Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Golden Inc. is a Canadian gold mining corporation. Golden has mines and development projects in Canada (Ontario and British Columbia), the United States (Alaska), and

Golden Inc. is a Canadian gold mining corporation. Golden has mines and development projects in Canada (Ontario and British Columbia), the United States (Alaska), and South America (Chile). Shares of Golden trade on three major international stock exchangesNew York, Toronto, and London. Golden is known as one of the lowest-cost producers of gold worldwide, and in the current fiscal year it achieved record gold production levels. Due to the record levels, revenues increased this year. Revenues grew from $1,357 million last year to $1,432 million in this year's draft financial statements (all dollar figures are U.S dollars). Corresponding gross profit figures are $642 million for last year and $678 million for the current year.

Harry, chairman and CEO of Golden, is known throughout the Canadian mining industry as a man of principle and integrity. He governs Golden in accordance with three key guiding principles, which he articulated in 1988 when he founded the company. These principles are entrepreneurial management, financial discipline, and corporate responsibility. Adherence to these principles has given Golden a stable and dedicated work force, and a strong balance sheet that includes $623 million in cash. In addition, Golden boasts an "A" credit rating and has access to a $1-billion line of credit. Golden' efforts with respect to corporate responsibility have been recognized internationally, and the company was recently awarded three major awards for environmental protection. In spite of this, however, Golden has had to expend some money on site restoration in the past in order to meet the requirements of environmental compliance orders.

Your firm has been Golden' auditors for the past eight years. In that time, there have been very few misstatements discovered during the audits, which have required adjustments to the draft financial statements. In fact, Stan, the partner in charge of the audit, and Nina, the audit manager, have found the audit to be almost routine in the past four years of their involvement with Golden. The internal controls over cash disbursements, and perpetual records are excellent but controls over acquisitions cannot be considered effective. However, this year promises to be a little different. Golden merged this year with a major U.S. gold company that had significant mining operations in Canada. Furthermore, immediately prior to year-end, Golden reassessed the carrying value of its capital assets. The reassessment resulted in a $1.1-billion writedown of Golden' property, plant, and equipment assets to a carrying value of $3,565 million. Even with this writedown, Golden' total assets remain at a substantial $4,535 million; however, the write-down resulted in a significant net loss before taxes of $944 million in the current year, compared with net incomes before taxes of $441 million and $443 million in the preceding two years. You are a senior auditor and it is the first time you will be working on this engagement. Nina has asked you to familiarize yourself with the file of this client and to send her a draft of the planning memo (risk analysis, preliminary materiality assessment and audit approach) for the audit of Golden Inc..

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

Fundamentals of Cost Accounting

Authors: William N. Lanen, Shannon Anderson, Michael W Maher

6th edition

1259969479, 1259565408, 978-1259969478

More Books

Students also viewed these Accounting questions

Question

3. What is my goal?

Answered: 1 week ago

Question

2. I try to be as logical as possible

Answered: 1 week ago