Chapter 24

24-4
3 situation
Remote – low possibility of contigent liablity to occured
Reasonable---- - medium possibility
Probbale – high possibility

Differences between 3?
Its financial statement treatment (in slide) –
2) notes to the account (footnote)
3) reasonably estimated? The amount of lossess that client have to pay to.

24-5
Matters that might arise in contigent liability
1) Stealing someone pattern (vivy vs sleeplyllama)
2) Between client and lhdn
3) Customers
24-6
Legal invoice – invoice from lawyerr

24-8
Contact client lawyrer, ask any CL facing by client.
24-10
24-12
1) Outstanding balance become bad debt. If bankcrupt.
How about customer who does not have outstanding balance? Think!
24-13
24-14
Audit test – audit procedure
Ask management, client lawyer
Check letters of representation (management representation letter)
Pages 732
Written by client management (cfo,ceo)
Compulsory to be given to auditor.
24-15
Purposes
24-16
1) For preparing FS
2) NO UNRECORDED EVENT
3) Recognition disclosure done by managemnt
4) Disclose subsequent event happend in year end
24-17
Prepared by client, not auditor
24-18
24-19
2) T0c, stot, todb
3) Complete all audit procedure
Chapter 8.
24-20
Different audit ducumention review and independent review – pages 738
24-25
24-26
Happend when client audit report has 2 dates.
How happend?
The forgot to audit on acquisition on PPE. They come back another day to complete it. They
have to amend the first draft of audit report and then mention the additional procedure
taken and put the new date. If happend, negligence of auditor.
24-27
MFRS 101, presentation FS
SOCE – hilang
Additional information – biru tu ada 3
24-28
During th release of audit report – audit commitee & management
Management letters – pages 741
24-29
Period after submission of audit report to security commision.

Exercise 24-30
1. Adjust the june 30, 2013, financial statement
2. Disclose the information in notes to the account in the june 30, 2013, financial
statement.
3. Request the client to recall the june 30, 2013, for revision.
4. No action id required.

Answer
a) 3 – amount should have been determined to be uncollectible before end of field
work, but it was discovered after the issuance of the statements. The financial should
have been known to be misstated on 8/19/11.
b) 4 – the amount appeared collectable at the end of field work.
c) 1 – the uncollectible amount was determined before end of field work.
d) 2 – the cause of the bankcruptcy took place after the balance sheet date, therefore
the balance sheet was fairly state by 30/6/11. Most auditors would probably require
that the account be written off as uncollectible as 30/6/11, but they are not reuqired
to do so. Notes to the accounts disclosure is necessary because the subsequent event
is material.
e) 2 – the sale took place after the balance sheet date but since the loss was material
and will affect profits, notes to the account disclosure is necessary.
f) 1 – the settlement should be reflected in the 30/6/11 financial statement as an
adjustment of current period income and not a prior period adjustment.
g) 4 – the financial statement were believed to be fairly stated on 30/6/11 and 19/8/11
h) 2 – the cause of the lawsuit occured before the balance sheet date and the lawsuit
should be included in the 30.6.11 notes to the accounts.
i) 2 – the lawsuit originated in the current year, but the amount of the loss is unknown.