SUBJECT 2 You are currently planning an external audit of financial statements of Fizzy plc for the financial year ending 31 December 2009. Fizzy plc produces and sells a range of ingredients used in the manufacture of soft drinks - a sector which has seen decreased consumer spending under the current economic crisis. You have been given the following draft statement of financial position (balance sheet) at the end of the period (see Annex). 1. Perform an analytical review of the attached draft statement of financial position and draft an overall audit strategy for the engagement. Specify the areas on which you would concentrate and explain why. In relation to the going concern assumption, describe the main audit procedures you would perform and the sources of audit evidence you would seek. After drafting the audit strategy, you call the financial controller at Fizzy plc in order to arrange a planning meeting. She informs you that she was just investigating a fraud in the AP (accounts payable) department. The financial accountant has been using company cheques and bank transfers to pay his own personal expenses. For the moment it appears that the amount involved is not material to the financial statements of Fizzy plc