Question

You are the auditor of Sika Pa Rural Bank Ltd. a non-listed rural bank in Ghana. You are currently finalizing the audit for the year ended 31 December 2019. Your audit tests have proved satisfactory with the exception of the following four matters (a) The year-end balance of short-term investments of GHS 12.500.000 includes an amount of GHS 7,000,000 with Gold Coast Securities Lid which matured on 14" March, 2018 but has not yet been received to the date of the completion of the field audit on 30 April 2020. The directors are of the opinion that they will receive the full amount in the near future but do not know when During the year 2019, interest of GHS 1.400,000 was calculated on the principal amount of GHS 7,000,000 and taken to income. The following are extracts of the balances before consideration of the outstanding matters Total Property. Plant and Equipment GHS105,234,138 ii) Current Assets GHS 78,516,617 Current Liabilities GHS 96,422,823 (b) Included in the Loans and Advances balance of GHS 18.250,000 carried in the Statement of Financial Position at 31" December 2019 is a total overdraft facility of GHS 13.500.000 The bank's records indicate that out of the GHS 13.500.000 overdraft balance, a total amount of GHS 11.300.000 is unscheduled due to system generated balances over the past six years. This therefore does not represent a valid

Answer 1

a) short term investment 12500 55oo 1H00 13500 4750 out of which, pertains to Gold Coast which matused on 14/3/18, not yet recorded tooo → Balance Good short tum Invertment Interest receivable Considered on Investment & Gold Coast Investment b) Total loan & Advances on 31/12/19 - 18950 - 18950 ola 00 with Gyans outstanding loans & Advances lesser than years Statement of Comprehensive Income operating result Other Compoehensive Income evento Comprehensive Mancome d) Cash flow & changes mandatory during part of the period & Changes in Equity during the period" * financials are not up to the marks, as Cash flow 2535 PS 22000 19466 in Equity is the financial. It shows the cash movements & Change in Equity is not part of financial, moreover prossruns for Javertiments not Gonsider which has not realised for more than I year. Similarly Interest do come has been considered on matured Investment

6. * The Band has making * Sika PA Rural bank itd has to provide for the followings + Investment matured but not slecened till time (mode than y) loan & Advances outstandi more than 6 years . Booked interest Income on dubious Loan & Advances. financial lossess as Capturing Interest income on the old loan & Advances told over 6 yrs. or it > loan & advance over Gyos axs to considering a fresk revolution, Invest matured but rol received to be conside financials Cash flow & » change in equity must be part of Jalopu
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