Auditing Assignment - Question & Answer

Added on - 22 Nov 2020

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AUDITING
TABLE OF CONTENTSEXECUTIVE SUMMARY.............................................................................................................1QUESTION 1...................................................................................................................................11.A Analysis of ratio which are linked to four listed accounts through audit partner................11.B Analysis of ratio along with additional information for outlining business risks................5QUESTION 2...................................................................................................................................62.A Identification of Internal control along with risk and test of control...................................62.B Listing and justifying weakness in internal control for accounts payable and purchases....8CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12
EXECUTIVE SUMMARYAuditing refers to an independent and systematic examination of accounts, vouchers,statutory records, books and documents of organization for pertaining the financial statementsalong with non financial disclosures are presented in fair and true aspect or not. The presentreport is discussing about capability for demonstrating various methodologies of riskmanagement along with functions of internal control with reference to audit. It had also analysedvarious ratios of consecutive three years. In the same series, potential audit risk are determinedwith its steps. It had also articulated about internal control in system which are effective and riskcontrol which might be alleviated. Further it had justified its weakness in internal control forpurpose of account payable and purchase as well. In nutshell, it had designed particular auditplan for proper audit procedure of financial statement. It had concluded by providing reflectiveand critical judgement and ethical practice's value is appreciated.QUESTION 11.A Analysis of ratio which are linked to four listed accounts through audit partnerCategoryAccountAnalysisAudit RiskAudit Steps toreduce riskAccountsReceivableDays inAccountReceivable(Wine)It specifies capability oforganization for collectingits accounts receivables. Inyear 2016 it receivedaccounts in 53.24 dayswhich got raised byapprox. 7 days in 2017. Itis a bad indicator fororganization so there isrequirementofimprovementformanaging. TWC hadconsidered past figures soit had managed itsGenerally,preliminaryanalyticalprocedure hadbeen performedwhich mightindicateincrement in riskof misstatementswith context ofaccountsreceivable (Alles& et.al., 2018).The debtor areCredit checksmustbeundertaken beforeagreeing oncredit. Thereshould be creditlimit on basis ofinformation viacredit check. Inthe same series,variousformalisedprocedures andpolicies with1
accounts in efficient aspectwhich had given itsoutcome as 50.2 days.slow for debtsand ownedamount is alwaysdisputed. Theevidence ofinsufficientdocumentary forevery balance andtransaction aswell. There ispresence ofreduction inprofits and majorissues of cashflow.context ofrequirement ofinformation forsupporting raisedinvoices. Onregular basis,organization mustissue statementsto its selectedcustomers(AccountsReceivable,2018).Days inAccountReceivable(Wine)With context of accountsreceivable of beef, itsperformance is decreasingfrom year to year. In year2016 it was properlymanaged with 24 days butin year 2017 it raised frommore than double to 36days. In year 2018 itsunaudited outcome is of 57days which reflects badpicture of organization.There is huge requirementfor managing itsreceivables in efficientaspect.InvestmentsReturn onEquityIt is considered as a majormeasure for profitabilitywhich calculates margin oforganization for generatingalong with money investedby shareholders. In theyear 2016 it was 15.2%return on investmentthrough its shareholders. Inthe same series, it raised to17.5% which seems thatorganization is growingCash flows areavoided alongwith applicationof previousfinancial data.It must be awareabout applicationof accountingguidance. In thesame series,appropriate rulesmust be appliedwith specific typeof business entityand to holdinvestments. Foraccomplishing2
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