How do we deal with subsequent events? 10 You are the manager responsible for th

Question

How do we deal with subsequent events? 10 You are the manager responsible for the audit of Sunway Group Berhad for the year ended 30 June 201 6. The draft consolidated financial statements recorded revenue of RM200 bil, profit before tax of RM 1.8 bil and total assets of RM380 bil. You noted the following: An overseas subsidiary is being sued by a customer for RM 70mil. The subsidiary auditors obtained verbal confirmation from the legal advisors that the damages are probable, but not virtually certain to be paid, and no provision has been recognised in either the individual or consolidated financial statements No other audit evidence has been obtained by the subsidiary auditors

Explanation / Answer

1. As per IFRS 21

2. The Auditor should inform this to the management of the client regarding recieving winding up notice from one of its debtor and analyse whether the amounts have been recovered subsequently. if already recovered then no change in the FS is required. if there is still due then discuss with the management and provide for the balance in the FS

3. The Auditor should seek clarification with the management regarding the chairmans note on profitability and asks the management to change the figures and if managemnet disagrees auditor should record his dissent in the audit commitee meeting and record in the minutes

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.