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Auditing Theory and Practice for Corporate Functions

   

Added on  2020-03-23

13 Pages2457 Words45 Views
Running head: AUDITING THEORY AND PRACTICEAuditing Theory and PracticeUniversity NameStudent NameAuthors’ Note

2AUDITING THEORY AND PRACTICEExecutive SummaryThe present study aids in gaining comprehensive understanding regarding auditing theory aswell as practice with regard to the functions of corporations. In essence, this segmentcritically evaluates different accounts heads, risks connected to auditing of the accounts andthe actions that can be carried out for diminution of the risks of audit. Additionally, thecurrent study also examines and analyses significant financial ratio for evaluation of risk ofthe business entity. Moreover, this piece also illustrates in internal control processes of thespecific business with emphasis on systems of competent control as well as risk mitigationprocesses. Moving further, this segment also elucidates in detail about the identifiedlimitations in internal structure of control of the functions of business entity.

3AUDITING THEORY AND PRACTICETable of ContentsSolution to Question 1A:............................................................................................................2Solution to Question 1B:............................................................................................................4Solution to Question 2A:............................................................................................................7Solution to Question 2B:..........................................................................................................10References................................................................................................................................11

4AUDITING THEORY AND PRACTICESolution to Question 1A:Analytical of different account heads:Receivable:-Accounts: Accounts receivable is calculated by evaluating credit sales with theaverage time of receivable.-Analysis: Based on business case, it can be stated that all the activities associated toreceivables are carried out by officials responsible for handling receivable. Forexample, customer returning medical tools after citing proper reasons of returning,specific notes drawn in favour of buyers and many others (Stewart & Shamdasani,2014). Thus, high risk is said to be involved in this case. -Risk of audit: there exists a risk that the trade receivable might perhaps getmisappropriated by firm’s official and lower amount of receivable might beregistered. -Different actions connected to receivables trade can be segregated among differentmembers for lessening the audit risk (Reporting et al, 2017). Investment Account:-Accounts- Investments can be transformed into cash within a period of 3 months to 12months-Evaluation- Investments susceptible to different accounting system is said to be at mediumlevel (Hardy, 2014).- Audit risk – Fundamentally, inherent risk assessment might be associated to investmentcarried out without considering diverse risks.

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