Part (e) Discuss the matters your audit firm should consider with regard to its reporting responsibility, based on the information in section 4. Exclude the detailed steps to be followed when reporting the matter. Exclude any impact this matter may have on the performance of the audit of Barista’s financial statements.
ANSWER
The audit firm has a legal and ethical duty to report the matter.
It's a "reportable irregularity." The act of reversing invoices to delay paying VAT is an unlawful and potentially fraudulent act.
Must report to IRBA. The firm must report this issue to their regulatory body, the IRBA.
Disclose in the audit report. This issue must also be mentioned in a specific section of the final audit report.
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