Plant and equipment ppe prepared your audit assistant megan cartwright

Revision ACC707

9.25 You are conducting the audit of Computer World Ltd for the year ended 30 June 2018 and are reviewing the audit working papers for property, plant and equipment (PPE) prepared by your audit assistant Megan Cartwright. Megan tested the PPE additions and disposals during the year and recalculated the depreciation. No discrepancies were found in the testing. As a result, Megan concluded PPE, which is a material balance, was appropriately valued.

The audit team member’s conclusion is not correct. Sufficient appropriate audit evidence has not been
obtained in relation to the accuracy, valuation and
allocation assertion.

Further procedures will need to be performed in order to obtain sufficient appropriate audit
evidence in relation to the accuracy, valuation and allocation assertion. These procedures will need to specifically cover the value of existing assets such as the test of the appropriateness and consistency of depreciation rate by reference to the useful life and comparison with previous years. Another example of a further procedure is testing for indicators of impairment.

The company’s chief financial officer (CFO), Rick Myer, advises you that that one cubic metre of timber weighs approximately one tonne and that the cost per cubic metre to the mill varies according to the contract with each supplier. You compare this to the information from an expert’s report obtained from the permanent audit file and find that it is consistent.

• comparing the net weight per the GRD with the weighbridge tickets (in and out)

• checking that the personnel signing the GRD are authorised to do so in accordance with the internal control system and procedures.

(b) On 17 July 2018, Play Equipment agreed to purchase for cash the outstanding shares of Recreation al Equipment Ltd. This acquisition is likely to double the sales volume of Play Equipment

(c) On 20 July 2018, the directors become aware of broken glass found in their pre-packaged sandpits. This product had only been on sale for two weeks and had been purchased directly from the manufacturer, Sandpit Ltd, an unrelated company in Thailand, one week prior to being introduced to the public

required in the financial report for the year ended 30 June 2018

(a)	The audit procedures that would have identified this are a solicitor’s letter or a review of payment details. The event that gives rise to the liability (that is, the

Required

Assuming the mater remains unresolved, explain the auditor’s opinion that

There is an inability to obtain sufficient appropriate audit evidence (scope limitation) on which to base the auditor’s opinion. No year-end balances can be verified (not even the bank account could be reconciled), so it is reasonable to assume that the possible effects of the adjustments are so pervasive that the financial report as a whole is potentially misleading.

Therefore, a disclaimer of opinion should be issued.

Required

Explain the most appropriate auditor’s opinion for Indian Imports for the year ended 30 June 2018

disclosures related to the ability of the entity to continue as a going concern.