Auditing case study, Auditing

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Fortex Limited, the meat processing firm, was formed in 1985 from three smaller companies. In 1993, however, after a few years of spectacular growth, the company collapsed.

a)  Summarise the history of theFortex Limited case.

b)  With respect to the Fortex Limited case, take and defend a position as to whether each of the following situations represents deficient performance by the auditor, deficient standards or unreasonable expectations on the part of interested parties. In you discussion, refer to any applicable legislation, common law or appropriate source.

i)   Loan receipts from an overseas financier were recorded as sales.

ii)  Inventory of unprocessed and processed lamb products were grossly overvalued.

iii)  There was no mention of going concern problems in the auditor's report.

iv)  Fortex was expanding too fast for its market and this information was not disclosed.


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