Reference no: EM132933470

Problem 1: You are assigned to conduct an audit on Syarikat ABC Bhd, a teak furniture manufacturer specifically for export overseas, mainly to the United States. For the year ended December 31, 2016, you find that ABC's business has declined in line with the slumping U.S. economy. Production volume decreased significantly due to declining demand from customers in the United States. This problem has led ABC's board of directors to decide to close one of the company's three operating factories. You also find that sales for the current year have dropped by 50%, inventory levels have increased and collections from customers have slowed. ABC Company has also failed to repay its debts to the bank. Currently, the company's management is in talks with the bank to ease its debt repayment burden through loan rescheduling. The management of the company is confident that these negotiations will be successful. Be required: With reference to the above case, discuss the appropriate type of audit report for the financial statements of ABC Bhd for the year ended 31 December 2016. Assume that there are no material misstatements involving other matters. Explain the things that need to be considered and then the action that should be taken by the auditor due to the limitations of the scope of audit work by management. What do the auditors need to state in the Key audit matters?