Question 1 :

A fire in February 2026 destroyed the only production line of Ironwood Custom Panels Ltd. There is no evidence the related equipment was impaired at December 31, 2025, and management added note disclosure only. The company has no alternate production capacity, and its three largest customers can terminate if supply stops for 60 days. What is the required completion response before issuance?

Reassess going concern and related disclosure before issuance, while recognizing that the fire does not by itself require a year-end asset write-down on these facts

Record a year-end impairment of the production line because the destruction was confirmed before the financial statements were issued

Leave the going concern conclusion unchanged if insurance coverage appears sufficient on paper

Treat the fire only as a disclosure event because post year-end operational disruption cannot affect the completion assessment

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Question 2 :

A draft review note says two unsupported top-side entries posted by the CFO to move operating expenses below EBITDA were "immaterial posting errors with no remaining fraud-response consequence" because the entries were reversed in April 2026. Which issue makes that note unsupportable?

The note should also discuss whether the entries created a control deficiency significant enough for communication to those charged with governance

The note dismisses override-risk indicators based on reversal and amount without resolving motive, support, and posting context

The note should quantify the net income effect after tax before concluding whether the entries matter

The note should compare the entries with prior-year proposed adjustments before concluding they were immaterial

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Question 3 :

Roselin Freight Ltd. shows positive forecast cash balances only because management assumes its three largest suppliers will return to 60-day terms. At the report date, two of those suppliers have already moved the company to cash-on-delivery and the third has issued a notice that further credit will be suspended unless arrears are cleared. What should be concluded before finalizing the file?

The supplier-term assumption can remain because credit terms often improve once sales recover

The forecast depends on a working-capital assumption that is contradicted by current evidence, so the going-concern conclusion must be reassessed

The issue affects payable management only and does not bear on going concern if sales remain stable

The contradiction can be handled through expanded note disclosure without revisiting management's assessment

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Question 4 :

At final review of the governance file for Granite Vale Ltd., the partner notes that the original audit planning communication to TCWG assumed no new locations. In November 2025, the client acquired a warehouse business, forcing a major change in scope, fraud discussions, and completion timing. The file contains internal updates, but no further communication to TCWG beyond the original planning letter. What must happen before the governance file can be treated as complete?

Nothing further is required because the original planning communication already covered scope in general terms

The significant change in audit scope and timing should be communicated to TCWG rather than left only in internal planning updates

The update belongs only with management because the acquisition closed before year-end

The update is needed only if the additional procedures lead to a modified audit opinion

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Question 5 :

Granite Hollow Mills Ltd.'s planning memo includes these facts:

• Planning materiality is based on 4% of normalized profit before tax.
• Performance materiality is set at 85% of planning materiality.
• The client has weak review controls over estimates and several locations generating small differences that tend to accumulate.
• The memo says the approach is acceptable because it matches a commonly used internal guide.

Which statement accurately identifies what still lacks support before approval?

Only the normalized-profit benchmark lacks support because the 85% performance materiality level is already justified by the remaining facts

Both the normalized-profit benchmark and the 85% performance materiality level still need engagement-specific support given the weak controls and accumulation risk

Only the 85% performance materiality level lacks support because a documented normalized-profit benchmark is automatically acceptable

Neither item needs more support because the memo followed a commonly used internal guide

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Audit Planning, Risk & Completion

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A draft review note says two unsupported top-side entries posted by the CFO to move operating expenses below EBITDA were "immaterial posting errors with no remaining fraud-response consequence" because the entries were reversed in April 2026. Which issue makes that note unsupportable?

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