OPSM Opticians Ltd is a producer of fashion eyewear. The audit report for the year ended 30 June 20X9 was signed on 5 August 20X9 and along with the financial report was mailed to shareholders on 10 August. Consider the following independent events. Assume that each event is material. I. On 5 July, OPSM Opticians entered into a new contract to supply eyewears to JDS, a new major department store. The contract was similar in nature to other contracts previously negotiated. (50- 80 words) II. OPSM Opticians has invested significant funds in developing a new type of unbreakable sunglass lens. On 8 July, OPSM Opticians applied for a patent for the lens, only to discover that a competitor had lodged a similar application on 20 June. The granting of Trendy Accessories’ application is now in serious doubt. (50- 80 words) III. Internal audit has uncovered a major fraud at one of OPSM Opticians branches. The fraud was perpetrated by two senior staff, acting in collusion over a number of years. The internal auditors released their report to management on 15 July, after a highly confidential investigation spanning several months. (50- 80 words) IV. One of OPSM Opticians major customers, Leisure Pty Ltd, suffered a fire on 20 July. Since Leisure Pty Ltd was uninsured, it is unlikely that their accounts receivable balance will be paid. (50- 80 words) V. On 25 July, a well-known financial planner advised his clients not to invest in OPSM Opticians due to poor long-term growth prospects. The market price for OPSM Opticians shares subsequently declined by 40%. (50- 80 words) Required: For each of the above events, state the appropriate action (if any) that the auditor would require of the client in order to issue an unqualified audit opinion. Give reasons.
OPSM Opticians Ltd is a producer of fashion eyewear. The audit report for the year ended 30
June 20X9 was signed on 5 August 20X9 and along with the financial report was mailed to
shareholders on 10 August.
Consider the following independent events. Assume that each event is material.
I. On 5 July, OPSM Opticians entered into a new contract to supply eyewears to JDS, a new
major department store. The contract was similar in nature to other contracts previously
negotiated. (50- 80 words)
II. OPSM Opticians has invested significant funds in developing a new type of unbreakable
sunglass lens. On 8 July, OPSM Opticians applied for a patent for the lens, only to discover
that a competitor had lodged a similar application on 20 June. The granting of Trendy
Accessories’ application is now in serious doubt. (50- 80 words)
III. Internal audit has uncovered a major fraud at one of OPSM Opticians branches. The fraud
was perpetrated by two senior staff, acting in collusion over a number of years. The
internal auditors released their report to management on 15 July, after a highly
confidential investigation spanning several months. (50- 80 words)
IV. One of OPSM Opticians major customers, Leisure Pty Ltd, suffered a fire on 20 July. Since
Leisure Pty Ltd was uninsured, it is unlikely that their accounts receivable balance will be
paid. (50- 80 words)
V. On 25 July, a well-known financial planner advised his clients not to invest in OPSM
Opticians due to poor long-term growth prospects. The market price for OPSM Opticians
shares subsequently declined by 40%. (50- 80 words)
Required:
For each of the above events, state the appropriate action (if any) that the auditor would require
of the client in order to issue an unqualified audit opinion. Give reasons.
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