Audit and Organizational Control

Running head: AUDIT AND ORGANIZATIONAL CONTROL
AUDIT AND ORGANIZATIONAL CONTROL
Name of the Student
Name of the University
Author Note

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AUDIT AND ORGANIZATIONAL CONTROL
Table of Contents
Question:1..................................................................................................................................4
Introduction................................................................................................................................4
Analysis of Organization............................................................................................................4
Management...........................................................................................................................5
Board of Directors..................................................................................................................5
Auditors..................................................................................................................................5
Recommendations......................................................................................................................6
Strategies for expansion of new business:.............................................................................6
Brand Image.......................................................................................................................6
Assessment of risk..............................................................................................................6
Control Activities...............................................................................................................6
Communication and Information.......................................................................................7
Monitoring and Reporting..................................................................................................7
Threats for Auditors...............................................................................................................8
Self-Review threat..............................................................................................................8
Self-Interest threat..............................................................................................................8
Familiarity threat................................................................................................................8
Advocacy threat.................................................................................................................8
Safeguards of auditor’s independence...................................................................................8
Rules and regulations as per the issue of Auditor’s independence:.......................................9

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AUDIT AND ORGANIZATIONAL CONTROL
Conclusion................................................................................................................................10
Question:2................................................................................................................................11
Introduction..............................................................................................................................11
Analysis of Organization..........................................................................................................11
Audit Assertions.......................................................................................................................12
Substantive Procedures............................................................................................................14
Risk in Auditing provision related to Warranty.......................................................................17
Conclusion................................................................................................................................18
References:...............................................................................................................................20

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AUDIT AND ORGANIZATIONAL CONTROL
Question:1
Introduction
The purpose of the paper is designed as per the case study; it is done by thoroughly
understanding the problems which Jertsy Ltd was facing with the controlling of a new
expansion of the fashion clothing store. The issues as per the case study are being solved with
the help of the Internal Control System and the auditing issues will be solved with the help of
the Australian Accounting Standards Board. The control for the new expansions can be
controlled by the Organizational Control Systems and by implementing strategic management
(Morden, 2016). So, in this report with the implementations of different strategies and the
internal auditing control the issues of the case study can be solved.
Analysis of the Organization
From the case study, it can be seen that the strategy which the senior management is
using that from the success which the Jertsy Ltd is getting, through this the management is
trying to expand their business structure by opening new stores. It is seen that there is a high
turnover of the store staff until now there was no problem because the business structure was
small, but now if they try to expand their business structure then there should be a stability
between the staff, there should be less turnover. To solve this issue, the management should
have control by implementing the internal control system.
Jertsy Ltd should follow the internal control system, which comprises of many policies,
procedures through which it can perform well and maintain a proper business structure
(Mahadeen, et al., 2016). In the internal control system, three parties have the main roles;
this system mainly comprises of the management team, board of directors and auditors.

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AUDIT AND ORGANIZATIONAL CONTROL
Management: The management team which comprises of senior manager, junior
manager, store manager or operations manager; the team should have a similar goal. Through
this, great management can be formed, which will help the organization to perform better. In
the case study, the issue with senior management was that there was a problem regarding the
control over the expansion of the new stores (Burt, 2016). This can be sorted out if they
distribute the management team, i.e. in every branch, there will be a specific branch manager;
through this implementation, the process of internal control can be effective. The information
between the management will be more accurate, and the risk will be less as there will be less
communication gap because the decision making process will be quick.
Board of Directors: The organization and the management are run by the directors.
They play a major role in this internal control system. They comply with all the applicable
laws and regulations which an organization needs. As per the case study, the role of the
directors is needed as they can help in maintaining the control as the expansion happens. The
directors should form a plan and strategize so that the business should be under control. The
strategy which the directors should comply is with the control of staff and planning. The
cross-section between the branches will help in the strategy because there will be a
continuous flow of information which will be provided by the managers. Thus, this
implementation of the staff control will help in the expansion of new branches, because as per
the case study, the staff turnover was much higher.
Auditors- In the case study, it is seen that the auditors do a good job in maintaining
the accounting records. The accounting reports are comprised of purchases, sales and the
sundry expenses, which is incurred locally. So, from the case study, it is seen that every
branch has his own accounts department, they maintain their own branch accounting records,
and at the end of the month, the report is being sent to the head office (Kravet, McVay and

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AUDIT AND ORGANIZATIONAL CONTROL
Weber, 2018). Thus, the auditors are the one who has the authority to evaluate the employees
work. It will be beneficial as the monitoring of the work will be there, and there will be
control over the employees.
Recommendations
As Jertsy Ltd has its own range of fashion clothing store, some of the strategies which the
company can adopt while the expansion of business is described below.
Strategies for expansion of new business:
Brand Image: Jertsy Ltd. should have a brand identity. It should keep the collection
of clothes which should be authentic. The type of clothes they are selling is mainly related to
youth fashion. To have brand recognition, the company should try different kinds of clothing,
which will try to attract a large base of customers. It will be beneficial for the company if
they expand the variety of clothing options. Through this strategy, the consumers will also
prefer Jertsy Ltd. because they will get various options under one clothing store.
Assessment of risk: There are many risks which are involved in the expansion of the
business. Thus it is important to look at the risk in the beforehand so that there should be no
problem in the future (Leung, 2017). In this case, the management has to take care of the risk
control after looking at the risks which can be involved in the organization. Thus, the analysis
of the risks should be done based on how it can be managed.
Control Activities: The Senior Management of Jertsy Ltd. should establish certain
activities which are related to the controlling of the system. Through this process of
controlling the activities, the risk associated with the company can be prevented
(Akhmetshin, 2018). Thus, it is beneficial for the management to follow the policies and
procedures which will ensure in the activities of the organization.