Question

1.prepare a draft audit report

A. You are given the following audit report. You must rearrange it so that each part is in its correct position.

1. 16 November 2018

2. K.K. Auditors

3. The auditors have prepared the report according to ISA standards. The audit only looked at the financial statements. The auditors only examined the accounting and control systems in as far as they affected the financial statements. The audit does not say that the other controls are good.

4. The report is intended only for the shareholders of Xtra Large Company.

5. An audit is an activity aimed at giving an opinion on the financial statements. The financial statements audited include: the notes, the statement of cashflows, the income statement, the statement of financial position and the statement of changes in owners equity. The financial statements are for the year ended 2017.

6. Xtra Large Plc

7. We would like to state that the financial statements for the period in question give a true and fair view.

8. Management is responsible for preparing the financial statements. They are also responsible for the accounting and other control systems as well as for fraud.

9. 1 Longcloud Road

Prospero District

Economica City

Alchemy State

2. draft suitable management letters in relation to a statutory audit.

B. During the audit the following things were discovered.

James Dilworth the chief scientist has said he will be leaving the company.

Effect Recommendfound ：

Be-slim, one of the company’s products has been found to cause some health problems. The company thinks it may have to pay £10million because of this.

Effect Recommendfound：

The company has found out that some foreign companies are making fake drugs which look

  Effect Recommendfound：

Answer 1

Audit Report

Heading	Brief of contents
Tittle	K.K Auditors
Addressee	Foreign companies
Management Responsibilty	Management is responsible for preparing the financial statement and accounting and other control system as well as for fraud.
Auditor's Responsibility	The auditors have the prepared the report according to ISA standerds The auditors only examine the accounting and control system in affects financial system.
Opinion	An audit is an activity aimed at giving an opinion on the financial statements.
Basis of the opinion	The financial statements audited include: the notes, the statement of cashflows, the income statement, the statement of financial position and the statement of changes in owners equity. The financial statements are for the year ended 2017.
Other Reporting Responsibility	Other responsibility like control the financial statement fruad.
Discovered of the report	James Dilworth the chief scientist has said he will be leaving the company. Effect Recommendfound ： Be-slim, one of the company’s products has been found to cause some health problems. The company thinks it may have to pay £10million because of this. Effect Recommendfound： The company has found out that some foreign companies are making fake drugs which look
Signature of the Auditors	K.K
Date of Audit Report	16 November 2018