You Are an Audit Manager with Spottit & Hope

question 28

Essay

You are an audit manager with Spottit & Hope. One of your clients, Bolington Limited, has recently asked your firm to perform a limited review of the financial statements.
During your review, you discovered a cash payment of $50,000. You have asked the company for details of this payment, and the directors have told you that it was an agency
fee, and they cannot tell you any more details as the company would lose its competitive
advantage. Profit before tax is $2m.
Your audit supervisor is happy with this explanation, and has proposed a draft review
report with the following opinion paragraph:
'Based on our review nothing has come to our attention which indicates that the financial
statements do not give a true and fair view'.
Discuss the validity or otherwise of the suggested opinion, and discuss the appropriateness of alternative opinions and suggest suitable wording for the opinion you consider to be most appropriate.

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Definitions:

Outsourcing Decision

The process by which a company decides whether to allocate specific operational tasks or processes to external vendors rather than completing them internally.

Design Phase

A preliminary stage in the development process where the specifications, features, and requirements of a project are defined.

Supply Chain Function

The activities and operations involved in moving a product from the supplier to the customer.

Supply Chain Profitability

The overall financial gain achieved throughout the supply chain, from suppliers to end consumers.