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Cloud 9 Assignment 11

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by

Sel Espinosa

on 22 October 2012

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Transcript of Cloud 9 Assignment 11

CLOUD NINE
ASSIGNMENT 11 Group 11 Aamy Attokaran 10845067
Cecilia Nguyen 11211772
Josel Espinosa 11221835 1 2 3 ANY QUESTIONS? no? the end PERIOD ASA 560.6-9 Events Occurring between the Date of the Financial Report and the Date of the Auditor’s Report

"The auditor shall perform audit procedures designed to obtain sufficient appropriate audit evidence that all events occurring between the date of the financial report and the date of the auditor’s report that require adjustment of, or disclosure in, the financial report have been identified. The auditor is not, however, expected to perform additional audit procedures on matters to which previously applied audit procedures have provided satisfactory conclusions." PERIOD ASA 560.10-13 Facts Which Become Known to the Auditor after the Date of the Auditor’s Report but before the Date the Financial Report is Issued

"The auditor has no obligation to perform any audit procedures regarding the financial report after the date of the auditor’s report. However, if, after the date of the auditor’s report but before the date the financial report is issued, a fact becomes known to the auditor that, had it been known to the auditor at the date of the auditor’s report, may have caused the auditor to amend the auditor’s report, the auditor shall:
(a) Discuss the matter with management and, where appropriate, those charged with governance.
(b) Determine whether the financial report needs amendment; and if so,
(c) Enquire how management intends to address the matter in the financial report." PERIOD ASA 560.14-17 Facts Which Become Known to the Auditor after the Financial Report Has Been

"After the financial report has been issued, the auditor has no obligation to perform any audit procedures regarding such financial report. However, if, after the financial report has been issued, a fact becomes known to the auditor that, had it been known to the auditor at the date of the auditor’s report, may have caused the auditor to amend the auditor’s report, the auditor shall:
(a) Discuss the matter with management and, where appropriate, those charged with governance;
(b) Determine whether the financial report needs amendment and; if so,
(c) Enquire how management intends to address the matter in the financial report." Auditor should... Explanation Reference a) b) c) d) e) Make an adjustment to Accounts Receivable and Bad Debts accounts. Disclose in notes. Disclose in notes. Make an adjustment to the Cash account. DO NOTHING As they are unable to collect the remaining funds owed to them.
(Shoez is now insolvent) As it is a contingent liability you need to disclose it. As nothing is set in stone, at best they need to put a note in their statements, ie. no adjustments need to be made. Event that would have caused ammendments to auditors report if it has been known prior to sign off date. Falls within period 3, which is the period outside of auditor responsibility. ASA 560.6
The auditor shall perform audit procedures designed to obtain sufficient appropriate audit evidence that all events occurring between the date of the financial report and the date of the auditor’s report that require adjustment of, or disclosure in... AASB 137.86
Unless the possibility of any outflow in settlement is remote, an entity shall disclose for each class of contingent liability at the end of the reporting period a brief description of the nature of the contingent liability and, where practicable:
(a) an estimate of its financial effect, measured under paragraphs 36-52;
(b) an indication of the uncertainties relating to the amount or timing of any outflow; and
(c) the possibility of any reimbursement. ASA 560.6
The auditor shall perform audit procedures designed to obtain sufficient appropriate audit evidence that all events occurring between the date of the financial report and the date of the auditor’s report that require adjustment of, or disclosure in... ASA 560.10a)-c)
The auditor has no obligation to perform any audit procedures regarding the financial report after the date of the auditor’s report. However, if, after the date of the auditor’s report but before the date the financial report is issued, a fact becomes known to the auditor that, had it been known to the auditor at the date of the auditor’s report, may have caused the auditor to amend the auditor’s report, the auditor shall:
(a) Discuss the matter with management and, where appropriate, those charged with governance.
(b) Determine whether the financial report needs amendment; and if so,
(c) Enquire how management intends to address the matter in the financial report. ASA 560.14
After the financial report has been issued, the auditor has no obligation to perform any audit procedures regarding such financial report. However, if, after the financial report has been issued, a fact becomes known to the auditor that, had it been known to the auditor at the date of the auditor’s report, may have caused the auditor to amend the auditor’s report, the auditor shall:
(a) Discuss the matter with management and, where appropriate, those charged with governance;
(b) Determine whether the financial report needs amendment and; if so,
(c) Enquire how management intends to address the matter in the financial report. The end of the financial year is 31 December 2010. The audit report was signed on February 9, 2011. The financial statements and director’s report was signed on 15 February 2011 and released to the public on the same day, along with the auditor’s report.
Requirements:
You have been given a number of independent situations below. Describe what action should be requested of the client by the auditor in each of the following situations. Potential options include:
Requesting the client make a disclosure in the notes to the accounts
Requesting the client make an adjustment (name the account)
Advising the client of a change in audit opinion (what sort of opinion should be given)
Doing nothing.
Explain your answer. Include an accounting and/or auditing standard and paragraph reference to support your answer.
a. You discover on the 15/1/2011 that Shoez, a major customer, has become insolvent and Cloud 9 will not be able to collect the amounts owing to them.
b. You discover on 10/2/2011 that a customer is suing Cloud 9 after they slipped and fell inside a Cloud 9 retail outlet. The accident occurred in November 2010.
c. On 31/1/2011 the federal government releases a draft working paper proposing an increase in import duties on all goods from China of 150% starting in July 2011. This increase in duties would increase the price of Cloud 9 shoes significantly above the prices of competitors.
d. At the official launch of the financial statements, you overhear the Financial Controller discussing a situation where an employee has been stealing cash from Cloud 9.
e. In March 2011 you read a newspaper article in regard to Cloud 9 possibly purchasing the shoe company Groovy Shooz (a competitor).
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