Khoo Designs Bhd. is a kitchen manufacturing company and the company's year-end is 30September. Encik Danish is the audit manager of Awal & Associates and have been provided withthe information during the audit investigation. Recently, Khoo Designs Bhd. has been experiencingtrading difficulties, as its major customer who owes them RM800,000, ceased trading. However,the balance is included in the financial statements. The sales director has left Khoo Designs Bhd.and yet to be replaced. The monthly cash flow has shown a net cash outflow for the last two monthsof the financial year and is forecasted as negative for the forthcoming financial year. As a result ofthis, the company has been slow in paying its suppliers and some are threatening legal action torecover the sums owing. Due to its financial difficulties, Khoo Designs Bhd. missed a few monthsof installment for loan repayment. As a result of this breach in the loan covenants, the bank hasasked that the loan of RM5.5 million to be repaid in full within six months. The directors havedecided to maintain the liquidity level, so no final dividend will be paid in 2019. The financedirector has informed Awal & Associates that as the cash flow issues are short term he does notpropose to make any amendments to the financial statements.Required:a. Determine the potential indicators that Khoo Designs Bhd. may not face any going concernissues.b. Describe the audit procedures that Awal & Associates should perform in assessing goingconcern issues.c. Explain Awal & Associate's responsibility for reporting on going concein to the directors ofKhoo Designs Bhd.d. Asses the consequences on the audit report if the directors not used the amendments in thefinancial statements.e. Draft the auditors' opinion paragraph of MZ Communications Sdn. Bhd. for financial yearended 30 September 2019 .

a. Determine the potential indicators that Khoo Designs Bhd. may not face any going concern issues. b. Describe the audit procedures that Awal & Associates should perform in assessing going concern issues. c. Explain Awal & Associate's responsibility for reporting on going conce.n to the directors of Khoo Designs Bhd.

a. Determine the potential indicators that Khoo Designs Bhd. may not face any going concern issues. b. Describe the audit procedures that Awal & Associates should perform in assessing going concern issues. c. Explain Awal & Associate's responsibility for reporting on going conce.n to the directors of Khoo Designs Bhd.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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