RECENT ASSIGNMENT

Case 2
The following items are documented in the audit working papers:
(a). A sales transaction for $1,200,000 was included in the year ended June 2016 but evidence from the cut-off procedure suggests that the sale should be dated 1 July 2016.
(b). No expense for impairment of assets has been made by management. A drought-induced recession has adversely impacted property values in regional cities where seven branch offices are located (head office and two branch offices are located in the capital city). Total land and buildings in the trial balance is $5,500,000.
Required:
(a) Evaluate each item above and explain whether it is an error or a
judgemental misstatement. (3 marks) (b) Which accounts would be affected? (3 marks)
(c) What action do you recommend for each item? (4 marks)