Reference no: EM132944861

You are the audit partner in the following material scenario:

The audit client purchased equipment from Chile on credit. From your examination of the accounts payables account you have reason to believe that the payables are materially understated due to the client not recognising any foreign currency losses at year end. You advise the client that these losses need to be recognised in accordance with GAAP. The client disagrees with your assessment and insists that the stated amounts are appropriate.

Required:

Problem 1: Analyse and explain how the situation would affect your audit report.