B. ZNZ Bhd. operates in the coal mining industry. The company owns ten (10) mines across the country from which coal is extracted before being sold to customers who are energy providers. Coal mining companies operate under licence from the National Coal Mining Authority, an organisation which monitors the environmental impact of coal mining operations, and requires coal mines to be operated in compliance with strict health and safety regulations. You are an audit manager in Sameera & Associates, responsible for the audit of ZNZ Bhd. and you are reviewing the audit working papers for the year ended 31 August 2020. The draft financial statements recognise profit before tax of RM21 million and total assets of RM195 million. The audit senior has left a note for your attention: Sales and Accounts Receivable • The consolidated revenue has increased by 184 percent from the 2019 to 2020. • Revenue in Korea, which has a reputation as a difficult market for foreign companies to enter, had increased from RM97,000 in the first quarter of 2019 to approximately RM59 million in the first quarter of 2020. • In the second quarter of 2020, sales has grown by 104 percent but accounts receivable grew by 128 percent. • The average collection days outstanding has increased from 138 days in 2019 to 160 days for the six-month period ended 31 August 2020. Accident at the Sinang Sabu Mine On 15 August 2020, there was an accident at the Sinang Sabu Mine, where several tunnels in the mine collapsed, causing other tunnels to become flooded. This has resulted in one- third (1/3) of the mine becoming inaccessible and for safety reasons, the tunnels will be permanently closed. However, ZNZ's management thinks that the rest of the mine can remain operational, as long as improvements are made to ensure that the mine meets health and safety regulations. Luckily no one was injured in the accident. However, the collapse caused subsidence which has damaged several residential properties in a village located above the mine. A surveyor has been commissioned to report on whether the properties need to be demolished or whether they can be safely repaired. A group of 25 residents have been relocated to rental properties in the local area and ZNZ is meeting all expenses in relation to this. The Sinang Sabu Mine was acquired several years ago and is recognised in the draft statement of financial position at RM12 million. As no employees were injured in the accident, ZNZ's management has decided not to report the accident to the National Coal Mining Authority. Required: a. Based on the above information, identify the relevant assertion for sales and accounts receivable that the auditor should be most concerned with.

B. ZNZ Bhd. operates in the coal mining industry. The company owns ten (10) mines across the country from which coal is extracted before being sold to customers who are energy providers. Coal mining companies operate under licence from the National Coal Mining Authority, an organisation which monitors the environmental impact of coal mining operations, and requires coal mines to be operated in compliance with strict health and safety regulations. You are an audit manager in Sameera & Associates, responsible for the audit of ZNZ Bhd. and you are reviewing the audit working papers for the year ended 31 August 2020. The draft financial statements recognise profit before tax of RM21 million and total assets of RM195 million. The audit senior has left a note for your attention: Sales and Accounts Receivable • The consolidated revenue has increased by 184 percent from the 2019 to 2020. • Revenue in Korea, which has a reputation as a difficult market for foreign companies to enter, had increased from RM97,000 in the first quarter of 2019 to approximately RM59 million in the first quarter of 2020. • In the second quarter of 2020, sales has grown by 104 percent but accounts receivable grew by 128 percent. • The average collection days outstanding has increased from 138 days in 2019 to 160 days for the six-month period ended 31 August 2020. Accident at the Sinang Sabu Mine On 15 August 2020, there was an accident at the Sinang Sabu Mine, where several tunnels in the mine collapsed, causing other tunnels to become flooded. This has resulted in one- third (1/3) of the mine becoming inaccessible and for safety reasons, the tunnels will be permanently closed. However, ZNZ's management thinks that the rest of the mine can remain operational, as long as improvements are made to ensure that the mine meets health and safety regulations. Luckily no one was injured in the accident. However, the collapse caused subsidence which has damaged several residential properties in a village located above the mine. A surveyor has been commissioned to report on whether the properties need to be demolished or whether they can be safely repaired. A group of 25 residents have been relocated to rental properties in the local area and ZNZ is meeting all expenses in relation to this. The Sinang Sabu Mine was acquired several years ago and is recognised in the draft statement of financial position at RM12 million. As no employees were injured in the accident, ZNZ's management has decided not to report the accident to the National Coal Mining Authority. Required: a. Based on the above information, identify the relevant assertion for sales and accounts receivable that the auditor should be most concerned with.

Business Its Legal Ethical & Global Environment

10th Edition

ISBN:9781305224414

Author:JENNINGS

Publisher:JENNINGS

Chapter16: Business Competition: Antitrust

Section: Chapter Questions

Problem 10QAP

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