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“CS Group”
Q1(a)(i)Consolidated financial statements audit1. Can we use the extrapolated full year result of Canary Co to calculate the significant component / materiality ?or should we use the 6 month result?
“Ravaen & Co / Grouse Co / Plover Co”
Q4(b)”Legal advice may need to be obtained”
“The potential impact of the apparent non-compliance should be evaluated. In this case, Plover Co could face further legal action from dissatisfied or injured patients, fines and penalties from the regulatory authorities and its going concern may be in jeopardy if that authority has the power to revoke its operating licence. If these potential effects are considered to be material
to the financial statements, legal advice may need to be obtained.”2. Refers to auditor to get legal advice for this case?what legal advice refers to here? for the amount of the penalty will involved?
1. Results should be extrapolated – it doesn’t make sense to say it’s not a significant component this year but it is next year – it is presumably significant to SoFP.
2. I would never write “obtain legal advice” or give credit to it unless it was specific what legal advice it was referring to. I don’t know what the author had in mind here.
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