342 Week 6
7.29 Effect of circumstances on audit opinion
You are an audit partner finalising your 30 June 2015 audits. The following independent and material matters have come to your attention.
1. Food Fund Foundation, a charity, is a non-reporting entity. As in previous years, you have performed the audit in accordance with its constitution. The financial report is prepared by another firm of accountants on behalf of Food Fund’s board of directors, because Food Fund does not have the in-house expertise to perform his function. During your review of the internal control structure, you noted that the company did not have sufficient controls over the collection of income to enable you to be satisfied that all income received were recorded. However, you have been satisfied that the company has correctly accounted for all income recorded.
2. Telken Ltd is the parent entity of the Telken Group, a reporting entity. Your firm did not act as auditor of either Telfast Ltd or Teldane Ltd – the entities controlled by Telken. You were unable to obtain the auditor’s report for Telfast, although you do have a copy of the final draft auditor’s report, and the other auditor’s verbal assurance that an unqualified auditor’s report was issued. In addition, despite receiving a copy of the audited report for Teldane, you do not believe the financial report is suitable for consolidation with the other entities in the group. This is because Teldance operates in Afghanistan, which has a vastly different accounting framework from that used in Australia. You have been able to quantify the financial effect of the required adjustments on the financial report of the Telken Group. However, management has refused to make the adjustments and has consolidated the existing version of Teldane’s financial report.
3. EUREKA & Co. Pty Ltd, a non-reporting entity, operates a small goldmine, which is run as a family business. The board consists of Mr Lalor and his sister, Ms Lalor, who are also the principle
You are an audit partner finalising your 30 June 2015 audits. The following independent and material matters have come to your attention.
1. Food Fund Foundation, a charity, is a non-reporting entity. As in previous years, you have performed the audit in accordance with its constitution. The financial report is prepared by another firm of accountants on behalf of Food Fund’s board of directors, because Food Fund does not have the in-house expertise to perform his function. During your review of the internal control structure, you noted that the company did not have sufficient controls over the collection of income to enable you to be satisfied that all income received were recorded. However, you have been satisfied that the company has correctly accounted for all income recorded.
2. Telken Ltd is the parent entity of the Telken Group, a reporting entity. Your firm did not act as auditor of either Telfast Ltd or Teldane Ltd – the entities controlled by Telken. You were unable to obtain the auditor’s report for Telfast, although you do have a copy of the final draft auditor’s report, and the other auditor’s verbal assurance that an unqualified auditor’s report was issued. In addition, despite receiving a copy of the audited report for Teldane, you do not believe the financial report is suitable for consolidation with the other entities in the group. This is because Teldance operates in Afghanistan, which has a vastly different accounting framework from that used in Australia. You have been able to quantify the financial effect of the required adjustments on the financial report of the Telken Group. However, management has refused to make the adjustments and has consolidated the existing version of Teldane’s financial report.
3. EUREKA & Co. Pty Ltd, a non-reporting entity, operates a small goldmine, which is run as a family business. The board consists of Mr Lalor and his sister, Ms Lalor, who are also the principle