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SECTION A - CASE 2: AERODYNAMICS LOGISTICS
AeroDynamics Logistics is a drone delivery startup. You are the audit senior for the year ended 30 September 20X6. During the audit, you note the following:
- The company has a significant cash burn rate and its main operating license expires in two months, with renewal pending a safety review.
- On 15 October 20X6, a major warehouse fire destroyed 40% of their drone fleet.
- A key customer, accounting for 25% of revenue, declared bankruptcy on 5 November 20X6.
The financial statements are due to be signed on 30 November 20X6.
Which TWO of the following are operating indicators that AeroDynamics Logistics may not be a going concern? (Select TWO)
ACCA · Question 09 · Review and Reporting
SECTION A - CASE 2: AERODYNAMICS LOGISTICS
AeroDynamics Logistics is a drone delivery startup. You are the audit senior for the year ended 30 September 20X6. During the audit, you note the following:
- The company has a significant cash burn rate and its main operating license expires in two months, with renewal pending a safety review.
- On 15 October 20X6, a major warehouse fire destroyed 40% of their drone fleet.
- A key customer, accounting for 25% of revenue, declared bankruptcy on 5 November 20X6.
The financial statements are due to be signed on 30 November 20X6.
Which TWO of the following audit procedures should be performed to assess whether AeroDynamics Logistics is a going concern? (Select TWO)
SECTION A - CASE 2: AERODYNAMICS LOGISTICS
AeroDynamics Logistics is a drone delivery startup. You are the audit senior for the year ended 30 September 20X6. During the audit, you note the following:
- The company has a significant cash burn rate and its main operating license expires in two months, with renewal pending a safety review.
- On 15 October 20X6, a major warehouse fire destroyed 40% of their drone fleet.
- A key customer, accounting for 25% of revenue, declared bankruptcy on 5 November 20X6.
The financial statements are due to be signed on 30 November 20X6.
Which TWO of the following audit procedures should be performed to assess whether AeroDynamics Logistics is a going concern? (Select TWO)
Answer options:
Review correspondence with the licensing authority regarding the renewal of the operating license.
Perform a physical verification of the remaining 60% of the drone fleet.
Analyze and discuss cash flow forecasts with management for at least 12 months from the reporting date.
Send a confirmation letter to the bankrupt customer to verify the outstanding balance.
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