Audit Measures and Risk Assessment for MYH Accounting Firm

Audit
Executive summary
Organizations in the corporate world are more likely to empower themselves owing to the
presence of properly explained audit procedures. Hence, possessing effective processes of
audit are compulsory in this era because it assists in detection of material risks in the financial
statements. Moreover, prevalence of internal control mechanisms also facilitates in
smoothening the audit processes. This report has focused on the audit measures adopted by
MYH in its affairs. The company is basically an accounting firm that is headquartered in
Australia. Nevertheless, this report progresses with the evaluation part wherein computation
of ratios is done. After this, the report has discussed the assessment of audit risks together
with the risks and steps to avoid the same. Moreover, enhanced discussion on the company is
also made so that other material business risks can be studied, thereby reflecting all the
mechanisms of internal control and test control in a tabular manner.
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Audit
Introduction
Both audit strategy and audit processes are crucial aspects of identification of material risk of
misstatements in an organization. This can assist companies to become capable of thriving in
this complicated environment. This report has highlighted the processes of audit that must be
present in all the organizations. Further, with this report, risk management mechanisms have
also been reflected together with the role played by the mechanisms of internal control.
Overall, a plan of audit has been established so that the financials can be effectively assessed.
Nonetheless, there has been effective discussion upon various legal measures and the same is
based on the significance of internal control mechanisms (Cappelleto, 2010). Overall, such
mechanisms play a vital role in allowing organizations thrive in this environment and attain
sustainable development on a whole.
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Audit
1A. Ratio assessment
This report has significantly concentrated on aspects like ratio evaluation in addition to the
business material risks associated to the company so that audit processes can be effectively
developed. Further, if the ratios are considered, it plays a key role in determining the
deficiencies and the place at which the company stands. Overall, the relevance of internal
control mechanisms in addition to the drawbacks of the scenario must be appropriately taken
into consideration (Elder et. al, 2010). The following table can be accounted for the
assessment of material ratios and risks associated to the same.
Marketing cost
Analysis Audit Risk Audit steps to reduce risk
The company’s marketing
costs have increased in
comparison to the last two
years and the reason behind
this can be due to increased
exposure of the company
towards its beef operations.
The audit risk here is that
marketing costs consists of
personal expenses of
directors and other costs that
are not allowed. This is
because the proportion of
increment in such expenses
does not go together with
sales increment or present
years return in comparison
to the previous tenures.
The auditor’s group must
monitor all documents and
vouchers of such expense.
Besides, they must observe
whether superior authorities
have permitted such
expenses (Elder et. al,
2010). Further, the personal
expenses bill that are of a
relevant value must be
accounted by the auditors as
well.
Investments
Analysis Audit Risk Audit steps to reduce risk
The times income earned
from this account has
deteriorated in comparison
to the last years.
The audit risk here is that
the same may possess a risk
of material misstatement or
can be undervalued in nature
because the interest on
investments has deteriorated
with due course of time.
Auditors must analyze the
cause behind deterioration in
such interest earned.
Further, investments must be
monitored when it comes to
their disposal process
(Matthew, 2015).
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