B. Suhaimi, a senior auditor in charge, is called upon to audit a client, Panda Motor Bhd, which manufactures and supplies automobile parts all over the country. During the financial year 31 December 2021, the company expanded its operation by opening new sites in a few strategic locations across the country. Mid-April 2021, the management appointed an experienced charted certified accountant to set up an internal audit department. However, by August 2021, the company reported a negative cash flow for the year, with sales going down in one of its sites due to the fierce competition in the automobile industry and the country's slow economic development. An extensive range of spare parts is held, for which perpetual inventory records are kept, but the storekeeper conducts no continuous checking. Meanwhile, car servicing and body repairs are carried out in workshops by employed and sub-contracted services, and body repairs are carried out in and finished in a day, but the invoices are not immediately prepared upon completion. In the last financial year-end, the company had also faced a change in the management with the resignation of the company's CEO, Mr Osaka.

B. Suhaimi, a senior auditor in charge, is called upon to audit a client, Panda Motor Bhd, which manufactures and supplies automobile parts all over the country. During the financial year 31 December 2021, the company expanded its operation by opening new sites in a few strategic locations across the country. Mid-April 2021, the management appointed an experienced charted certified accountant to set up an internal audit department. However, by August 2021, the company reported a negative cash flow for the year, with sales going down in one of its sites due to the fierce competition in the automobile industry and the country's slow economic development. An extensive range of spare parts is held, for which perpetual inventory records are kept, but the storekeeper conducts no continuous checking. Meanwhile, car servicing and body repairs are carried out in workshops by employed and sub-contracted services, and body repairs are carried out in and finished in a day, but the invoices are not immediately prepared upon completion. In the last financial year-end, the company had also faced a change in the management with the resignation of the company's CEO, Mr Osaka.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 1P

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