An Audit Analysis

A. BACKGROUND Laser Engineering is a wholly owned subsidiary of Lightray Inc., a company listed on the New York Stock Exchange. Laser Engineering is a company which manufactures and retail distribution of high technology engineering equipment. Laser Engineering is an Australian based company which has two subsidiaries, Ace Supply Pty Ltd and Bell Manufacturing Pty Ltd. The Board of Directors of Laser Engineering consists of two directors of Lightray Inc. and three Australian directors, Sandra …

…the reliability of the account receivable balance is doubtful. There are many overdue debts. The risk of overstatement of account receivable is very high. As there are many overdue debts, the provision of doubtful debts should be increased. In the contrary, the statement of financial position shows that the provision of doubtful debts decrease and account receivable increase. We need to review this area and investigate the going concern problem for Laser Engineering Pty Ltd.