i) It is concluded that your client is not a going concern. Identify two appropriate audit procedures for this matter in relation to the financial report. 

ii) ASA700 (Revised) 'Forming an Opinion and Reporting on a Financial Report' provides a new form of audit report.

What is the change made in relation to Key Audit Matters and Audit Opinion?

Explain how these changes potentially contribute to reducing the audit expectation gap?

 

b) You are the supervisor on the audit of Golden Pokie Club, a large suburban club in New South Wales with an annual revenue of approximately $5m. On 12 August 2022, the club signed a large contract for the upgrade of the club's entire air conditioning system. The upgrade is necessary to ensure compliance with workers compensation regulations.

The first payment of $200,000 is due on 1 September 2022. Work will be completed (and the final contract payment made) by 30 March 2023.

The financial year-end is 30 June 2022, and the auditor's report will be signed on 20 August 2022.

i) Identify and explain the type of the above subsequent event. Is the event material? Explain your answer?

ii) Explain what further evidence you would seek in relation to the above event. What action should you recommend to management?