You are engaged as an audit senior in the public accounting firm of Millie and Partners....

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Accounting

You are engaged as an audit senior in the public accounting firmof Millie and Partners. As part of the planning process for theaudit of Maxie Ltd for the financial year ended 30 June 2018, yourequested the minutes of the Board of Directors meetings for thefinancial year and noted the following: Date of Meeting Extractfrom Board of Directors Meetings for the year 2017-18 1/9/2017 Theboard agreed that in order to attract new customers and thereforeincrease sales, any new customers from 1/9/2017 would receive threemonths credit before their debt becomes overdue, rather than theone month credit previously allowed. 1/11/2017 The board agreedthat a new ‘bonus scheme’ would be implemented from 1/11/2017,which would provide directors with a 5% bonus on profits if theycould exceed last year’s profit by 20%. 1/6/2018 The board agreedto revalue land and buildings upwards by 50% in the financialstatements at 30/6/2018, in accordance with a property valuationundertaken at the company’s request. Required: Discuss thepotential risk of each of the above items from the board ofdirectors meetings and the impact each would have on your auditplan for 30 June 2018

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1There exists the inherent risk of material misstatementdue to volume addendant error of receivables amount carried in the financial statements wherein the auditor has to attest to the correctness accuracy of the balances their valuation So the auditor has to plan the audit of receivables in a detailed manneras the noof See Answer

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