Bee Kay & Co has been appointed as an auditor of Syarikat Elektrik Fudu for the year ended 31 October 2020. During the year, Syarikat Elektrik Fudu obtained a long-term loan amounted RM35 millions from Glory Bank with the following financing agreement: 1. The loan was secured by a fixed charge over two pieces of land and buildings of the company located in Alor Setar. 2. Monthly installment rate of 5% started from 1 February 2020. The loan secured was used to expand the business. Syarikat Elektrik Fudu has increased the number of staff from 100 to 130 staff for the purpose of business expansion. During the planning process, Bee Kay & Co determined that the inherent risk of overstatement of payroll might be high as compared to prior financial year. (a) Explain THREE (3) procedures that Bee Kay should employ in examining the long-term loan from Glory Bank.
Bee Kay & Co has been appointed as an auditor of Syarikat Elektrik Fudu for the year ended 31 October 2020. During the year, Syarikat Elektrik Fudu obtained a long-term loan amounted RM35 millions from Glory Bank with the following financing agreement:
1. The loan was secured by a fixed charge over two pieces of land and buildings of the company located in Alor Setar.
2. Monthly installment rate of 5% started from 1 February 2020.
The loan secured was used to expand the business. Syarikat Elektrik Fudu has increased the number of staff from 100 to 130 staff for the purpose of business expansion. During the planning process, Bee Kay & Co determined that the inherent risk of overstatement of payroll might be high as compared to prior financial year.
(a) Explain THREE (3) procedures that Bee Kay should employ in examining the long-term loan from Glory Bank.
(b) Describe TWO (2)
Step by step
Solved in 2 steps
