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JK Associates, an auditing firm, has been appointed by the directors of Kwality Limited to...

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Accounting

JK Associates, an auditing firm, has been appointed by the directors of Kwality Limited to conduct audit of the financial statements for the financial year ending 31 December 2019.During the audit, the auditor was skeptical that there is a possible material misstatement in the transportation expenses. Kwality Limited uses transport services from other entities for transport of their goods. It spends on an average of RO 0.025 per ton for 1 kilometre. During the year it used the services of other transport agencies for transporting 1250 tons of goods to average distance of 2000 kilometres. Transport charges vary due to demand and supply factors and during the year they varied by 5%. The entity has shown the transport expenses RO 61,500.
As an auditor, state whether the transport expenses shown is fair? What actions would you suggest to JK Associates?

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