Assignt Question ( 1) ( 10 Marks)
Impulse Pty Ltd (Impulse) is an entertainment system manufacturer that
was established in 2005. Your audit firm King & Queen have been the
auditor of Impulse since its formation. The audit report for the year ended
30 June 2012 was unqualified. Although Impulse had been suffering
liquidity problems with a drop in both debtors’ turnover and inventory
turnover, King & Queen did not consider that any additional audit work
was necessary in regard to the valuation of these assets. In August 2012,
Impulse obtained a large loan from a finance company, Easy Finance
Limited (EFL), to provide additional working capital. However, Impulse
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He copies the information and uses it in his
assignment, carefully removing all reference to Club Casino in order to
preserve the client’s confidentiality.
(ii)Wendy has been the engagement partner on the Ace Limited audit for
a number of years. Some time ago, Ace’s long-standing company
secretary retired and Ace took six months to find a replacement. At Ace’s
request, Wendy performed company secretarial duties for this period of
(iii)Leo is the eldest son of the factory foreman of one of your firm’s major
audit clients, Precision Machinery Limited. During vacation work, L is
assigned to the audit of Precision Machinery. Leo’s work comprised testing
the internal controls of the cash payments system.
(iv)Chan & Associates are auditors of Classic Reproductions Pty. Limited, a
large furniture wholesaler currently experiencing financial difficulties.
Classic Reproductions is a significant client of Chan & Associates and have
not paid their...