Question
Glow Ltd your audit client, during its financial year lost two key personnel, was involved in legal disputes, and had substantial fall in revenue and
Glow Ltd your audit client, during its financial year lost two key personnel, was involved in legal disputes, and had substantial fall in revenue and cash flows. It is concluded that Glow is not a going concern. Identify TWO appropriate audit procedures for this matter in relation to the financial report.
(b) Your client is Disco Ltd, a company running a large venue including a bistro, bars and restaurants, and other club facilities. On 16 August 2020, the financial controller informed you that a serious fire occurred in one of the club's kitchens during the football celebrations. Although covered by insurance, the fire caused extensive damage to the bistro area and the adjacent bar. Both the bistro and bar are expected to remain unserviceable until at least the end of October 2020, resulting in an expected fall in revenue of around 20%. The financial year-end was 30 June 2020, the auditor's report was signed on 15 August 2020, and the financial statements were mailed to shareholders on 22 August 2020.
(i) Identify and explain the type of subsequent event in the above.
(ii) What further evidence would you seek in relation to the matter, and how should it be treated in the financial report?
(iii) The corroborating evidence confirms the event is material and pervasive. What audit opinion would be appropriate if the directors of Disco Ltd follow the auditor's recommendations regarding the above event? Justify your answer
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a For Glow Ltd since it has been concluded that the company is not a going concern two appropriate audit procedures in relation to the financial report could be 1 Verification of Going Concern Assumpt...Get Instant Access to Expert-Tailored Solutions
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