During the audit of Leven Ltd for the year ended 31 March 2018, your audit tests reveal
Question:
During the audit of Leven Ltd for the year ended 31 March 2018, your audit tests reveal that trade receivables include
£30 000 for a customer who went into liquidation shortly before the end of the financial year. Leven’s profits for the year amount to £190 000 and receivables shown in the balance sheet are stated at
£585 000. The directors do not wish to reduce the stated profits to £160 000 and the receivables to £555 000 and suggest that the accounts will still give a true and fair view if the notes to the accounts explain that the debtor has gone into liquidation and that no amount is expected to be received from the liquidator. Do you agree? What would you say to the directors?
Step by Step Answer:
The Audit Process Principles Practice And Cases
ISBN: 9781473760189
7th Edition
Authors: Iain Gray, Louise Crawford, Stuart Manson