Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider each of the following independent situations, all of which apply to ongoing audits of your clients for the year ending 30 June 2020. a)Future

Consider each of the following independent situations, all of which apply to ongoing audits of your clients for the year ending 30 June 2020.

a)Future Ltd (Future) is a furniture manufacturer. Although demand for Future's products has been steady, increasing costs have put significant pressure on gross margins, which have fallen from 30% last year to 25% this year, based on the latest management monthly accounts. Net profit before tax is a key measure used by investors and Future has already had to revise down its profit forecast once in the current financial year.

b)EasyMart Ltd's major competitor has decided to cease its current aggressive discounting and marketing campaign that it was waging to try and increase its market share.

c)The CEO of Zoo Ltd (Zoo) issued a media statement on 1 August 2015, stating that Zoo had committed massive accounting fraud resulting in overstated profits and assets over the past five years.

d)Technological developments have made 30% of the inventory on hand of Advanced Computing Ltd obsolete.

Required:

For each of the independent situations described above, outline the impact, if any, on inherent risk.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Robert Libby, Patricia A Libby

7th Edition

0078111021, 9780078111020

More Books

Students also viewed these Accounting questions