ACCT5016-Advanced Audit and Assurance
You are a senior auditor working on the audit of HealthyGlow for the year ended 30 June 2021. You are in the planning stage of the audit. It is April 2021 and you discover that HealthyGlow has recently acquired two new, full-body scanning machines, representing the very latest in technology, at a cost of more than $10 million each. The machine enables a full 360 degree scan of the body with the ability to identify tumours, cysts and other abnormal internal growths which currently have a 50% probability of being detected with other scanning devices on the market.
Recent studies have shown there may be potential long-term side effects to patients who are scanned by the new technologically advanced machine. However, given the machine has only just arrived on the market, the long-term side effects will not be known for many more years. This uncertainty and the potential high risk associated with the machine have caused bad press for both the scanning machine and HealthyGlow.
HealthyGlow charges Patients a premium price for scanning due to the machine's advanced technological abilities. As a result of high demand, the hospital has decided to reserve the use of the machine for pre-paid patients only. All scans must be paid for in full by patients at the time of booking. Payments are immediately recognised as revenue by the hospital.
Demand for the scanners has been extremely high and HealthyGlow now has bookings for four months in advance. You note that, even though it is only April 2021, the hospital has bookings for July and August 2021.
The Medical Association of NSW is currently reviewing the use of the scanning machines and may ban their use within Australia until the issue is resolved. The decision is expected to be communicated on 1 August 2021. Management have indicated there is an 80% chance the scanners will be given the go ahead.
1.Assess the main business risks for HealthyGlow.
2.Identify two key account balances likely to be affected by the above information.
3.For each account balance identified in (2), identify and explain the key assertion most at risk.
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