(c) Lamont owns a residential apartment above its head office. Until 31 December

(c) Lamont owns a residential apartment above its head office. Until 31 December 2006 it was let for $3,000 a

month. Since 1 January 2007 it has been occupied rent-free by the senior sales executive. (6 marks)

Required:

For each of the above issues:

(i) comment on the matters that you should consider; and

(ii) state the audit evidence that you should expect to find,

in undertaking your review of the audit working papers and financial statements of Lamont Co for the year ended

31 March 2007.

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

(c) Rent-free accommodation(i) Matters■ The senior sales executive is a member of Lamont’s key management personnel and is therefore a related party.■ The occupation of Lamont’s residential apartment by the senior sales executive is therefore a related pa