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Q2(a)(ii)Further action to be taken
1.Obtain copies of the individual company accounts and agree all relevant group balances and disclosure?
How will this help to identified intra group transaction?(b)(ii)Further actions to be taken
2.The evaluation of the compentence and independence of the component auditor is still relevant to the Q?as its in the review and final completion stage of the audit and this consideration should be on the planning stage?3.Obtain access to their working paper refers to the analytical procedure being performed as no other documentation being done?
(c)(i)
“For example,They should have considered the overall going concern status of the company and the impact on the valuation…”4.But the Q already states that under the key audit finding,their audit work concludes that this does not create a significant going concern risk to Daisy Co?
1. Because balances with group companies will be shown separately in receivables/payables – if not in SoFP then in the notes.
2. Yes – because so far group auditor considered only analytical procedures on grounds that new subsidiary was immaterial.
3. It is the group auditor who only performed analytical procedures – the component auditor should carried out a “proper” audit of Geranium.
4. The scenario states only that the new government environmental regulations do not create a significant going concern risk – it is not a conclusion on matters that may affect going concern.
4. But the answers was specific refers to the government regulations and the scenario have already stated no going concern implication?
“There is a risk that not all of the implication of the government regulations have been addressed by Foxglove & Co during their audit” “For example,They should have considered the overall going concern status of the company and the impact on the valuation…”
“Our audit work concludes that this [i.e. new regulations] does not create a significant going concern risk …”
But what about all the other things that might affect going concern?
And what risks other than to going concern might be created by the new regs?
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