This memorandum addresses the areas of concern present in the internal control and financial statements of the Always Precise Instrument Private Limited (API). The company is the supplier and the manufacturer of small military equipment. The memorandum address three particular aspects. At first it will take into the account the ratio analysis to identify the probable risks to lay down appropriate auditing process. Secondly, the memo will identify the weakness of internal control surrounding API in its inventory system to locate the probable risks of audit and develop a corresponding audit procedure. At last, the memo will consider performing analysis of two audit assertions and appropriate sampling process by providing satisfactory justification for the same.