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Audit Techniques and Processes

   

Added on  2021-05-30

13 Pages2837 Words50 Views
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BMLExecutive summaryAudit techniques and processes are very pivotal as it assists in creating a path for companies to progress further. Besides, it is vital for companies to pursue a powerful internal control function within their framework so that they can cater to problematic scenarios effectively. This report intends to shed light on Big Machine Ltd (BML) that offers lease services associated to heavy mining machineries to the gold mines. Moreover, this report starts with the assessment part wherein computation of ratios has been facilitated. In other words, four different accounts are disclosed by the audit partner that is again followed by a table wherein audit steps, audit risk, and evaluation part to decrease risks have been discussed. Further, the ratios are assessed to depict the business risks posing a threat to the company. Nevertheless, in the other segment, internal control measures are emphasized wherein control processes, risk deduction, and examination of control is highlighted through a table. Lastly, the weaknesses of such mechanism for contract payroll is discussed.2

BMLContents1.Planning of audit in BML................................................................................................................31B. Business risks that pose a threat to the company...........................................................................72a. Recognition of internal controls......................................................................................................72B. Weaknesses in the internal control for contract payroll.................................................................9Conclusion...........................................................................................................................................10References...........................................................................................................................................113

BML1.Planning of audit in BMLThis report plays a key role in highlight relevant segments such as business risks and analysisof rations that are associated with the company’s audit plan. Further, the effectiveness of current internal control measures prevalent together with the current shortcomings in this same segment are also intended to be discussed.AccountEvaluationAudit risksAudit steps to mitigate riskAccounts receivablesThe average of industries in relation to accounts receivables in days is forty-five days. Further, the company also had 53 days for such accounts in the past tenure that had enhanced to 62 in 2017.BML must seek legitimate reasons to interpret why it has not attained industry’saverage in relation to such accounts. Furthermore, to prevent delay or postponement of BML’s cash flow and working capital cycle, proper precautions must be undertaken at the initial stages itself (Livne, 2015).In order to supervise BML’s smoother flow of operations, it is necessary that the company makes attempts to discuss and deal the accounts receivables separately that have become due for a longer tenure.Machinery Finance LiabilitiesThe average of industry in relation to debt-equity ratio is themost effective as it reports at 1.50. Further, the bank loan in the company can also be effectively interpreted while accounting for its debt-equity ratio that The company’s debt-equity ratio is reportedto have witnessed a significant decline in comparison to the pastyear. Further, the company has a currentdebt structure of $1.05for each dollar of its equity. Moreover, it cannot be considered aIn order to confirm thecompany’s coverage of all its liabilities, it is required that there prevail accurate and effective disclosures that an audit process must look for scrutinization from several resources.4

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