Question 1. You are an audit manager in Banjul & Co, a firm of Chartered Accountants, responsible for the audit of Mega Co, with a year ended 28 February 2023. The draft financial statements recognized profit for the year of D11 million which was prepared in accordance with IFRS. The audit for the year end is nearing completion which was done in accordance with ISA, and several matters have been highlighted for your attention by the audit team. The matters have been discussed with management and has not been adjusted in the financial statements:
a. In January 2023 a major customer went into administration. There was a balance of D1·5 million owing to Mega Co from this customer at 28 February 2023 and was agreed to be waved in exchange of services that he will render, which is still included in trade receivables.
b. A court case began in December 2022 involving an ex-employee who is suing Mega Co for unfair dismissal. Lawyers estimate that damages of D50, 000 are probable to be paid. The financial statements include a note describing the court case and quantifying the potential damages but no adjustment has been made to include it in the statement of financial position or the statement of profit or loss.
You are required to write an audit report summarizing the above findings and form an opinion on the financial statement of Mega co.
Question 2. Explain the three Circumstances where an auditor may disclose Confidential Information.
