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Part 1 - You are the partner in charge of the audit division in your accountancy firm. You are presently in charge of the audit of a company called Nevertire Pty Ltd. During the process of the audit the audit supervisor (your senior audit manager on the ground conducting the audit) reports the following activities that have occurred at Nevertire: I. The company being audited has had substantial changes in accountancy staff in the 6 months and the audit testing has revealed significant discrepancies in the accounting records. The company (after several attempts) cannot finalise its P&L and Balance Sheet for the period and has asked the audit team to finalise it for them. It has indicated it will pay extra above the agreed audit price. II. As Nevertire is an export/import firm it has stated that it has at least 100 containers (full of inventory) located at another location. It has shown the audit supervisor three containers (full of inventory) and asks the audit supervisor to certify the total inventory figure in the Balance Sheet and P&L based on the three containers audited and the record of the continuous inventory maintained by the company. III. The audit supervisor whilst auditing the company's records of its shareholdings noticed shares held by a Mrs Jones. The address of that shareholder is the same address of the Senior Partner in the accountancy firm and Mrs Jones is the wife of that partner.
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