Slow moving inventory.

-> impairment charges (you should)

We can only liquidate the product below the cost
Indeed the amount is below the cost and that is the impairment loss that we should
charge.

Broken by different type of the product. Launch is after financial period -> when to
recognize?
Adjusting entries is the impairment to its net realizable value.

Evaluate the misstatement -> iniduvdla or aggregate

How to evaluate misstatements under summary of unadjusted sheet ->

Subsequent events -> summary of unadjusted misstatements,

Incentive -> at least 1 questions. Just for asking questions. Need to be prepared for
finals.

Best strategy t odo finals is to start with easy questions. Reading comprehensive
You know which part u are most confident with. Get full marks on those parts. As
long as u can read and write

Hint: you have a course outline -> what are the impt topics. Assess us on if we
cover those points or not. Those points will be there in exams.

Bring practice finals next week. Once u do the case, you will realized that it is
straightforward.

FRS 10 -> events after reporting periods (definition: favourable or unfavourable)

570 define across 3 time periods. Auditors responsibility are different in 1 2 and 3.

Events after reporting event. =? Adjusting events (adjustments in FS) Non-adjusting

evience (conditions arose after reporting date)
Guideline: if it were to affect the decision of the users. About an existing conditions.
If they have provided provision or provided more than enough provision.
On-going legal cases but it is hard to estimate the cost of the liabilities. Or difficult
to estimate the probability. Just no disclosure. On 1 st of july court settlement.
FRS dont require to treat such a transaction if it occurs in time period 2 and 3.
Adjusting events disregard materiality. Non-adjusting dont adjust.
Misleading advertising campaign -> existing condition as at 30 ujune. Adjusting
events. Require disclosure. What is the treatment. What do we adjust. We will adjust
30th of june F.S and include contigent liabilities. Actual change to financial figres.
Adjusting no disclosure.

New information come into light to time 1 => frs 10. Adjusting events or not. New
information is about the condition that only arise from 31 July 2013. Not exist on
30th of June.
Once you understand u need to think about do I require disclosure? We need to
think about materiality. 20mil material or not.

We know u have non-adjusting events with material amt. We need non-disclosure.

Disclosue the nature of the events. And estimate of its financial impact if we can
provide an estimate. If cannot then provide a statement.

Specific materiality -> individual accounts.

Time period #1 -> auditor are required to obtain sufficient and appropriate
evidence. Managers have appropriately accounted for those subsequent events.
If something happened during time period #2 or #3 -> respond to new facts that
become known to auditor. (we are not actively seeking for those events) Not
obligated unless we become notice.
Time period #1 -> actively seeking.
Management representation letter -> state they have disclose all subsequent
events to auditor.s

Big fluctuation between from month to month. Major events -> it can affect. Those
amt is not going to hit the budgeted figures. The subsequent events are related to
xxx. To understand any litigation. Charges to ur legal expense accounts. Litigation
concerns. Management refused to adjust. So that means the financial report
contains material misstatements.
Unadjusted material misstatements by issuing the appropriate audit opinion
->modified. Under modified got 3 types. In exam need to be specific. Say which
type.
Time period #2 -> authorizing and signifying. Major news 560 parpgrah 10
Extended time period #1 -> In practice this is extremely rare.

Difference between 2 and 3 -> 2 not yet so can make changes.

No time to stop the r/s of FS to general public. Reissue u a revise report.

EOM -> draw investorss attention to something disclosed and correctly disclosed.
Clean audit opinion + EOM => draws investorss attention

Planning stage -> indicator if it is appropriate

Turnaround and evaluate the approach taken by the managers

If environment suddenly detoriate then this will affect the CFstream for the next 12
months.
If the bank recall the loan, this will cast out going concern loans. Then question is
how did they secure alternative source of funding
Change from credit to cash on delivery transaction with suppliers.
Inability to obtain financing for esstnetial (financial trouble)

Ensure that it is legal and legally enforceable

Determine adequacy of support for any planned disposals of assets.

Talk to managers about how they intend to settle CF issues. Obtain evidence.
Impact -> different audit opinion.
Adverse opinion is one type of modified opinion.

The subsidiary is bankcrupt as well.

There are material uncertainties exist. There is material uncertainty. Financial
statement requires the disclosure of material uncertainty. Can issue unmodified
audit opinion. But draw the information.