Team006 Appendix 6

.pdf

School

Humber College *

*We aren’t endorsed by this school

Course

4004

Subject

Accounting

Date

Feb 20, 2024

Type

pdf

Pages

1

Uploaded by MegaToadPerson269

ColAlta Pipeline An External Auditing Simulation ColAlta Pipeline, Ltd. Subsequent Events Following are a series of independent situations (i.e. do not let any one situation affect your view of the other situations). For each situation below, descibe what action you believe you as the auditor should take in the given situation, and provide an explanation as to why you believe this is the correct course of action. Support your response with reference to the auditing standards where appropriate. For the purpose of this activity, recall that the financial statements are dated December 31, 2021. Assume that the audit report will be dated February 15, 2022. Date of the event Event January 21, 2022 A municipal road crew was doing road repairs on a secondary road that runs over top of a section of the pipeline. During the road work, a backhoe operator accidentally damaged a portion of the pipeline. ColAlta has filed a lawsuit claiming damages in the amount of $65,000. 5 January 11, 2022 One of the accounts payable clerks found an invoice under her desk dated August 2 of the fiscal year being audited. The invoice had accidentally slipped down behind her desk, and had never been entered into accounts payable. The amount was $267. 14 February 3, 2022 During the fiscal year, the company loaned $15,000 to Michael Fitzpatrick, the President and Chief Executive Officer. Subsequent to the end of the year, you read in the minutes of the Board of Director's meeting that the Board agreed to forgive this loan effective this date. 15 January 29, 2022 The state government of Idaho issued a draft paper proposing a 9% increase in state property taxes, which would include the portion of the pipeline running through that state. 23 Appendix 6 - Subsequent Events Page 1
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