i) Amendment of Financial Statements:
Under IAS 10 (Events after the Reporting Period), if the customer is experiencing significant cash flow difficulties just a few months after the year-end, it is unlikely that the GHS 0.8 million was recoverable as of 30 September. Therefore, the receivables balance is overstated, and consideration should be given to adjusting the balance, if material, through the use of an allowance for receivables or by writing it off. (1 mark)

ii) Audit Procedures:

• Review correspondence with the customer to assess the likelihood of payment.
• Discuss with management why they believe an adjustment is not required.
• Review post year-end period to check if any payments have been received from the customer.
  (3 points @ 1 mark each = 3 marks)

b

i) Responsibility between the year-end date and the date the Auditor’s report is signed:
During this period, management is responsible for updating the financial statements for any adjusting events that provide further evidence of conditions existing at the year-end. Under IAS 10, non-adjusting events that arise after the year-end but before the audit report is signed are required to be disclosed in the notes to the financial statements if material. The disclosure should include the nature of the event and an estimate of its financial effect, or a statement that an estimate cannot be made. (3 marks)

ii) Responsibility between the date the Auditor’s report is signed and the date the financial statements are issued:
During this period, management is responsible for bringing any material subsequent events to the attention of the Auditor. If adjustments are necessary, the financial statements should be amended, and the Auditor should issue a fresh report dated after the amendment. If management refuses to amend, the Auditor may need to withdraw the report and issue a revised one or prevent further reliance on the report. (3 marks)