(ii) Audit work on after－date bank transactions identified a transfer of cash fr

(ii) Audit work on after-date bank transactions identified a transfer of cash from Batik Co. The audit senior has

documented that the finance director explained that Batik commenced trading on 7 October 2005, after

being set up as a wholly-owned foreign subsidiary of Jinack. No other evidence has been obtained.

(4 marks)

Required:

Identify and comment on the implications of the above matters for the auditor’s report on the financial

statements of Jinack Co for the year ended 30 September 2005 and, where appropriate, the year ending

30 September 2006.

NOTE: The mark allocation is shown against each of the matters.

(ii) Wholly-owned foreign subsidiary■ The cash transfer is a non-adjusting post balance sheet event. It indicates that Batik was trading after the balancesheet date. However, that does not preclude Batik having commenced trading before the year end.■ The