This year will mark a （) point in the development of China's credit card sector.

A、To commemorate the death of Qu Yuan

B、To welcome the coming year

C、To celebrate the harvest

D、To mark the end of the old year

A．after the year 1936

B．after the 3rd White Olympics

C．before the 3rd White Olympics

D．before the year 1932

4 (a) Explain the auditor’s responsibilities in respect of subsequent events. (5 marks)

Required:

Identify and comment on the implications of the above matters for the auditor’s report on the financial

statements of Jinack Co for the year ended 30 September 2005 and, where appropriate, the year ending

30 September 2006.

NOTE: The mark allocation is shown against each of the matters.

financial statements for the

year ended 31 December 2004.

The following material matters are under discussion:

(a) During the year the company has begun selling a product with a one-year warranty under which manufacturing

defects are remedied without charge. Some claims have already arisen under the warranty. (2 marks)

Required:

Advise the directors on the correct treatment of these matters, stating the relevant accounting standard which

justifies your answer in each case.

NOTE: The mark allocation is shown against each of the three matters

(c) During the year Albreda paid $0·1 million (2004 – $0·3 million) in fines and penalties relating to breaches of

health and safety regulations. These amounts have not been separately disclosed but included in cost of sales.

(5 marks)

Required:

For each of the above issues:

(i) comment on the matters that you should consider; and

(ii) state the audit evidence that you should expect to find,

in undertaking your review of the audit working papers and financial statements of Albreda Co for the year ended

30 September 2005.

NOTE: The mark allocation is shown against each of the three issues.

more prosperous future. We are proud to join in the global effort to mark Earth Hour. Its a reminder that small actions can make a big difference. In this “make-or-break” year, let your actions and voices send a clear message to the world: now is the time to be bold and ambitious.

(iv) Tyre recently undertook a sales campaign whereby customers can obtain free car accessories, by presenting a

coupon, which has been included in an advertisement in a national newspaper, on the purchase of a vehicle.

The offer is valid for a limited time period from 1 January 2006 until 31 July 2006. The management are unsure

as to how to treat this offer in the financial statements for the year ended 31 May 2006.

(5 marks)

Required:

Advise the directors of Tyre on how to treat the above items in the financial statements for the year ended

31 May 2006.

(The mark allocation is shown against each of the above items)

you have been assigned

specific responsibility for undertaking annual reviews of existing clients. The following situations have arisen in

connection with three client companies:

(a) Dedza was appointed auditor and tax advisor to Kora Co, a limited liability company, last year and has recently

issued an unmodified opinion on the financial statements for the year ended 30 June 2005. To your surprise,

the tax authority has just launched an investigation into the affairs of Kora on suspicion of underdeclaring income.

(7 marks)

Required:

Identify and comment on the ethical and other professional issues raised by each of these matters and state what

action, if any, Dedza should now take.

NOTE: The mark allocation is shown against each of the three situations.

(ii) Audit work on after-date bank transactions identified a transfer of cash from Batik Co. The audit senior has

documented that the finance director explained that Batik commenced trading on 7 October 2005, after

being set up as a wholly-owned foreign subsidiary of Jinack. No other evidence has been obtained.

(4 marks)

Required:

Identify and comment on the implications of the above matters for the auditor’s report on the financial

statements of Jinack Co for the year ended 30 September 2005 and, where appropriate, the year ending

30 September 2006.

NOTE: The mark allocation is shown against each of the matters.

(c) Pinzon, a limited liability company and audit client, is threatening to sue your firm in respect of audit fees charged

for the year ended 31 December 2004. Pinzon is alleging that Bartolome billed the full rate on air fares for audit

staff when substantial discounts had been obtained by Bartolome. (4 marks)

Required:

Comment on the ethical and other professional issues raised by each of the above matters and their implications,

if any, for the continuation of each assignment.

NOTE: The mark allocation is shown against each of the three issues.