问题详情

YouareanauditmanageratRockwell&Co,afirmofCharteredCertifiedAccountants.YouareresponsiblefortheauditoftheHopperGroup,alistedauditclientwhichsuppliesingredientstothefoodandbeverageindustryworldwide.
Theauditworkfortheyearended30June2015isnearlycomplete,andyouarereviewingthedraftauditreportwhichhasbeenpreparedbytheauditsenior.DuringtheyeartheHopperGrouppurchasedanewsubsidiarycompany,SeuratSweetenersCo,whichhasexpertiseintheresearchanddesignofsugaralternatives.ThedraftfinancialstatementsoftheHopperGroupfortheyearended30June2015recogniseprofitbeforetaxof$495million(2014–$462million)andtotalassetsof$4,617million(2014:$4,751million).Anextractfromthedraftauditreportisshownbelow:
Basisofmodifiedopinion(extract)
Intheircalculationofgoodwillontheacquisitionofthenewsubsidiary,thedirectorshavefailedtorecogniseconsiderationwhichiscontingentuponmeetingcertaindevelopmenttargets.Thedirectorsbelievethatitisunlikelythatthesetargetswillbemetbythesubsidiarycompanyand,therefore,havenotrecordedthecontingentconsiderationinthecostoftheacquisition.Theyhavedisclosedthiscontingentliabilityfullyinthenotestothefinancialstatements.Wedonotfeelthatthedirectors’treatmentofthecontingentconsiderationiscorrectand,therefore,donotbelievethatthecriteriaoftherelevantstandardhavebeenmet.Ifthisisthecase,itwouldbeappropriatetoadjustthegoodwillbalanceinthestatementoffinancialposition.
Webelievethatanyrequiredadjustmentmaymateriallyaffectthegoodwillbalanceinthestatementoffinancialposition.Therefore,inouropinion,thefinancialstatementsdonotgiveatrueandfairviewofthefinancialpositionoftheHopperGroupandoftheHopperGroup’sfinancialperformanceandcashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandards.
EmphasisofMatterParagraph
Wedrawattentiontothenotetothefinancialstatementswhichdescribestheuncertaintyrelatingtothecontingentconsiderationdescribedabove.Thenoteprovidesfurtherinformationnecessarytounderstandthepotentialimplicationsofthecontingency.
Required:
(a)CriticallyappraisethedraftauditreportoftheHopperGroupfortheyearended30June2015,preparedbytheauditsenior.
Note:YouareNOTrequiredtore-drafttheextractsfromtheauditreport.(10marks)
(b)Theauditofthenewsubsidiary,SeuratSweetenersCo,wasperformedbyadifferentfirmofauditors,FishAssociates.DuringyourreviewofthecommunicationfromFishAssociates,younotethattheywereunabletoobtainsufficientappropriateevidencewithregardtothebreakdownofresearchexpenses.ThetotalofresearchcostsexpensedbySeuratSweetenersCoduringtheyearwas$1·2million.FishAssociateshasissuedaqualifiedauditopiniononthefinancialstatementsofSeuratSweetenersCoduetothisinabilitytoobtainsufficientappropriateevidence.
Required:
CommentontheactionswhichRockwell&CoshouldtakeastheauditoroftheHopperGroup,andtheimplicationsfortheauditor’sreportontheHopperGroupfinancialstatements.(6marks)
(c)DiscussthequalitycontrolprocedureswhichshouldbecarriedoutbyRockwell&CopriortotheauditreportontheHopperGroupbeingissued.(4marks)


请帮忙给出正确答案和分析，谢谢！