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Bernard & Associates has audited the financial report of Basset Pty Ltd (Basset) for several years and had always been paid promptly for services rendered.

Bernard & Associates has audited the financial report of Basset Pty Ltd (Basset) for several years and had always been paid promptly for services rendered. Last year s audit invoices have not been paid because Basset is experiencing cash flow difficulties and the current year s audit is scheduled to commence in one week. With respect to the past due audit fees, Bernard & Associates should:

perform the scheduled audit and allow Basset to pay when the cash flow difficulties are alleviated.

perform the scheduled audit only after arranging a definite payment schedule and securing notes signed by Basset.

inform Basset s management that the past due audit fees may be considered an impairment of auditor independence.

inform Basset s management that the past due audit fees may be considered a loan on which interest must be imputed for financial report purposes.

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