As the auditor of Komsu air limited that manufacturers and installa large commercial air conditioning systems.KAL typically has two or three large contracts(ranging from $6 million to 10million) in progress at any one time The contracts usually take upto 6 momths to complete although unexpected on site difficulties can result in lengthy delay im completion KAL ginace operations with a mixture of equity long term debt the relevant issue are as follows competion in the industry in becoming more intense with some customers now installing their own systems kAL bank has requested cash flow forcecasts for the coming year to support the short term loans it has indicated that it may need to withdraw funding or restructure debt if the forcast are not adequate Assets consist chiefly of plant and equipment some of which is specialised to the industry.Debtor are significant but recoverable is not considered an issue as the ongoing projects are with reputable customer and management is not aware of any problem. included in previous is a large provisions for warranty for one of kAL jobs completed at a hotel two year ago it appreas that the air-conditioning system is not working and the hotel is now requesting a substantial refund of the contract price required explain whether you believe the area of going concern should be assessed as high risk and mitigating factors for KAL audit for the year ended 30 june 2017
As the auditor of Komsu air limited that manufacturers and installa large commercial air conditioning systems.KAL typically has two or three large contracts(ranging from $6 million to 10million) in progress at any one time The contracts usually take upto 6 momths to complete although unexpected on site difficulties can result in lengthy delay im completion KAL ginace operations with a mixture of equity long term debt
the relevant issue are as follows
competion in the industry in becoming more intense with some customers now installing their own systems
kAL bank has requested cash flow forcecasts for the coming year to support the short term loans it has indicated that it may need to withdraw funding or restructure debt if the forcast are not adequate
Assets consist chiefly of plant and equipment some of which is specialised to the industry.Debtor are significant but recoverable is not considered an issue as the ongoing projects are with reputable customer and management is not aware of any problem.
included in previous is a large provisions for warranty for one of kAL jobs completed at a hotel two year ago it appreas that the air-conditioning system is not working and the hotel is now requesting a substantial refund of the contract price
required
explain whether you believe the area of going concern should be assessed as high risk and mitigating factors for KAL audit for the year ended 30 june 2017
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