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Assignment on Audit Planning | Corporate Reporting - Crimson Enterprises

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Added on  2019-10-31

Assignment on Audit Planning | Corporate Reporting - Crimson Enterprises

   Added on 2019-10-31

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Corporate Reporting - Crimson Enterprises 1
CORPORATE REPORTING - CRIMSON ENTERPRISES
By Name
Course Title
Instructor’s name
Name of Institution
Name of Department
Assignment on Audit Planning | Corporate Reporting - Crimson Enterprises_1
Corporate Reporting - Crimson Enterprises 2
Audit planning
Audit planning is considered to be a vital area in auditing primarily carried out at the
beginning of the audit to make sure that suitable attention is devoted to particular areas,
probable problems are quickly identified. This aspect means developing a common strategy
and a comprehensive approach to the projected timing, nature, and degree of the audit. The
auditor often plans to do the audit in a timely and effective manner (Arens, Elder, Beasley,
and Hogan, 2016). Generally, auditor’s design detailed procedures so as to obtain sufficient
appropriate audit evidence. This assignment incorporates planning of the audit and having
access to the preliminary trial balance sheet for Crimson Enterprises. The assignment extracts
data from the company trial balance and identifies the accounts that are likely to require
significant audit attention (Trotman, and Wright, 2012). According to the Crimson
Enterprises trial balance, the selected seven accounts for audit that basically require attention
are;
Items accounts Current year Prior year % Change
1 Inventories 185,000 174,000 6.32%
2 Cash at bank 70,000 73,000 4.1%
3 Motor vehicles 66,000 66,000 0%
4 Accumulated depreciation (MV 27,940 21,000 33%
5 Accounts receivables 120,750 122,750 2.2%
6 Bank loans 230,000 230,000 0%
7 Sales 181,454 187,450 3.2%
Illustration
Crimson Enterprises
30th May 2017 1st July 2016
Revenue 181,545 187,450
Cost of Sale 55,963 63,595
Gross Profit 125,582 123,855
Assignment on Audit Planning | Corporate Reporting - Crimson Enterprises_2
Corporate Reporting - Crimson Enterprises 3
Other income - Interest 44 50
Other income - Fees 54,313 57,000
Total Income 179,939 180,905
Operating Expenses
Bank charges 319 350
Depreciation 15,185 15,738
Interest expense 10,542 11,500
Printing 339 375
Repairs & Maintenance 1,320 5,050
Wage 48,189 53,000
Superannuation 3,661 4,770
Total Expenses 79,555 90,783
Profit/(Loss) before tax 100,384 90,122
Ratio Formulae Current year Prior year Industry
average
1 Gross profit
margin
= Gross profit/Net
sales
69% 66% 67.5%
2 Quick ratio Cash + Accounts
receivables + Current
assets
investment/Current
liabilities
163% 160% 241.5%
3 Current ratio Total current
assets/Total current
liabilities
1.63 1.6 1.62
4 Debt equity
ratio
TL/Share equity 1.8 1.6 1.7
5 Inventory
turnover
COS/Inventory 30% 37% 33.5%
6 Assets turnover Sales/TA 34.8% 37% 35.9%
7 ROA Operating profits/Total
sales
69.2% 66.1% 67.7%
Assignment on Audit Planning | Corporate Reporting - Crimson Enterprises_3

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