- 15 Marks
AAA – L3 – Q60 – Evaluation and review
Identify further information needed to assess Jemila Foods' going concern status due to supplier financial difficulties.
Question
Jemila Foods has been in existence, importing foodstuffs such as rice, 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 food which is manufactured exclusively by one company which is based in Bharat. The food is distributed via ‘shops within shops’ at 20 branches of a well-known store. Under this minimum annual payment of $10,000 per store.
The audit is nearing completion but you have just heard that the Bharat manufacturer is facing serious financial difficulties and that supplies have ceased.
Required:
(a) Set out the further information the auditor would require before reaching his audit opinion. (b) Set out the possible forms of report that the auditor may issue.
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