Healesville Sanctuary is a family-owned and operated wildlife park located in Melbourne. Healesville Sanctuary has more than 150 animal species, some of which are loaned from overseas animal parks. Healesville Sanctuary has two divisions for selling merchandise: a retail operation that sells food, beverages, shirts, souvenirs and other novelties to visitors within the park, and a wholesale operation that sells toys to department stores. The following management figures are relevant for the year ended 30 June 2020: $ Total assets 69 120 000 Total current assets 34 560 000 Inventories 28 800 000 Net assets 51 840 000 Profit after income tax 9 792 000 The company tax rate is 30 per cent. During the conduct of the audit, the following items of interest were noted by the audit team: Due to an electrical contractor accidentally drilling through a power cable, all invoices for items sold through Healesville Sanctuary's wholesale operations on 22 and 23 June had to be manually prepared. Many of the manual invoices from this period omitted some of the items that were sold to department stores. The total value of the omitted items was $30 666 Healesville Sanctuary lodged its tax return late and received a substantial fine. Payment of the fine was not made by the required date, and liability for the amount has not been recorded. The fine was $300 000. Required: For each of the individual statements listed, explain whether the item should be reported to management or is clearly trivial.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter3: Internal Control Over Financial Reporting: Responsibilities Of Management And The External Auditor

Section: Chapter Questions

Problem 21RQSC

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Healesville Sanctuary is a family-owned and operated wildlife park located in Melbourne. Healesville Sanctuary has more than 150 animal species, some of which are loaned from overseas animal parks. Healesville Sanctuary has two divisions for selling merchandise: a retail operation that sells food, beverages, shirts, souvenirs and other novelties to visitors within the park, and a wholesale operation that sells toys to department stores.

The following management figures are relevant for the year ended 30 June 2020:

	$
Total assets	69 120 000
Total current assets	34 560 000
Inventories	28 800 000
Net assets	51 840 000
Profit after income tax	9 792 000

The company tax rate is 30 per cent.

During the conduct of the audit, the following items of interest were noted by the audit team:

Due to an electrical contractor accidentally drilling through a power cable, all invoices for items sold through Healesville Sanctuary's wholesale operations on 22 and 23 June had to be manually prepared. Many of the manual invoices from this period omitted some of the items that were sold to department stores. The total value of the omitted items was $30 666
Healesville Sanctuary lodged its tax return late and received a substantial fine. Payment of the fine was not made by the required date, and liability for the amount has not been recorded. The fine was $300 000.

Required:
For each of the individual statements listed, explain whether the item should be reported to management or is clearly trivial.

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