The Audit of Bouncy Co Is Nearly Complete and the Financial

question 22

Essay

The audit of Bouncy Co is nearly complete and the financial statements and the audit report are due to be signed next week. However, the following additional information has just been presented to the auditor. The company's yearend was 30 September 2X17.
The springs in a new type of mattress have been found to be defective making the mattress unsafe for use. There have been no sales of this mattress; it was due to be marketed in the next few weeks. The company's insurers estimate that inventory to the value of R1,750,000 has been affected. The insurers also estimate that the mattresses are now only worth R1,225,000. No claim can be made against the supplier of springs as this company is in liquidation with no prospect of any amounts being paid to third parties. The insurers will not pay Bouncy for the fall in value of the inventory as the company was underinsured. All of this inventory was in the finished goods store at the end of the year and no movements of inventory have been recorded post year-end.
What actions should the auditors take and what will be the effect on the accounts for the year ended 30 September 2X17?

Identify the main environmental forces that influence marketing decisions.

Recognize the role of marketing programs in implementing the marketing mix strategy.

Understand the concept of market segments and the process of market segmentation.

Comprehend the concept of customer value and its importance in marketing decisions.

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Definitions:

Rotary International

An international service organization that brings together business and professional leaders to provide humanitarian service and to advance goodwill and peace around the world.

Circulatory System

Organ system consisting of a heart or hearts and vessels that distribute circulatory fluid through a body.

Tracheal Tubes

A system of air-filled tubes in insects and some other arthropods that allow for gas exchange directly with body cells.

Spiracles

Small openings found on the surface of some animals, such as insects and spiders, that lead to their respiratory systems.