Question
You are the engagement partner for the following clients current year audit and all companies have a financial year end at 31 December 2019: 1.
You are the engagement partner for the following clients current year audit and all companies have a financial year end at 31 December 2019:
1. Fortune Company The notes to the financial statements disclose the following:
Since January 2019, the companys travel luggage is guaranteed to be free from defects in materials and workmanship under normal use within a 5-year guarantee period. No provision has been recognized as the amount of the obligation cannot be measured with sufficient reliability.
Sale of travel luggage for the current year was regarded as material.
3. Treasure Company
During the year, your client experienced a change in its controlling shareholder. The new controlling shareholder refocused the business to catering operations and discontinued its logistics business through disposal of certain subsidiaries. All the books and records of the subsidiaries disposed of were no longer retained by your client. The accounts department managed to keep certain management reports of the disposed companies up to the date of disposal. Information from these reports was extracted to prepare the disclosure notes on the discontinued business in the financial statements of your client in accordance with the relevant accounting standards. The audit team considers that the magnitude of the discontinued business to be material and that sufficient appropriate evidence for these disclosure notes is not available.
Required:
Suggest an appropriate auditors report to be prepared. Explain your reasons.
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