ADVANCED AUDITING

Greenwood Holdings Inc. $($GHI$),$ a company incorporated in Canada, is holding controlling interests in Greenwood Property Ltd$.($GPL$)$ and Greenwood Technology Ltd$.($GTL$).$ GPL

and GTL are incorporated in Hong Kong.

GPL controls a shopping mall in Hong Kong. The lease of the shopping mall lasts for $999$ years until $2047$ with a renewal right of another $100$ years and is currently managed by an

independent property management company. The property management company has sole discretion in managing the mall but is required to provide quarterly management report and

rental income so derived after deducting the management fee to GPL$.$

The auditors of GPL$,$ Out$-$Going & Co $("$OG$"),$ resigned and your CPA firm, Lau, Lam & Co $("$LL$"),$ has been asked by GPL to take up the audit of GPL$\text{'}$s financial statements for the year

ended $31$ December $2021.$ After several meetings between Mr$.$ Lam, senior partner of LL$,$ and the management of GPL$,$ LL eventually decided to take up this new audit engagement.

Required:

As the current auditor of GPL for the year ended $31$ December $2021,$ explain the effects of the opening balances of GPL$\text{'}$s financial statements at $1$ January $2021$ on the work of your audit

team and determine the procedures your team would perform on these opening balances.