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Question - You are the audit partner of Simon & Co., a large audit firm that is operating in Melbourne. Your firm audited ABC Ltd, a custom-made products manufacturing company. ABC Ltd declared bankruptcy within six months of receiving an unqualified auditor's opinion on its financial statements for the year ended 31 December 2018.
The XYZ bank initiated a court challenge against your firm on the grounds that the bank disbursed a $2,500,000 loan to ABC Ltd in May 2019, but ABC went bankrupt shortly afterwards. The plaintiff alleged that your firm's 2018 audit of ABC was deficient and argued that the auditors failed to uncover that the value of ABC's inventories were substantially lower than reported on the balance sheet. Your audit firm did not issue privity letters to any third party in the past four years.
Required -
a. With reference to the principles established in common law, explain whether the XYZ bank is likely to be successful.
b. What are the legal requirements that a third party has to satisfy to successfully sue an auditor for negligence?
c. Why is independence so essential for auditors? Explain the difference between independence in appearance and independence in fact.
In general terms, compare and contrast how expenditures are controlled in the general fund and in debt service funds. Explain why differences would occur.
Show the impact of the inventory write-down on the accounting equation, and also show the journal entry that should have been recorded on December 31, 2004. Calculate (a) the Inventory balance that should have been reported on December 31, 2004, and ..
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Prepare all necessary elimination entries for the consolidating worksheet of December 31, 20X1. Complete the consolidating worksheet for December 31, 20X1
The "Hammer" Gets Hammered. In 2010, Tom DeLay, former Texas Congressman and U.S. House Majority Leader, was convicted of money laundering and sentenced.
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Comment on the inherent limitations of the financial statements of this church, or any comparable not-for-profit organization
Using the following data from both Garcon Company and Pepper Company for the year ended December 31, 2019, compute (1) the cost of goods manufactured
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