Audit and Assurance – Coursework
One of the fundamental concepts in auditing is ‘true and fair’. Despite this being a cornerstone of UK financial reporting and auditing for the last half century, the phrase has never been defined in Company Law. Details are provided by Essay Writing !
Discuss the concept of true and fair, outlining the factors that should be considered by an auditor when forming a conclusion as to the truth and fairness of a set of accounts.
Your answer should cover the following aspects:
- Summarise the legal view of true and fair (10 marks)
- What does true mean in the context of accounts? (10 marks)
- What ideas are involved in the idea of fair? (10 marks)
- Do accounts need to be relevant to the needs of users to show a true and fair view? (10 marks)
- Why should an auditor be aware of the problem of bias in accounts? (10 marks)
You are undertaking the audit of M Ltd for the year ended. The company assembles microcomputers from components purchased from the Far East and sells them to retailers and to individuals and businesses by mail order. In the current year, there has been a recession, a banking collapse and strong competition which has resulted in a fall in sales and the gross profit margin. This had led to a trading loss and the company experiencing going concern problems.
Explain the going concern concept. (5 marks)
Describe the factors which indicate that a company may not be a going concern. Your
list should include all factors, and not just those which apply to M Ltd. (25 marks)
Describe the audit procedures that need to be undertaken in relation to going concern issues. (20 marks)
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