1：27 leadership and HR

1;17 

1. obtain wp from previous auditor to assess the risk of MM in openning balances.

discuss with previous auditor for the ROMM in opening balances.

obtain previous audit report and check whether the opinion is modified, if modifed ask for reason from mgt and previous auditor.

enquiry about the accounting polices in previose period to ensure it is consistent with present.

2.auditor's responsibility is to ensure that the FS is free from MM, 

the FS include openning balance and comparative figuires so auditor also need to ensure the openning balance and comparateive figuires  are free from MM in initial engagements.

1. hospital is a public interest entity, so the expired medical inventories will damege the public interest

2. this is a helf and safety issue, and the hospital may have breach the regulation of health and safety.

3. intimidation threat arose as the fd's attitude. and he also put a limitation on audit scope, as no assess to the inventory.

4. should report to TCWG

5. consider disclose the the prublic for the prublic interest. but should seek for legal advice as there is confidential issue.

6.the integrity of the FD should be investigated

7.consider withdraw from the engagement but withdraw should not be the answer to NOCLAR without any further action

(a).ROMM

1.analytical procedures

operating margin 35/220 = 16% 37/195=19%

risk of  overstate expenses, and understate profit.

ROCE 35/(110+229)=10%  37/(82+221)=12%

current ratio 143/19=7.5 107/25=4.3

interest cover 35/7 =5 37/7=5.3

gearing 110/229 82/221

etr 3/28 3/30

2.foreign exchange

m: sold in more than 100 countries

a: IAS21

R: not using correct rate or not retranslated

3.consolidation

m: 40sub 15 ass

a : elimination

r : not be consolidated correctly

4. acquisition of azalea

m 130/358  material

a it is a subsequent event, happen after the reproting period. need to be disclosed

r not disclosed appropriately then misstatement exists

5.PPE

m 20/358 material 5/25 material

a cost less depreciation is acceptable,but the change of estimated useful live is subject and complex. as the profit decrease, mgt has the incentive to manipulate the profit by chaing the useful life.

r risk that the change of useful lives is incorrect,lead to overstate profit and assets

6.gw

m 18/358 material

a ias36 gw need to be review for impairment annually. 

as profit decrease.

r risk that mgt did not take impairment review for gw. and then overstate assets and profit.

7. acquiired brand names.

m 80/358 material

a ias38  the 30m impair is significant, which could be subject and complex. 

asset like equiments to manufacure Chico perfume range could also be impaired if can not produce althernative product

r asset and profit could be overstated.

8.development cost

m 25/358 material

a ias38 PIRATE, 

r asset and profit could be overstated.

 9.debenture loans

m100/358 material

a ias23 dirct finance cost could be capitalised.

r not capitalised correctly, lead to misstatement.

10. finance cost

20/358 also material

a but contraditional with finance cost as it stay they same.

r risk of overstate profit and understate liabilities

11deferred tax

m 10/358 2.8% material

a dtl temperary differenccies. the DTLincrease 8, but the PPE's revaluation seems not consist with the increase of DTL,as the projected depreciation charge for the year is only 5m less than the comparative figure.

r risk that liabilities is overstated, profit is understated

12.effective tax rate

m

a

r

business risks

1. management issue

centre manager is responsible for day-to-day business and also preparing and submitting monthly accounting returns to head office.

risk that they may not have enough competence or time/resource to record the monthly accounting returns. error could be exists. and manage the routine business at the same time.

2. health and safety

chemical spill: reputation damagement, sauna facilities be suspended will cause economic loss.

licience could be revoked if not compliance with law and regulatory

3. staff issue

ROMM

1. managers' report

centre manager is responsible for day-to-day business and also preparing and submitting monthly accounting returns to head office.

risk that they may not have enough competence or time/resource to record the monthly accounting returns. error could be exists.

2. revenue

IFRS15 need to be followed.

risk that recognised ealier. overstate profit, understate liabiliites.

3.licence arrangement

ias38, licence need to be amortised if the useful life is definite

4.provision for refund

members may request to refund as Verne centre was closed for 3months

Q1,a.   Business Risk

1. Rebulatory-risk of breach law and regulatory requirements and the licences could be revoked.

2. management bias

as the centre manager is responsible for managing daytoday business and also preparing and sumitting monthly accounting returns to head office.

3. health and safety issue

chemical spill in Verne centre. risk of fine and penalty, and also revocation of licence.

also need to refund for the customer.

4.childcare facilities issue

can reach the levels of supervision. may leak to kids injuries, and compensation.

also fine and penalty.

5. falling membership

going concern issue as 3 centres run at a loss situation due to falling membership.

the investment  in hydrotherapy pool may not be able to ...

b. ROMM

1. provision on fine for chemical spill

2. refund for the  customers.

3.