Answer Happy

Today is the 30 August 20x1, the audit is due to be completed, and the audit report has not been signed. You have just come from a meeting with the Finance Director at Skaters where an outstanding receivable was discussed as follows: In April 20X1, Skaters sold goods to the value of £3 million to a customer, Company Sport. On 5 August 20X1, Company Sport went into liquidation. No money has been received for the goods sold and Skaters have been advised they are unlikely to receive any of the £3 million due from the receivable. The directors do not want to make the adjustment as the liquidation occurred after the year end, and they are hopeful they may be able to at least recover the goods sold. Other information: Revenue for the year is £34 million profit before taxation is £2.9 million and total assets of £72m Required: d) Identify and explain whether the outstanding receivable is an adjusting or non- adjusting events according to IAS 10 events after the reporting period. (4 marks) e) Explain the impact on the audit report should the issue remain uncorrected. (4 marks) (Total 25 marks)