QUESTION 3 Khalish is the auditor of Bright Bhd. preparing the final audit for the year ended 30 September 2021 and reviewing the audit working papers. Two issues summarised from the review are as follows: Situation 1: During the year, Bright Bhd. was named as a defendant in a suit for damages by its main supplier, Sunny Sdn. Bhd. for breach of contract. In October 2021, an adverse decision to Bright Bhd. was rendered, and it is required to pay RM2 million sum of damages to Sunny Sdn. 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 was carried out in early November 2021. The management claim that they did not disclose the information on the acquisition and transaction since both activities were carried out after the balance sheet date. In addition, the management keeps on giving excuses when asked about the management's written representation. It is the only thing outstanding before the auditor's signed and dated report. Required: c. Should the audit partner sign the auditor's report before obtaining the written representation from management? Justify your answer.
QUESTION 3 Khalish is the auditor of Bright Bhd. preparing the final audit for the year ended 30 September 2021 and reviewing the audit working papers. Two issues summarised from the review are as follows: Situation 1: During the year, Bright Bhd. was named as a defendant in a suit for damages by its main supplier, Sunny Sdn. Bhd. for breach of contract. In October 2021, an adverse decision to Bright Bhd. was rendered, and it is required to pay RM2 million sum of damages to Sunny Sdn. 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 was carried out in early November 2021. The management claim that they did not disclose the information on the acquisition and transaction since both activities were carried out after the balance sheet date. In addition, the management keeps on giving excuses when asked about the management's written representation. It is the only thing outstanding before the auditor's signed and dated report. Required: c. Should the audit partner sign the auditor's report before obtaining the written representation from management? Justify your answer.
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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