ABAS Workbooks - Capital - Case Study

PWC audit 审计

Share Capital, Reserves and

Statutory Records (Case Study)

PWC audit 审计

Contents

SECTION TOPIC

1 Case study

PAGE

3

PWC audit 审计

APPENDIX TOPIC A

Case study suggested solution

PAGE

27

PWC audit 审计

Before you can proceed with this case study, you must have completed the self-study workbook, ABAS Workbooks: Share Capital, Reserves and Statutory Records. Also, you must have created a local copy of Thinkready, Inc. TeamAsset database on your PC. The Thinkready, Inc. TeamAsset database will be available on the CN Knowledge Curve database.

This case study should take you approximately 60 minutes to complete. If you find yourself taking more time, don't worry . . . at this stage it's more important that you practice the techniques thoroughly, rather than watching the clock.

You are a new team member on the audit of Thinkready, Inc. for the year ended December 31, 1998. One of the tasks allocated to you is the audit of share capital and reserves.

Your team manager has briefed you on the relevant steps of the tailored step document. You can see the steps that you should perform if you follow the following:

(i) Go into your local copy of Thinkready, Inc.;

(ii) Select the view 01 Client Work, then 1 Main. Select

Equity, then section 5000 - Capital and other equity accounts. Work through the steps in the order that they appear in this view. To go into a step from this view either double click on it or put the highlighter bar over a step and press return. You also need to complete the work in section 8025 - Statutory records. When you go into the steps you will see that the team manager has tailored them to be relevant to Thinkready, Inc.

PWC audit 审计

(iii) Expanding this area shows you the steps you must

perform to audit share capital and reserves.

To go into a step from this view either double click on it or put the highlighter bar over a step and press return. When you go into a step you will see that the team manager has tailored it to be relevant to Thinkready, Inc.

Your team manager has obtained the following information from the company secretary which is relevant to your audit work. These are attached on the next few pages:

extracts from the December 31, 1997 audited financial

statements;

various board minutes;

register of charges;

register of directors and secretaries;

register of members;

Annual Return; and

client prepared schedule on share capital

You may assume that any amounts that need to be traced to bank statements and cash book have already been performed without any error arising.

PWC audit 审计

Once you have completed the audit of share capital and reserves, your final task is to think about the presentations and disclosure implications of your audit work on share capital and reserves.

You must update the extracts from the 1997 financial statements to reflect the results of your audit work above for the 1998 financial year.

When you have finished, turn to the suggested solution in Appendix A, and compare that to your own. If you have any questions about the suggested solution, ask your team manager or an experienced team member to talk through any problems you had.

PWC audit 审计

THINKREADY, INC.

DIRECTORS' REPORT AND ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 1997

These financial statements have been prepared for training purposes only. Whist every effort has been made to ensure compliance with PRC accounting standards, no reliance should be placed on the disclosures herein.

PWC audit 审计

THINKREADY, INC. (FOR TRAINING PURPOSES ONLY)

REPORT OF THE DIRECTORS

The directors submit their report together with the audited accounts for the year ended December 31, 1997.

Principal activities

The principal activities of the company are the development, manufacture and marketing of dermal pharmaceutical compounds used in human health care applications.

Results and appropriations

The results of the company for the year ended December 31, 1997 are set out in the profit and loss account on page 5 of the accounts.

The directors do not recommend the payment of a dividend.

Reserves

Movements in the reserves of the company during the year are set out in Note 13 to the accounts.

Donations

During the year, the company made charitable and other donations of Rmb 50,000 and Rmb 1,000 respectively.

Fixed assets

Details of the movements in fixed assets are set out on Note 7 to the accounts.

Share capital

Details of the share capital of the company are set out in Note 12 to the accounts.

PWC audit 审计

THINKREADY, INC. (FOR TRAINING PURPOSES ONLY)

REPORT OF THE DIRECTORS

Directors

The directors during the year were:

Philip Tan Wan Kong Charles Heindahl Yeung Siu Mo Wong Bun

There being no provision in the company's Articles of Association for retirement by rotation, all current directors continue in office.

Directors' interests in contracts

No contracts of significance in relation to the company's business to which the company, its fellow subsidiaries or its holding companies was a party and in which a director of the company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

Directors' interest in equity or debt securities

At no time during the period was the company, its fellow subsidiaries or its holding companies a party to any arrangement to enable the directors of the company to acquire benefits by means of the acquisition of shares in, debenture of, the company or any other corporate body.

Management contracts

No contracts concerning the management and administration of the whole or any substantial part of the business of the company were entered into or existed during the year.

Auditors

The accounts have been audited by PricewaterhouseCoopers who retire and being eligible, offer themselves for re-appointment.

On behalf of the Board

Secretary

March 1, 1998

PWC audit 审计

AUDITORS' REPORT TO THE SHAREHOLDERS OF THINKREADY, INC.

We have accepted the appointment to audit the company’s balance sheet as at December 31, 1997, its profit and loss account and cash flow statement for the year then ended. The company is responsible for the financial statements. Our responsibility is to express an audit opinion on the financial statements. Our audit was conducted in accordance with China Certified Public Accountants Independent Auditing Standards and consequently included such auditing procedures as were considered necessary and appropriate to the company’s circumstances, including examination, on a test basis, of the company’s transactions and accounting records.

In our opinion the financial statements of the company set out on pages 4 to 15 [Note 1] present fairly, in all material respects, the financial position of the company at December 31, 1997 and its results and cash flows for the year then ended in accordance with the Accounting Standards for Enterprises and the Accounting Regulations of the People’s Republic of China for Enterprises with Foreign Investment [Note 2]. The accounting policies used in the preparation of the financial statements for the year are consistent with those used in the preceding year [Note 3].

PRICEWATERHOUSECOOPERS Certified Public Accountants

March 1, 1998

PWC audit 审计

THINKREADY, INC. (FOR TRAINING PURPOSES ONLY)

Extract of balance sheet

Note 1997 1996 Rmb '000 Rmb '000Financed by: Share capital 12 8,190 8,190 Reserves 13 Shareholders' funds 14 Amount due to holding company 15 Long-term liabilities 16

Extract of notes to the accounts

12. Share capital

1997 Authorized 10,000,000 ordinary shares of Rmb 10 each Issued and fully paid 819,000 ordinary shares of Rmb 10 each

33,560 1,234 Rmb '000 38,7201,0241996Rmb '000

PWC audit 审计

Thinkready, Inc.

Minutes of a meeting of the board of directors held on January 14, 1998

Present: Philip Tan Wan Kong (Chairman)

Charles Heindahl Wong Bun Yeung Siu Mo

T. E. Johns (Company secretary) Tsoi Mun Wai (Company secretary)

1. Tan Wan Kong began by welcoming Tsoi Mun Wai to the meeting.

2. T. E. Johns stated that he wished to resign from the post of Company Secretary and the

board regretfully accepted his decision. On behalf of the board, Charles Heindahl thanked him for all his hard work in the past and said that he would be missed.

3. Tan Wan Kong proposed that Tsoi Mun Wai as Company Secretary to replace T. E.

Johns. Ms. Tsoi accepted the proposal and left the room while the board voted. Ms. Tsoi was appointed company secretary unanimously.

4. Philip reported that he has received the final copy of the managed care agreement with

Hospital Associate. Both he and Charles have reviewed the contract and have voted that the changes requested by the Board at the November 1997 meeting have been made. Philip, director, and Charles, director, will be meeting with Mr. Yip Kin Lung, Hospital Associate's representative, to sign the final contract.

5. Philip stated that discussion were underway with the Company's financial advisors to

raise additional funds for further development. One possible way of raising funds currently under consideration is the issue of new shares to a venture capitalists.

6. Pay rise of 7% for all employees were approved. These rises are to date back to the

beginning of the year and the first month's pay to be affected will be January's.

7. Additionally a one-off bonus of 15% of 1997 yearly salaries for all sales staff was

approved. The board noted that, subject to the audit of the financial statements, it looked like turnover for the year had risen by at least that amount. It was generally agreed that it had been an exceptional year and that the increase in turnover was down to the hard work of the sales staff. This bonus is to be paid in the February payroll.

8. There being no further matters to discuss the meeting was adjourned. The date of the

next meeting was agreed at July 1, 1998.

Philip Tan Charles

Wong

Yeung Siu

Heindahl

Charles Heindahl

Bun Mo

Yeung Siu Mo

Philip Tan Wan Kong Wong Bun

PWC audit 审计

Thinkready, Inc.

Minutes of the Annual General Meeting - April 1, 1998

Present: Philip Tan Wan Kong (Chairman)

Yip Han

Charles Heindahl Wong Bun Yeung Siu Mo

Tsoi Mun Wai (Company secretary)

Keith Dugdale (PricewaterhouseCoopers)

1. Philip Tan began by welcoming auditor Mr. Summers to the meeting.

2. Philip presented the accounts to the AGM and asked anyone if they had any questions

concerning the accounts. PricewaterhouseCoopers expressed his willingness to answer any queries members of the Company might have.

3. The members of the Company agreed unanimously to adopt the accounts.

4. PricewaterhouseCoopers expressed his firm's willingness to continue in office as

auditors. The members agreed unanimously to reappoint PricewaterhouseCoopers as auditors for the financial year ended December 31, 1998.

5. There being no further matters to discuss, the meeting was closed.

Philip Tan Charles

Wong

Yeung Siu

Heindahl

Charles Heindahl

Bun Mo

Yeung Siu Mo

Philip Tan Wan Kong Wong Bun

PWC audit 审计

Thinkready, Inc.

Minutes of a meeting of the board of directors held on July 1, 1998

Present: Philip Tan Wan Kong (Chairman)

Charles Heindahl Wong Bun Yeung Siu Mo

Tsoi Mun Wai (Company secretary)

1. Tan Wan Kong began the meeting by welcoming the rest of the Board.

2. The board noted that the financial statements for the 1997 year end were now signed

and the Directors of the Company had approved them. It had been an exceptional year and it was agreed that a year end bonus of Rmb 250,000 be paid to each of the Directors.

3. The purchase of a new tank system, together with all necessary piping for Rmb

1,500,000 was approved. The new tank is to be used to produce products currently under development. It was noted that Cortoline sales were no longer continuing to rise and so it was becoming a matter of urgency to have new products licensed for next year. Yeung Siu Mo agreed to update the board on the status of the product development and licensing at the next board meeting.

Philip Tan Charles

Wong

Yeung Siu

Heindahl

Charles Heindahl

Bun Mo

Yeung Siu Mo

Philip Tan Wan Kong Wong Bun

PWC audit 审计

Thinkready, Inc.

Minutes of a meeting of the board of directors held on August 2, 1998

Present: Philip Tan Wan Kong (Chairman)

Charles Heindahl Wong Bun Yeung Siu Mo

Tsoi Mun Wai (Company secretary)

1. Tan Wan Kong began the meeting by bringing the rest of the Board up to date with the

proposed issue of share capital to a venture capitalist. The board noted that there had been many meetings between the financial advisor's and Philip and Jim and the venture capitalists, 3x Venture Capitalists.

2. It was noted that if the issue proceeds, with the funds raised, the company would be in

a much better position to continue its research and development of new products.

3. It was therefore agreed unanimously to issue 2,200,000 ordinary shares to 3x Venture

Capitalists, who have agreed to purchase these shares at nominal value of Rmb 10 per share. The shares will be fully called and paid up by August 2, 1998.

4. Miss Yeung updated the board on the progress of the new product license. She

confirmed that her department had yet to hear anything from the Hospital Authority. Tests were underway on product XB6, and once her team were happy with its performance they would seek a license for it under its proper name. 5.

Wong Bun updated the board as to the latest sales and marketing strategy. He noted that the sales department were working extremely hard with added enthusiasm since their one-off bonus. Plans for further expansion into Europe and the U.S. were being developed.

The board then discussed the summer away day which is planned to take place on Friday, September 16. This year it was the turn of the Finance team to organize it. Charles confirmed that plans were underway and a day out at Ocean Park looked like a popular choice. Charles’s team will organize group tickets and a bus to take everyone there. Timings would be announced later. The board approved the plans and agreed that partners would be invited too.

The date of the next meeting was agreed at September 1.

6.

7.

Philip Tan

Philip Tan Wan Kong

Charles

Wong

Yeung Siu

Heindahl

Charles Heindahl

Bun Mo

Yeung Siu Mo

Wong Bun

PWC audit 审计

Thinkready, Inc.

Minutes of a meeting of the board of directors held on September 1, 1998

Present: Philip Tan Wan Kong (Chairman)

Charles Heindahl Wong Bun

Tsoi Mun Wai (Secretary)

1. Apologies for absence were received from Yeung Siu Mo. She had to go to a meeting

at the Hospital Authority about the new product license. She promised to update the Board on the new developments at the next meeting.

2. Charles began the meeting by updating the board with the details of the Summer

Event. This years’ Summer Event was an away day at Ocean Park on Friday, September 18. The latest cost estimate was Rmb 250 per employee covering the cost of the coach trip and entrance ticket for both the employee and their partner. It was agreed that arrangements for refreshments could be made by individuals.

3. There being no further matters to discuss the meeting was adjourned.

4. The date of the next meeting has yet to be decided.

Philip Tan Charles

Wong

Heindahl

Charles Heindahl

Bun

Philip Tan Wan Kong Wong Bun

PWC audit 审计

NAME OF COMPANY:

Company Number:

Date of charge

Value of charge (Rmb)

Description of property charged

Name and address of persons entitled thereto

Date of registration of charge with registrar of companies 11/30/97 Memorial No. 800182

Date of release

Entry made by

REGISTER OF CHARGES

First legal

charge on 3/F, Min Plaza, 777 Guo Ding Road, Shanghai. The consideration is all monies.

Bank of China 1 Nanjing Road, Shanghai

PWC audit 审计

NAME OF COMPANY:

Company Number:

Date of appoint-ment 05/21/89

Full name

Nationality and ID No.

Residential address

Occupation

Date of ceasing to act

Entry made by YYY

REGISTER OF DIRECTORS

Tan Wan Kong, Philip Chinese

Z000123(4)

Block 8 HK Plaza

111 Huai Hai Road Shanghai

Bun Chinese

15 Athen Gardens

59 Ronghua Road

B555000(2) Shanghai

62 Hong Mei Villa 40 Hong Mei Road Shanghai

Charles British AB13579

04/12/95 Yeung Siu Mo

Flat H, 53/F

Central Plaza

C666777(3) 6 Nanjing Road

Shanghai

British

PWC audit 审计

NAME OF COMPANY:

Company Number:

Date of appoint-ment

Full name

Nationality and ID No.

Residential address

Occupation

Date of ceasing to act

Entry made by

REGISTER OF SECRETARIES

British Flat B, 5/F Jin Jiang Towers 99 Mao Ming Road AB23175

Shanghai 06/05/93

Tim Edward Johns

British AB51212

Block 1, 27/F Victoria Gardens 99 Gu Bei Road Shanghai

YYY

PWC audit 审计

NAME OF COMPANY:

Company Number:

Name Address

Tan Wan Kong

Block 8, HK Plaza, 111 Huai Hai Road, Shanghai

REGISTER OF MEMBERS

Date

Shares Acquired

No. of shares

Total shares held

Distinctive #s.

number

Han Address

Flat 6, 25/F, Aston Villa, 43 Xin Guo Road, Shanghai

Rmb

Date

Shares Acquired

No. of shares

Total shares held

Distinctive #s.

number

Name Address

3X Venture Capitalists

1010 Two Pacific Place, 444 Huai Hai Road, Shanghai 124

Rmb

Date

Shares Acquired

No. of shares

Total shares held

Distinctive #s.

number

Rmb

PWC audit 审计

Page 20 ABAS Workbooks: Share Capital, Reserves& Statutory Records (Case Study)

本文来源：https://www.bwwdw.com/article/9rre.html