Question

3) Pleasant Beverages Ltd has the following audit problems:

• The company did not update the listing for the changes in shareholding of the company

• The director’s minutes were not prepared for the current year

• No annual general meeting (AGM) was held last year • There was no written consent from the directors to act

• The company did not even justify the reason for not keeping proper records and holding the AGM

Required : For this scenario discuss the audit issues to be considered and what impact these issue would this have on the audit opinion. You may also justify the answer using relevant legislation such as the Corporations Act and relevant auditing standards.

Answer 1

Pleseant Beverages Ltd Fails to update the listing chnages in shareholding of the company.The director's minutes were not prepared for the current year.No AGM's was held last year.There was no consent from the directore's act.The company did not even justify the reason of not keeping the proper records and holding the AGM.

The above scenario tells us that the company least bothers about the terms and policies of not recording and updating any data.This will impact on the entire industry process for further running of the iindustry.Basically these acts will happen when the management will either escape from the shareholders and tries to shutdown the industry by bankrupting.The basic information of auditing is not followed by the industry result bankrup.

With this act by the industry the shareholders will be effected for investing in the company.They will drag the industry to court and needs to follow the legal issues.Even than they have to produce the present and previous audits.

As the industry fails to update and audit the financial and shareholders data,the legislation or law will consider the previous years audit reports and work according to it.Every company will maintain and update the data is to run the organization and able to detect the loss or gain of the organization.

Here the industry did not performed and maintained any kind of information that needs to be produced when demand.According to the public accounts and audit committe act 1951,this law is brought for not maintaing the data this includes uncommenced amendments,editorial chnages,modifications and self-repealing provisions.

There are so many laws for this kind of acts by the industry they are :

Public accounts committe act 1951.

Public accounts and committe act 1965,

Statue law ( Miscellaneous Amendments) act 1982

The corporation act 2001 is the principal legislation regulating companies.It regulates the matters such as formation and operation of companies.This law states that statutory requirements for founding a registered firm,and governs the conduct of its directors and officers.The act commonly requires a company to maintain a registered office to carryout all operations through it and a minimum number of two directors,filling of the memorandom of association and articles of association or articles of incorpporation and bylaws with the appropriate authority

Failure of following the corporation act may result in forfeiture of limited and liability protection granted to the stokeholders(shareholders) under its stipulations.

Responsibility of compliance with laws and regulations- this law will effect the management as well as the auditor,as mangement is responsible for not managing the proper details and proper audits are not monitored.Auditors are placed to update and day by day audit report needs to be generated.