MBS680 Auditing: Lean Start-Up Venture Business Report Analysis

This report provides a detailed analysis of auditing a lean start-up venture, focusing on the application of ASA 560 and ASA 570 standards. It examines two key events: a cash theft and a golf member accident, evaluating their impact on financial statements and audit opinions. The report discusses the auditor's responsibilities in gathering evidence, providing recommendations to management, and determining the appropriate audit opinion based on the materiality and pervasiveness of the events. It further addresses the implications of doubts about the client's ability to continue as a going concern, recommending adverse opinions when necessary. Desklib offers a wide range of solved assignments and past papers for students seeking further assistance.

BUSINESS REPORT
DETAILED LEAN START
UP VENTURE

Table of Contents
Question 2........................................................................................................................................3
Event (1).......................................................................................................................................3
Event (2).......................................................................................................................................4
REFERENCES................................................................................................................................1

Question 2
Event (1)
(a)
As per ASA 560, the evidence that auditor need to gather for audit completion is financial
statement. It means that financial statement have to analyzed by the auditor in order to identify
whether the condition respects to the event is existed on the balance sheet date or not. In the
given case, such event comes to the auditors eyes on 10th August 2021 which is before the date of
audit report sign off. This event i.e., stolen of cash is over the past five year so the condition of
event is exist on the year end. That’s why this event is considered as adjusting event which is
also known as Type 1 event. It is because the events that occurred between the end of the
reporting period and the date of audit report is consider as adjusting event with the condition that
such event condition existed at the period end. The evidence should be gather and part of audit
completion is as follows:
 Enquire of Management.
 Reading minutes of meeting of those charge with governance.
 Reviewing most recent financial information.
 Written representation.
(b)
As per ASA 560, the actions that the auditor should take is providing recommendation to the
management of the Golden Golf Club is that they need to adjust the amount of $400000 in the
financial statement of the company. It is because this is an adjusting event and is prior to the
auditors report being signed. In this case, the action auditors need to take is carry out audit
procedure to obtain evidence about subsequent event. The action is that the auditor need to
discuss the same with management and those charge with governance.
The audit opinion can be offered by the auditor of the company in the given case is qualified or
adverse opinion. It is because the auditor concludes that the financial statement are not free from
material misstatement. After analyzing the case study, it is identified that this event is material
but not pervasive thus auditor is recommended to give qualified audit opinion on the financial
statement of Golden Golf Club (Arslan and Demirkan, 2017).

(c)
If the auditor has doubt on the clients ability to continue as a going concern, the auditor is
recommended to give adverse opinion on the financial statement of the company. It is because as
per ASA 570 “Going Concern” if the auditor have doubt on the clients going concern than they
can provide adverse opinion on the financial statement of the company.
Event (2)
(a)
As per ASA 560 “Subsequent event”, the events occurring between the end of the reporting
period and the date of the auditor’s report and facts discovered after the date of the auditor’s
report than this is consider as subsequent event. But as in the given case study, the condition of
event such as accident of golf member accident and sue is not existed thus it is considered as
unadjusted subsequent event. The evidence that should be gathered by the auditor as a part of
audit completion in the given case is that they need not to obliged to perform any audit
procedure. It is because it occurred after the date of annual report mailed to shareholders. In case
if the auditor aware of the fact, than they can opt evidence from discussion with the
management and those charge with governance. It is because the audit report has yet not
available to shareholders.
(b)
As per the ASA 560, the action auditor need to take in this situation is communication with
management and those charge with governance regards the same. The auditor need to provide
modified opinion on this matter if the management are ready to modify the same event.
(c)
If the auditor has doubt on the clients ability to continue as a going concern, the auditor is
recommended to give adverse opinion on the financial statement of the company. It is because as
per ASA 570 “Going Concern” if the auditor have doubt on the clients going concern than they
can provide adverse opinion on the financial statement of the company (Smidt and et.al., 202).

REFERENCES
Books and journals
Arslan, M. C. and Demirkan, S., 2017. Auditing And Assurance Services. THE JOURNAL OF
ACCOUNTING AND FINANCE JULY 2017 SPECIAL ISSUE, p.127.
Smidt, L. and et.al., 2021. Assessment of the Purpose of the Use of GAS: A Perspective of
Internal Audit Functions in Australia. International Journal of Information Systems in the
Service Sector (IJISSS). 13(2). pp.65-82.
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