Accounting and

Auditing

Audit
General audit approach

YVON Case - Statement

Duratio 30 minutes
n:
Difficulty from 1 to 5 (5 being the most 2
difficult):
Status Optional
:

SA XAVIER owns 70% of the capital of SARL YVON, whose essential characteristics are set out i n Appendix 1.

This company has had a statutory auditor since the close of 12/31/N-3, as the mandatory appointment
thresholds w e r e exceeded in N-4.

On February 15 N+1, the company's chartered accountant sent you the draft annual financial statements. Upon
receipt of this document, you decide to start your audit work.

You have set a materiality threshold for the financial statements taken as a whole equal to 20% of net income,
i.e. €22,000.

Work to do

1. What is a significance threshold? What is its purpose? In which document is it embodied?

As part of your work, you have decided to confirm the company's significant third-party customers and
suppliers. As part of this process, you have selected 80% of the trade receivables and payables shown on the
balance sheet.

Work to do

2. What is the procedure for requesting confirmation from third parties and how does i t work?

On examining the company's past trade receivables, your attention is drawn to a trade receivable that is now
over a year old, amounting to €80,400 (VAT at 20%). By consulting the company register website and ordering
a K-Bis extract for this company, you learn that the company has been the subject of a court-ordered
receivership judgment published in the BODACC dated
October 19 N. In addition, you learn that SARL YVON has failed to declare its claim to the judicial
representative.

Work to do

3. How would you assess your opinion on the annual financial statements if :
- the manager modifies the annual accounts;
- the manager does not amend the annual financial statements.

4. Given that the SARL no longer exceeds the thresholds for appointing a statutory auditor, what
happens to the company's statutory auditor?

Cas YVON - Statement -

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 Accounting and
Auditing

At the shareholders' meeting to approve the financial statements for year N, scheduled for June 30 N+1, the
company's manager is also planning to put on the agenda the conversion of the SARL into a société par actions
simplifiée (SAS).

Work to do

5. What happens to the statutory auditor's mandate if the conversion to an SAS is approved?

6. Is it necessary to appoint a transformation commissioner for this operation?

APPENDIX 1
Main characteristics of SARL YVON

Share capital: €50,000 divided into 500 shares of €100 Share

ownership :
- 70% or 350 shares held by XAVIER ;
- 30% or 150 shares held by 3 individuals (50 shares each).

Year-end date: December 31 Key figures :

N-1 N
Workforce 35 employees 35 employees
Sales figures 2 552 000 € 2 433 000 €
EBITDA 214 000 € 187 000 €
Net income 142 000 € 114 000 €
Availability 165 000 € 142 000 €
Balance sheet total 1 123 000 € 1 103 000 €

Date of the general meeting called to approve the financial statements for the year ended 12/31/N: June 30,

N+1 The company does not benefit from the reduced corporate income tax rate.

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