Angela Goodbody is a partner in Tickitt & Run and has come to the audit of E-musica Ltd to carry out a hot review of the audit which is in progress for the year ended 31 March 2X11.

E-musica have their own record label for dance and rap music, they sell musical equipment, and control three recording studios.

She has noted comments on the audit file to the effect that:

(a) Inventory of CDs is valued at the lower of cost and net realizable value. Cost includes production overheads based on a global labour hour rate based on output in 2X10. Unsold stocks of CDs from before 31 March 2X10 are written down to £1.

(b) Advances to bands are written off as they are paid.

(c) Equipment is written off on the straight line basis over ten years.

(d) The freehold property is amortized over 30 years.

She has also noted that:

(a) The directors’ report is optimistic about the current year and future year’s success in selling dance and rap music despite the revival in live artistes in which E-musica has no representation. They do not consider themselves a niche label, insisting that dance music is still mainstream.

(b) Inventories appears in the financial statements simply as ‘Inventories £120 000’.

(c) The company rents out a leasehold property it owns but has no use for. The notes to the accounts say ‘Gross rental income £4900.’

(d) No mention is made of the entry into liquidation on 13.3 2X11 of a wholesale music distributor who owed E-musica £142 000 on 13.3.2X11 and £71 000 on 31.3.2010. Angela knows of the liquidation as her boss is the liquidator.

(e) No mention is made of an action against a group for breach of copyright. The action was commenced on 31.38.2X10 and already uncharged legal fees of about £10 000 have been incurred.

(f) The list of directors shows 14 names and the remuneration breakdown only 13.

(g) The directors’ report shows that Joe Gigli, a director, has 1000 shares in the company. She happened to note that the dividend paid to him indicated a shareholding substantially greater than that.

Question:-

1. What should Angela do about these matters?