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Auditing and Assurance Services (Australian)
Finance & Accounting
Pages 3 (753 words)
Introduction The following discusses how the issue of the delays and cost overruns on the Waratah Project will impact the planning for the audit of Downer EDI. General Waratah project (the Project) has a very large impact on the Downer group (the Group), as a whole, and its financials.
45 and Wen, 2011). The audit plan will, thus, include procedures to gather “audit evidence of events or conditions and related business risks” that will impact the Group’s “ability to continue as a going concern” (ASA 570, par. 17). There should also be procedures to review management’s assessment, if there’s any, or to discuss with management its assessment of the Group’s ability to continue as a going concern (ASA 570, par. 19 and 20). The subsequent events review should also emphasize reviewing subsequent events that may or may not indicate that the Group still has the ability to continue as a going concern. Related to the going concern issue is the news that the financial guarantors of Reliance Rail had claimed that there were already “events of default under the consortium’s debt financing documents” (Kelly, 2011). In addition, page 44 of the 2011 Annual Report stated that, “based on legal advice received”, the claim is not expected to “adversely affect the delivery” of the Project’s contract. With this development, the audit plan, in the assessment of the Company’s internal control structure, should include procedures to assess how management identifies legal matters for recording or for disclosure. ...
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