In an audit of Malakat Mall Hypermarket for the financial year ended 30 June 2020, youdiscovered sufficient and reliable evidence on the following highly material independentsubsequent events. An audit report was issued on 12 September 2020 and the clientpublishes its financial statement by 25 September 2020. State the appropriatealternative action for the situation. The alternative actions are as follows:• Adjust the June 30, 2020, financial statements.• Disclose the information in a footnote of the June 30, 2020, financial statements.• Request the client to recall the June 30, 2020, statements for revision• No action is required.The events are as follows.iv.On September 15, 2020, the auditor discovered that Ahsan-VenturesIncorporated, a wholly-owned subsidiary of Malakat Mall Hypermarket issued AED5million, 10-year Sukuk at a 6 percent profit sharing rate in 2018. Malakat Mall waslisted as a guarantor for the Sukuk. Since the spread of the Covid-19 outbreak, Ahsan-Venture's business was severely affected and unable to honor the profit-sharingpayments due on 30 June and 31 December 2020.Select one:a.• Adjust the June 30, 2020, financial statements.• Request the client to recall the June 30, 2020, statements for revisionC.• Disclose the information ina footnote of the June 30, 2020, financial statements.• No action is required.

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In an audit of Malakat Mall Hypermarket for the financial year ended 30 June 2020, you discovered sufficient and reliable evidence on the following highly material independent subsequent events. An audit report was issued on 12 September 2020 and the client publishes its financial statement by 25 September 2020. State the appropriate alternative action for the situation. The alternative actions are as follows: • Adjust the June 30, 2020, financial statements. • Disclose the information in a footnote of the June 30, 2020, financial statements. • Request the client to recall the June 30, 2020, statements for revision • No action is required.

In an audit of Malakat Mall Hypermarket for the financial year ended 30 June 2020, you discovered sufficient and reliable evidence on the following highly material independent subsequent events. An audit report was issued on 12 September 2020 and the client publishes its financial statement by 25 September 2020. State the appropriate alternative action for the situation. The alternative actions are as follows: • Adjust the June 30, 2020, financial statements. • Disclose the information in a footnote of the June 30, 2020, financial statements. • Request the client to recall the June 30, 2020, statements for revision • No action is required.

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

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

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

Chapter14: Activities Required In Completing A Quality Audit

Section: Chapter Questions

Problem 87RSCQ

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