(a) What is a value for money audit?
(b) What are the relevant statutory provisions with regard to investigations by the Registrar of Companies?
You are a partner in a firm of Certified Public Accountants and a member of the local golf club. One day whilst at the club you are approached by another club member, James Bryden, who seeks your professional advice. James has the opportunity of acquiring a one-third share in the partnership business of Messrs Long, Tall and Short. At present these three gentlemen are equal partners but as Long is due to retire. Messrs Tall and Short would like someone to take over Long's share of the partnership. The firm which has been in business over twenty years specialises in the retailing of car accessories. After having a brief discussion with James it is agreed that you will act for him.
Describe the procedures you will adopt following your initial discussion.
You are the auditor of Roaches Coaches Ltd. You have been asked to review the management and accounts of Roaches Coaches Ltd for the eleven months ended 30th November 19X5, which the company intends to submit to its bankers before 31st November 19X5 in support of an application for further facilities to fund the increasing working capital requirements of the company and the replacement of half of its fleet of 24 coaches. In the past it has been the company's policy to replace 4 coaches every year, with proceeds on disposal usually equating to half of the original cost. During the last three years no coaches have been replaced due to lack of funds.
The company's turnover for the current year is expected to be in the region of £500,000 and consists mainly of contract hire. The coaches are housed and maintained in the company's own freehold garages and workshops.
(a) Outline the approach you would take to carry out the review, and state those matters to which you would pay particular attention.
(b) State the extent to which such a review will have an effect on the statutory audit for the year ending 31st December 19X5.
(a) Critically, examine the following statement:
"Investigation is a critical examination of records and is, therefore similar to an audit".
(b) What precautions are necessary before undertaking an investigation? State the procedure that you would adopt in an investigation on behalf of a bank proposing to advance a loan to a private limited company.(Total: 20Marks)