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Your company Handerson Ltd., is the auditor for Harper Company Ltd. Harper Company Ltd., has a contractual commitment as part of a debenture deed to
Your company Handerson Ltd., is the auditor for Harper Company Ltd. Harper Company Ltd., has a contractual commitment as part of a debenture deed to maintain a current ratio of 2.0. If the ratio falls below that level on the balance sheet date, the debentures become payable immediately. In the current year, the client's financial statements show that the ratio haf dropped from 2.6 to 2.05 over the past year. Required:- Discuss how this situation would affect your audit plan for the current year. What accounts would you review to determine reasons for the decrease in the current ratio? (5+5=10
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