QUESTION 3Khalish is the auditor of Bright Bhd. preparing the final audit for the year ended 30 September2021 and reviewing the audit working papers. Two issues summarised from the review are asfollows:Situation 1:During the year, Bright Bhd. was named as a defendant in a suit for damages by its mainsupplier, Sunny Sdn. Bhd. for breach of contract. In October 2021, an adverse decision toBright Bhd. was rendered, and it is required to pay RM2 million sum of damages to SunnySdn. Bhd.Situation 2:Bright Bhd. has acquired a new subsidiary, Metal Sdn. Bhd. to supply construction materials.The acquisition was taken place in October 2021, and the first transaction between them wascarried out in early November 2021. The management claim that they did not disclose theinformation on the acquisition and transaction since both activities were carried out after thebalance sheet date. In addition, the management keeps on giving excuses when asked about themanagement's written representation. It is the only thing outstanding before the auditor's signedand dated report.Required:b. Before Khalish completes the audit, critically analyse Bright Bhd.'s financial statementsfrom situations 1 and 2.

An auditor when performs the audit on the financial statements of the company have to give or in…

Answered: Before Khalish completes the audit,…

Business

Accounting

Before Khalish completes the audit, critically analyse Bright Bhd.'s financial statements from situations 1 and 2.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter4: Internal Control And Cash

Section: Chapter Questions

Problem 69.4C

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