Audit

Q38 - Earthstor:

Key audit risks frrom each of transactions

• no able to repay loan

  • confirm creditworthiness: procedures, loan terms verify, security if loan not repaid, examin correspondence e.g. legal/board mins/letters/emails

• Loan wrongly classified

  • Need to read terms of loan agreement and look for signs early repayment

• Loan approved without proper checks

  • confirm board approval loan, review treasury checks credit and legal advice

• Loan terms not arms length

  • Inspect supply contracts for discounts linked to loan compare past prices/

• Foreign exchange risk

  • confirm exchange rate used on loan reclaculate using average closing rate

Audit risks

Risk of wrong exchange rates: - verify the exchange rates

Risk Hard to support valuation because shares are not traded.

• Obtain 3rd party evidence of valuation, Compare valuation with TraynerCo’s accounts, cash flows, forecasts.

  Risk: : Investment terms may be tied to discounts on goods or rent deals (not arm’s length).

• Examine contract for acquitionsion of shares ensure not related agreement of cost of goods, prep analytical procedures on history of cost of goods

Risks - management not include the fall in price of shares and overstatement investment.

• Review and assess valuation made by directors

• Agree cost of acquition of shares to legal documents, share certificates and payment