For each of the following independent scenario, discuss the issue and describe the impact on the audit report: v. ZSZA Sdn. Bhd. has been audited by your firm for the last six years. For the past three years, their financial condition has been declining steadily. In the current year, for the first time, the current ratio is below 2:1, which is the minimum requirement specified in ZSZA's major loan agreement. You now have doubt about the ability of ŽSZA to continue in operation for the next year.

For each of the following independent scenario, discuss the issue and describe the impact on the audit report: v. ZSZA Sdn. Bhd. has been audited by your firm for the last six years. For the past three years, their financial condition has been declining steadily. In the current year, for the first time, the current ratio is below 2:1, which is the minimum requirement specified in ZSZA's major loan agreement. You now have doubt about the ability of ŽSZA to continue in operation for the next year.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter13: Auditing Debt, Equity, And Long-term Liabilities Requiring Management Estimates

Section: Chapter Questions

Problem 27RQSC

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