The additional information that we feel need to know about the company: Current status of past issues and mitigating factors, details for development expenditure and bias of valuation of securities. The auditors should further investigate the shareholding pattern of the entity. He should investigate the details of the fresh issues of the shares through public offering and its basis. As the initial public offering must be accompanied with the red herring prospectus, financial statement (audited). He can communicate with the company’s existing auditor to discuss more about this engagement. By looking at the facts, the auditor should further consider investigating the basis of revenue recognition for the entity. In this regard, he should verify the service contract entered into with the outsourcing company, its terms and conditions, nature of services provided etc.
