Blackcutt is a local government organisation whose financial statements are prepared using International Financial Reporting Standards. Blackcutt wishes to create a credible investment property portfolio with a view to determining if any property may be considered surplus to the functional objectives and requirements of the local government organization. The following portfolio of property is owned by Blackcutt. 

Blackcutt owns several plots of land. Some of the land is owned by Blackcutt for capital appreciation and this may be sold at any time in the future. Other plots of land have no current purpose as Blackcutt has not determined whether it will use the land to provide services such as those provided by national parks or for short-term sale in the ordinary course of operations.

The local government organisation supplements its income by buying and selling property. The housing department regularly sells part of its housing inventory in the ordinary course of its operations as a result of changing demographics. Part of the inventory, which is not held for sale, is to provide housing to low-income employees at below market rental. The rent paid by employees covers the cost of maintenance of the property.

Comment on the matters to be considered, and explain the audit evidence you should expect to find during your file review in respect of the trade receivable recognized in relation to Cherry Co.

Marks:

Evaluate the audit junior's concerns regarding the management of the audit of Sultana Co.

Marks:

Explain the components of audit risk and, for each component, state an example of a factor which can result in increased audit risk.

Marks:

Using the information provided, identify and describe FIVE audit risks and explain the auditor’s response to
each risk in planning the audit of Abrahams Co.

Marks:

Describe substantive procedures you should perform to obtain sufficient appropriate evidence in relation to:
(i) Inventory held at the third party warehouses; and
(ii) Use of standard costs for inventory valuation.

Marks:

Prepare a statement of profit or loss for the next year for APX Co using the information provided

Marks: 4

Prepare a statement of financial position at the end of the next year for APX Co using the information above

Marks: 5

Analyze and discuss the working capital financing policy of APX Co

Marks: 6

Discuss the role of financial intermediaries in providing short-term finance for use by business organizations.

Marks: 5

Advise whether the factor’s offer is financially acceptable to Widnor Co.

Marks: 7