You are the partner in charge of the audit division in your accountancy firm. You are presently in charge
of the audit of a company called Nevertire Pty Ltd. During the process of the audit the audit supervisor (your
senior audit manager on the ground conducting the audit) reports the following activities that have occurred
at Nevertire:
a. The company being audited has had substantial changes in accountancy staff in the 6 months and the
audit testing has revealed significant discrepancies in the accounting records. The company (after several
attempts) cannot finalise its P&L and Balance Sheet for the period and has asked the audit team to finalise
it for them. It has indicated it will pay extra above the agreed audit price.
b. As Nevertire is an export/import firm it has stated that it has at least 100 containers (full of inventory)
located at another location. It has shown the audit supervisor three containers (full of inventory) and asks
the audit supervisor to certify the total inventory figure in the Balance Sheet and P&L based on the three
containers audited and the record of the continuous inventory maintained by the company.
c. The audit supervisor whilst auditing the company's records of its shareholdings noticed shares held by a
Mrs Jones. The address of that shareholder is the same address of the Senior Partner in the accountancy
firm and Mrs Jones is the wife of that partner.

 

 

You are required to provide advice to the audit supervisor and to take any and all necessary steps to ensure
there is compliance with the Corporations Act 2001 (Cth) and the general law.
Part 2 - After resolving the matters listed above, the audit supervisor casually comments to you that Nevertire
Pty Ltd are thinking of approaching a finance firm to advance them money to finance their further
development. It appears Nevertire intends using the audit report being prepared as part of the present audit
as the basis for encouraging the finance firm to advance the money for their development.
Advise of what actions you would take to ensure there is compliance with the Corporations Act 2001 (Cth) and
the general law, Please use refer to relevant section numbers when completing this section.