Reference no: EM132757161
Audit Closing Memorandum of Athon IT
We conducted a full test method balances. In the previous year the auditor to qualify the financial statements stating his opinion as follows:
- Management of the Company in Note 1 "explanations some special events' included in the notes to the financial statements, presented a justification for not having to make write-downs of inventories to net selling prices.
- Management believes that the Company's inventories of materials and work in progress (devices in construction ) and finished products will be sold at prices higher than sum of costs already incurred, in the case of production in the course of the costs necessary to complete the production.
- Justifications of such a position is the innovative technology used in the construction equipment. However, until the day of the opinion the company has sold only one device for TPLN 232 at the balance sheet date. |In addition to this transaction the Company does not have contained other unconditional sales agreements for any other products.
- Information contained conditional sales contracts Board of the Company presented in Note 2.1.8 to the financial statements.
- Due to lack of effective market for the innovation of manufactured equipment that would allow to determine the potential demand for these devices we were unable to compare the cost of manufacturing these devices to market prices, and thus confirm the accuracy of inventory valuation on the balance sheet date.
- In addition, the Company has not provided us with sufficient audit evidence to enable verification of the balance of deferred income from grants in the total amount of TPLN 1,671, and the public liabilities in the total amount of TPLN 670. therefore we limited scope of the audit of the financial statement items."
During this year's audit following issues were identified:
a) the company's liabilities exceed assets.
b) Uncleaned balance sheet loss is 12 million PLN.
c) BZ WBK terminated the loan agreement and received a writ of execution against the company
d) The Company has shown in the register of fixed assets intangible assets 300 thousand zl net, the physical inventory revealed that the license rights to these values ??belong to third parties, potential claims arising from the improper use of intellectual property rights is estimated at 3 million zl.
e) In the final products Athon showed 1.2 million zl line on disposal of sand, in relation to this device Technical Inspection Authority issued a temporary protection consisting in this, and the product can not be marketed in the EU without obtaining a certificate of qualification emission of harmful for living organisms. Estimated costs of obtaining such a certificate is 300 thousand. PLN.
f) Test the age structure of receivables pointed to the understatement of the provision for receivables of 150 thousand. PLN.
The Board refused to correct the financial statements in paragraphs d and f, agreed to show the issues in point. a-c. Apply 300 thousand PLN as the materiality of the study.
You are required:
Problem 1: Draw the summary of audit differences. Formulate auditors opinion on financial statements Athon HT for the year ended December 31, 2012?
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