An example of a Type I subsequent event would be A. a sudden change in senior management after the financial statement date B. a filing with the Securities and Exchange Commission (SEC) of an amended form 10K after the financial statement date C. the bankruptcy of a client’s customer after year-end as a result of poor financial condition that existed as of the balance sheet date D. the bankruptcy of a client’s customer after year-end as a result of poor financial condition that existed after the balance sheet date
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- Write whether the following events are considered as event occurring after the end of reporting period. Also explain whether these events are adjusting events or non-adjusting. On 12 September, the auditor became aware that a fire burnt down one of TGL’s warehouses, resulting in a loss of 40% of the inventory that was on hand at that date. On 30 September, management discovered that Johnno, a major debtor of TGL who was facing financial difficulties, became bankrupt on 15 September. All sales to Johnno were made before the end of the financial year.Write whether the following events are considered as event occurring after the end of reporting period. Also explain whether these events are adjusting events or non-adjusting. On 12 September, the auditor became aware that a fire burnt down one of TGL’s warehouses, resulting in a loss of 40% of the inventory that was on hand at that date. On 30 September, management discovered that Johnno, a major debtor of TGL who was facing financial difficulties, became bankrupt on 15 September. All sales to Johnno were made before the end of the financial year. djjnsjsdAssume you are employed as the chief financial officer of a corporation and are responsible for preparation of the financial statements, including the adjusting process and preparation of the adjusted trial balance. The company is facing a slow year, and after your adjusting entries, the financial statements are accurately reflecting that fact. However, as you are discussing the matter with your boss, the chief executive officer (CEO), he suggests that you have the power to make further adjustments to the statements, and that you should use that power to “adjust” the profits and equity into a stronger position, so that investor confidence in the company’s prospects will be restored. Write a short memo to the CEO, stating your intentions about what you can and/or will do to make the financial statements more appealing. Be specific about any planned adjustments that could be made, assuming that normal period-end adjustments have already been reflected accurately in the financial…
- A company’s management has uncovered events that indicate that substantial doubt exists that the company can pay its debts as they come due over the following year. What should management do next? a. Management should disclose that substantial doubt exists that the company can remain in existence. b. Management should examine the plans created to address the concern. c. Management should adjust all asset balances to fair value. d. Management should adjust all liabilities to expected settlement amounts.An entity has made an error in the balance sheet. During the current year, a bond has been classified as a non-current liability rather than recording it as a current liability. However, the entity will amend this error in the next financial year (Amend as a current liability). Explain how the employees/managers will impact on this error?A company’s management has uncovered events that indicate that substantial doubt exists that the company can pay its debts as they come due over the following year. Management studies the plans created to address this risk. How can the company avoid disclosing that this substantial doubt exists? a. The plans must be reviewed by the chief financial officer. b. It must be probable that the plans will be implemented and it must be probable that the plans will mitigate the conditions that raised substantial doubt. c. Disclosure of the substantial doubt is required regardless of the availability of the plans. d. The plans must have been tested before the end of the financial year.
- Identify one (1) real-life ‘financial reporting accounting fraud’ that occurred post 1990 (i.e. in the last 30 years), in any country, and answer the following questions: a) Discuss what specific accounting regulations were violated?[The following information applies to the questions displayed below.] Megan Company (not a corporation) was careless about its financial records during its first year of operations, 2017. It is December 31, 2017, the end of the annual accounting period. An outside CPA has examined the records and discovered numerous errors, all of which are described here. Assume that each error is independent of the others Analyze each error and indicate its effect on 2017 and 2018 net income, assets, and liabilities if not corrected. Do not assume any other errors. Use these codes to indicate the effect of each dollar amount: O = overstated, U = understated, and NE = no effect. The first transaction is used as an example. Wages earned by employees during 2017 not recorded or paid in 2017 but recorded and paid in 2018, $500. (Enter all values as positive values.) I'm unsure why my answer is incorrect.. Thanks.The recently hired CFO of Finger Lakes Vacation Sales Corp. is concerned about some of the Year 4 situations. The CFO has come to you for advice. Finger Lakes Vacation Sales Corp. follows IFRS. Required For each scenario above, state if the situation is a change in policy, a correction of an error, or a change in estimate. Explain your answers. Also state if the situation requires a restatement of retained earnings on January 1, Year 4. What disclosures, if any, are required. Fully discuss any ethical implications related to the scenarios. The items of concern are: A. Finger Lakes Vacation Sales Corp. has provided a loyalty rewards program to customers for the past 6 years. During that time, the amounts were insignificant, and no revenues were deferred, and no accruals were made. With Year 4 changes to the plan, the amount of rewards has become material. The Controller decided that starting in January, Year 4, Finger Lakes Vacation Sales Corp. will defer the revenue related to these…
- 1.Which of the following reports are likely when management has not made available minutes to the board of directors meetings during the year? a)Neither adverse nor disclaimer. b)Adverse only. c)Both adverse and disclaimer. d)Disclaimer only. 2.Which of the following is least likely to be considered in determining whether a misstatement pervasively misstates the financial statement? a)An immaterial misstatement is similar to one that occurred in the prior year. b)A material misstatement represents a substantial proportion of the financial statements. c)A disclosure is fundamental to users’ understanding of the financial statements. d)A material misstatement is confined to specific elements, accounts, or items of the financial statements. 3.Due to complications related to a national health crisis, the auditors were unable to observe major portions of the client’s year-end inventory count. However, they believe that they have been able to perform adequate alternative procedures. If…assume you are employed as the chief financial officer of a corporation and are responsible for preparation of the financial statements, including the adjusting process and preparation of the adjusted trial balance. the company is facing a slow year, and after your adjusting entries, the financial statements are accurately reflecting that fact. however, as you are discussing the matter with your boss, the chief executive officer (CEO), suggests that you have the power to make further adjustments to the statements, and that you should use that power to “adjust” the profits and equity into a stronger position so that investor confidence in the company’s prospects will be restored. you must write a short memo to the ceo, stating your intentions about what you can and/or will do to make the financial statements more appealing. you must be specific about any planned adjustments that could be made, assuming that normal period-end adjustments have already been reflected accurately in the…You have been the auditor of Data Ltd for two years. Your auditor’s report for Data for the year ended30 June 2018 was unmodified, indicating that in your opinion the financial report gave a true and fairview. In August 2018, Data obtained a large loan from Better Bank Ltd, to provide additional workingcapital. Subsequently Data suffered severe trading difficulties and was placed into liquidation in lateDecember 2018, with insufficient funds to repay the loan to Better Bank.Required:Outline a defense for your audit firm to any legal action taken by Better Bank to recover its loss. ( maximum 600 words)
