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Smith, a chartered accountant has just completed his audit of Lumberjack Pty.Ltd and issued an unqualified audit report. Subsequently, he was informed by the directors

Smith, a chartered accountant has just completed his audit of Lumberjack Pty.Ltd and issued an unqualified audit report. Subsequently, he was informed by the directors that they also require him to furnish a special audit report on the sales and sales returns accounts. The report is to be issued to Lumberjack's lessor, who bases the annual rentals on the net of these two accounts.

Required:

a) Explain why Smith is unable to issue the special audit report without additional audit procedures.

b) What are some of the additional tests that are likely to be required before the special report can be issued?

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