Reference no: EM132973265

Question - Today's date is 1 July 20X5 and you are a manager in Winterborn & Co responsible for the audit of Slate Co. The audit of the financial statements for the year ended 31 March 20X5 is nearly complete and the auditor's report is due to be issued next week. The financial statements show a profit of £1.6 million and total assets of £9 million. The following issue has been left for your attention. Slate Co provides freight services between seven major cities. The cities are located at significant distances from each other meaning deliveries can take several days. During the yearthere were a number of protests by independent lorry drivers who were angry about increases in fuel taxes. The protests involved blockading major roads which prevented traffic from getting through. This caused significant delays to Slate Co in reaching its customers. Slate Co has offered all customers affected by the delays a 30% discount on invoices relating to delayed deliveries during the protests. The discount offered to all customers totaled £53,000. This is not yet recognised in the financial statements. One customer, Kola Co, is refusing to accept the discount and refusing to pay the full invoiced amount of £72,000 as Kola Co claims it was unable to fulfil a significant contract of its own because of the delays.

Required - Comment on the matters that should have been considered, and recommend any further audit procedures that should be performed in respect of the issue described above.