- 12 Marks
AA – L2 – Q68 – Going Concern
Identify further information needed for audit opinion on Luxe Scents due to supplier issues. Outline possible audit report forms for Luxe Scents given supplier financial issues.
Question
Luxe Scents has been in existence, importing perfume, for a number of years. The managing director had built up the business using contacts he already had in the industry. The company imports only one brand of perfume, which is manufactured exclusively by one company. The perfume is distributed via ‘shops within shops’ at 20 branches of a well-known store. Under this agreement, Luxe Scents pays a percentage of its takings to the store, with a minimum annual payment of $50,000 per store.
The audit is nearing completion, but you have just heard that the Italian manufacturer is facing serious financial difficulties and that supplies have ceased.
Required
(a) Set out the further information the auditor would require before reaching an audit opinion.
(b) Set out the possible forms of report that the auditor may issue.
Find Related Questions by Tags, levels, etc.
- Tags: Audit opinion, Audit Reports, Going Concern, Material Uncertainty
- Level: Level 2
- Topic: AUDIT REPORT
