One of the clients of MMM Chartered Accountants operates a restaurant. From January of the current year,

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One of the clients of MMM Chartered Accountants operates a restaurant. From January of the current year, the business has consistently paid its suppliers late, well in excess of the suppliers’ normal credit terms. This has resulted in some suppliers requesting cash on delivery from the business. The auditor has reviewed the correspondence between the business and its bank and finds that the business has been experiencing cash flow problems for two years.


Required

Explain whether (and, if so, how) the information provided impacts on the auditor’s assessment of preliminary materiality.

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Auditing A Practical Approach

ISBN: 9780730364573

3rd Edition

Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton

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