PART B 45 Marks ALL Questions to be answered. QUESTION 1 15 Marks You are the audit manager assigned to the audit of Seagreen Pharmaceuticals Pty Ltd. (SP) a wholly owned subsidiary of Universal Pharmaceuticals Inc. (UP), a company listed on the New York Stock Exchange. SP was established in 2006 to provide UP with access to the Australian and South East Asian markets. Since establishment SP have found trading conditions difficult. The audit evidence obtained and final review of this evidence suggests that unless SP receives a significant cash flow injection or trading conditions improve, it will be bankrupt within three months. You have approached the CEO of SP with your concerns and he has indicated that there is nothing for you to worry about. The company's owners have guaranteed financial support of the company for as long as it takes to establish a market presence. Required: a. Evaluate the impact of the parent company's support on your assessment of the going concern at SP. (4 marks) b. What further evidence will you require to assess the appropriateness of going concern at SP? (4 marks) c. Explain the reason for assessing the probability that any company will continue as a going concern. (7 marks) ALL Questions to be answered. QUESTION 1 15 Marks You are the audit manager assigned to the audit of Seagreen Pharmaceuticals Pty. Ltd. (SP) a wholly owned subsidiary of Universal Pharmaceuticals Inc. (UP), a company listed on the New York Stock Exchange. SP was established in 2006 to provide UP with access to the Australian and South East Asian markets. Since establishment SP have found trading conditions difficult The audit evidence obtained and final review of this evidence suggests that unless SP receives a significant cash flow injection or trading conditions improve, it will be bankrupt within three months. You have approached the CEO of SP with your concerns and he has indicated that there is nothing for you to worry about. The company's owners have guaranteed financial support of the company for as long as it takes to establish a market presence. Required: a. Evaluate the impact of the parent company's support on your assessment of the going concern at SP. (4 marks) b. What further evidence will you require to assess the appropriateness of going concern at SP? (4 marks) c. Explain the reason for assessing the probability that any company will continue as a going concern. (7 marks) PART B 45 Marks ALL Questions to be answered. QUESTION 1 15 Marks You are the audit manager assigned to the audit of Seagreen Pharmaceuticals Pty Ltd. (SP) a wholly owned subsidiary of Universal Pharmaceuticals Inc. (UP), a company listed on the New York Stock Exchange. SP was established in 2006 to provide UP with access to the Australian and South East Asian markets. Since establishment SP have found trading conditions difficult. The audit evidence obtained and final review of this evidence suggests that unless SP receives a significant cash flow injection or trading conditions improve, it will be bankrupt within three months. You have approached the CEO of SP with your concerns and he has indicated that there is nothing for you to worry about. The company's owners have guaranteed financial support of the company for as long as it takes to establish a market presence. Required: a. Evaluate the impact of the parent company's support on your assessment of the going concern at SP. (4 marks) b. What further evidence will you require to assess the appropriateness of going concern at SP? (4 marks) c. Explain the reason for assessing the probability that any company will continue as a going concern. (7 marks) ALL Questions to be answered. QUESTION 1 15 Marks You are the audit manager assigned to the audit of Seagreen Pharmaceuticals Pty. Ltd. (SP) a wholly owned subsidiary of Universal Pharmaceuticals Inc. (UP), a company listed on the New York Stock Exchange. SP was established in 2006 to provide UP with access to the Australian and South East Asian markets. Since establishment SP have found trading conditions difficult The audit evidence obtained and final review of this evidence suggests that unless SP receives a significant cash flow injection or trading conditions improve, it will be bankrupt within three months. You have approached the CEO of SP with your concerns and he has indicated that there is nothing for you to worry about. The company's owners have guaranteed financial support of the company for as long as it takes to establish a market presence. Required: a. Evaluate the impact of the parent company's support on your assessment of the going concern at SP. (4 marks) b. What further evidence will you require to assess the appropriateness of going concern at SP? (4 marks) c. Explain the reason for assessing the probability that any company will continue as a going concern. (7 marks)