As an audit assistant you are on the audit team assigned to audit, BP, you are working on the 2015 audit The following are the financial statements that have been submitted by the Chief financial officer and the Audit manager has assigned you to analyse them Financial Statements BP Group Consolidated Statement of Financial Position Notes 31 12 2015 million31 12 2014 million ASSETS Cash and cash equivalents 3 338 8 401 5 Inventories 4 657 0 571 5 Trade receivables 5 483 1 449 2 Income tax receivables 22 50 5 75 0 Other current financial assets 6 76 8 93 6 Other current assets 7 78 6 91 8 Current assets 1,684 8 1,682 5 Deferred taxes 8 219 8 178 8 Property, plant and equipment 9 232 6 224 0 Intangible assets 10 403 3 391 4 Investments in associates 11 15 2 15 2 Other non current financial assets 12 39 3 34 6 Other non current assets 12 25 2 23 4 Non current assets 935 5 867 5 Total assets 2,620 3 2,549 9 LIABILITIES AND SHAREHOLDERS' EQUITY Current financial liabilities 13 14 0 19 8 Trade payables 13 519 7 515 2 Income taxes 22 49 7 58 8 Other current provisions 16 52 7 69 5 Liabilities from acquisitions 17 3 0 0 5 Other current financial liabilities 13 115 9 51 0 Other current liabilities 13 125 1 107 8 Current liabilities 880 0 822 6 Deferred taxes 8 64 2 54 6 Pension provisions 15 23 8 26 0 Other non current provisions 16 23 5 23 1 Liabilities from acquisitions 17 0 0 2 5 Other non current financial liabilities 13 7 2 0 3 Other non current liabilities 13 2 2 2 5 Non current liabilities 121 0 109 0 Subscribed capital 18 38 6 38 6 Group reserves 18 162 5 176 0 Retained earnings 18 1 441 7 1 412 0 Treasury stock 18 31 4 31 4 Equity attributable to the shareholders of theparen t 1,611 3 1,595 2 Non controlling interest 18 8 0 23 1 Shareholders' equity 18 1,619 3 1,618 3 Total liabilities and shareholders' equity 2,620 3 2,549 9 Consolidated Income Statement Notes 2015 million 2014 million Sales 25 3,387 4 2,972 0 Cost of sales 25 1,847 2 1,586 7 Gross profit 25 1,540 2 1,385 4 Royalty and commission income 16 5 19 4 Other operating income and expenses 20 1,460 5 1,276 8 Operating income (EBIT) 96 3 128 0 Result from associated companies 21 1 0 1 3 Financial income 21 11 2 4 8 Financial expenses 21 23 4 12 3 Financial result 11 2 6 2 Earnings before taxes (EBT) 85 0 121 8 Taxes on income 22 23 3 37 0 Consolidated net earnings for the year 61 7 84 8 attributable to Non controlling interest 18 24 6 20 8 Equityholdersoftheparent(netearnings) 37 1 64 1 Earnings per share () 23 2 48 4 29 Earnings per share () diluted 23 2 48 4 29 Weighted average shares outstanding (million) 23 14 940 14 940 Weighted average shares outstanding, diluted (million) 23 14 940 14 940 Required a) Describe what information and explanations you will ask from BP management and briefly explain the audit work you will perfume before you start the analytical review (10marks) b)Discussomeoftheanalyticalreviewthatyouwill performonBP financial statements above (5marks) c) Having done the analytical reviews, highlight the financial statements balances where you will need further explanation, and explain the substantive tests that you will perform to verify management assertion on the said issues (20marks) d)In the notes to the financial statements, BP management have stated that the financial statementsareinaccordancewiththeapplicablefinancialreportingframework,andthatthefirm is a going concern Basing on International Standard on Auditing (ISA) 570 going concern and the review of the above financial statement above , Discus your views on BPs ability to continue as a going concern as claimed by management (5marks) e)The audit manager has reminded you that among the issues that should be checked is Presentation and disclosure of items in the financial statements and he has emphasised that it should be in accordance with applicable reporting framework Identify some presentation issues that you are likely to raise and citing relevant financial reporting standard offer recommendation for adjustment to management (10 marks)

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As an audit assistant you are on the audit team assigned to audit, BP, you are working on the 2015 audit. The following are the

As an audit assistant you are on the audit team assigned to audit, BP, you are working on the 2015 audit. The following are the financial statements that have been submitted by the Chief financial officer and the Audit manager has assigned you to analyse them.

Financial Statements: BP Group

Consolidated Statement of Financial Position

Notes

31.12.2015 million31

.12.2014 million

ASSETS

Cash and cash equivalents

338.8

401.5

Inventories

657.0

571.5

Trade receivables

483.1

449.2

Income tax receivables

50.5

75.0

Other current financial assets

76.8

93.6

Other current assets

78.6

91.8

Current assets

1,684.8

1,682.5

Deferred taxes

219.8

178.8

Property, plant and equipment

232.6

224.0

Intangible assets

403.3

391.4

Investments in associates

15.2

Other non-current financial assets

39.3

34.6

Other non-current assets

25.2

23.4

Non-current assets

935.5

867.5

Total assets

2,620.3

2,549.9

LIABILITIES AND SHAREHOLDERS' EQUITY

Current financial liabilities

14.0

19.8

Trade payables

519.7

515.2

Income taxes

49.7

58.8

Other current provisions

52.7

69.5

Liabilities from acquisitions

3.0

0.5

Other current financial liabilities

115.9

51.0

Other current liabilities

125.1

107.8

Current liabilities

880.0

822.6

Deferred taxes

64.2

54.6

Pension provisions

23.8

26.0

Other non-current provisions

23.5

23.1

Liabilities from acquisitions

0.0

2.5

Other non-current financial liabilities

7.2

0.3

Other non-current liabilities

2.2

2.5

Non-current liabilities

121.0

109.0

Subscribed capital

38.6

Group reserves

162.5

176.0

Retained earnings

1.441.7

1.412.0

Treasury stock

31.4

Equity attributable to the shareholders of theparen

1,611.3

1,595.2

Non-controlling interest

8.0

23.1

Shareholders' equity

1,619.3

1,618.3

Total liabilities and shareholders' equity

2,620.3

2,549.9

Consolidated Income Statement

Notes

2015 million

2014 million

Sales

3,387.4

2,972.0

Cost of sales

1,847.2

1,586.7

Gross profit

1,540.2

1,385.4

Royalty and commission income

16.5

19.4

Other operating income and expenses

1,460.5

1,276.8

Operating income (EBIT)

96.3

128.0

Result from associated companies

1.0

1.3

Financial income

11.2

4.8

Financial expenses

23.4

12.3

Financial result

11.2

6.2

Earnings before taxes (EBT)

85.0

121.8

Taxes on income

23.3

37.0

Consolidated net earnings for the year

61.7

84.8

attributable to:

Non-controlling interest

24.6

20.8

Equityholdersoftheparent(netearnings)

37.1

64.1

Earnings per share ()

2.48

4.29

Earnings per share () - diluted

2.48

4.29

Weighted average shares outstanding (million)

14.940

Weighted average shares outstanding, diluted (million)

14.940

Required

a) Describe what information and explanations you will ask from BP management and briefly explain the audit work you will perfume before you start the analytical review.(10marks)

b)Discussomeoftheanalyticalreviewthatyouwill performonBP financial statements above.(5marks)

c) Having done the analytical reviews, highlight the financial statements balances where you will need further explanation, and explain the substantive tests that you will perform to verify management assertion on the said issues (20marks)

d)In the notes to the financial statements, BP management have stated that the financial statementsareinaccordancewiththeapplicablefinancialreportingframework,andthatthefirm is a going concern. Basing on International Standard on Auditing (ISA) 570 going concern and the review of the above financial statement above , Discus your views on BPs ability to continue as a going concern as claimed by management?. (5marks)

e)The audit manager has reminded you that among the issues that should be checked is Presentation and disclosure of items in the financial statements and he has emphasised that it should be in accordance with applicable reporting framework. Identify some presentation issues that you are likely to raise and citing relevant financial reporting standard offer recommendation for adjustment to management (10 marks)