You are the audit manager on the audit of Golden Golf Club, a function centre and golf facility situated in Perth Western Australia. Your accounting firm has been the auditor of this business for the last 4 years. The business operates:

-A mini casino

-The golfing green and golf shop

-A member bar

-A small bistro/restaurant

-A gym

-A heated pool

The following dates are important for the current audit period:

Year end: 30 June 2022

Audit report signoff: 15 August 2022

Printing of annual report: 20 August 2022

Annual report mailed to shareholders: 22 August 2022

Final date that annual report can be made available to shareholders: 1 October 2022

The following events have occurred:

On 23 August 2022, it was reported in the newspaper that the CEO admitted to committing fraud and had stolen $400,000 over the past five years. You speak to the CFO and he verifies the claims saying the figure is likely to be correct and at least half of the amount relates to the current financial year. He also says that the police are looking for the previous CEO as he has disappeared, and it will be another month before the exact amount that has been stolen is known. Materiality is $100,000 for the current audit year.

1. Discuss the evidence that you would gather as part of your audit completion. (5 marks)
2. State the actions the auditor should take relating to audit reporting. (5 marks)
3. Which audit opinion would be issued following the subsequent event. (5 marks)
4. As part of substantive procedures, when dealing with risky clients, the auditor often has a reassess their final materiality from that which was assigned at the planning stage of the audit. It makes sense then to increase final materiality consistent with the increase in audit risk. Discuss the correctness of this statement. (5 marks)