, written report should correlate other sources of evidence ….Not contact/ conflict with it .
….So if received… cannot simply be relied upon to support current accounting treatment.
●Audit conclusion: Probable non-compliance with IAS 2/ IAS 37…in that the $130k should be monitor. But individually it is immaterial by value.
2) Audit work on provision
●Legal claim $125k individually immaterial by value.
●But if added to obsolescence by provision in aggregate $130k+125k=$255k , and $130 comes material to I/E
●IAS 37 correct accounting treatment for legal claim should be provision …legal advise is that with probably be paid.
●Only verbal evidence to date from lawyers…seeking confirmation in writting
●Financially statements appear to be materially misstated on to issues…which in aggregate are material.
●Modified report
FS’s materially misstated
Material not pervasive
Multiple qualified report
…except for…
3) Audit work on current assets
●Accounting treatment….IAS 24
Cherry is a related party…loan to cherry is a RP transaction.
●As such should be separately disclosed in FS’s
Not simply included in current assets。