ACCT601: Auditing and Assurance - Outback Mining Limited - Case Study Assignment Help

Auditing and Assurance Case Study Assignment Help

1. Describe the audit work you will carry out to check whether the valuer has provided an accurate and independent valuation of the land and buildings.
2. Describe the audit work you will carry out to check the existence and completeness of plant and machinery, as recorded in the company’s non-current asset register.

1. A client holds a note receivable consisting of principal and accrued interest receivable. The note’s maker recently filed a voluntary bankruptcy petition, but the client failed to reduce the recorded value of the note to its net realisable value, which is approximately 20 percent of the recorded amount.
2. An auditor is engaged to audit a client’s financial report after the annual physical inventory count. The accounting records are not sufficiently reliable to enable the auditor to become satisfied as to the year-end inventory balances.
3. An auditor hires an actuary to assist in corroborating a client’s complex superannuation calculations concerning accrued superannuation liabilities that account for 35 % of the client’s total liabilities. The actuary’s findings are reasonably close to the client’s calculations and support the financial report.
4. Due to losses and adverse key financial ratios, an auditor has substantial doubt about a client’s ability to continue as a going concern for a reasonable period of time. The client has adequately disclosed its financial difficulties in a note to its financial report, which do not include any adjustments that might result from the outcome of this uncertainty.

• The balance date is 30 June 2017.
• The fieldwork was completed on 5 August 2017.
• The financial report and audit report were signed on 12 August  2017.
• The financial report and audit report were mailed to the members on 20 August  2017.

1. On 14 August 2017, you discover that a debtor of your client, Galaxy Ltd, was placed in provisional liquidation on 8 August 2017. The debtor owed $600,000 as at 30 June 2017; a specific provision of $300,000 of this amount was made at this date. On very preliminary information, the likely payout to unsecured creditors is zero.
2. A flood occurred in the warehouse of your client SuperSpring Ltd on 2 July 2017. Inventory valued at $2m was destroyed. The directors believe only half of this value will be recovered from the insurers.
3. Your client, Outback Mining Limited (hereinafter referred to as ‘Outback’), owns a mineral exploration licence in Central Australia. At 30 June 2017, Outback’s licence was valued by an independent expert at $50,000,000. This valuation is reflected in the financial report. On 8 August 2017, Outback received notice that a claim was being lodged under the Native Titles Act for land which included that subject to the exploration licence. If the claim is successful the exploration licence will be worthless.
4. Your client, Bird Pty Limited, derives approximately 10% of revenues from selling aviary supplies to city-based bird breeders. A draft copy of a government report, leaked to the press and reported in the media on 11 May 2017, recommends that strict limits be placed on the number of birds that are allowed to be kept in suburban areas. Bird Pty Limited estimates that if the recommendations are enacted, about 70% of its customers will have to cut their flocks by 50% or more. This would affect not only future sales but also their ability to pay existing debts. No further information, other than the draft report, is available as at 12 August 2017.

1. Identify the periods during which the auditor is responsible for identifying subsequent events and indicate the extent of the auditor’s responsibility.
2. For each of the above events (i) to (iv), state the appropriate action that the auditor would require in order to issue an unqualified opinion for the situation and justify your response.